<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) April 22, 1996
MCN CORPORATION
(Exact name of registrant as specified in its charter)
MICHIGAN 1-10070 38-2820658
State of Incorporation (Commission File (I.R.S. Employer
Number) Identification No.)
500 GRISWOLD STREET, DETROIT, MICHIGAN 48226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(313) 256-5500
<PAGE> 2
ITEM 5. OTHER EVENTS
The registrant is filing herewith the following in connection with the
offering of its 8 3/4% Preferred Redeemable Increased Dividend Equity
Securities ("PRIDES"), pursuant to the registration statement of the
registrant, MCN Financing I and MCN Financing II on Form S-3, as amended, (No.
333-01521) filed with the Securities and Exchange Commission under the
Securities Act of 1933.
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
1-4 Purchase Agreement dated April 22, 1996 with respect to
MCN Corporation's PRIDES.
4-9 Purchase Contract Agreement dated April 22, 1996 between
MCN Corporation and The First National Bank of Chicago, as
Purchase Contract Agent.
4-10 Pledge Agreement dated April 22, 1996 among MCN
Corporation, Chemical Bank, as Collateral Agent, and The
First National Bank of Chicago, as Purchase Contract Agent.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MCN CORPORATION
By /s/ Sebastian Coppola
------------------------------
Sebastian Coppola
Vice President and Treasurer
Date: April 25, 1996
<PAGE> 1
EXHIBIT 1-4
MCN CORPORATION
(A MICHIGAN CORPORATION)
PREFERRED REDEEMABLE INCREASED DIVIDEND EQUITY
SECURITIES(SM), 8 3/4% PRIDES(SM)
(STATED AMOUNT $23.00 PER SECURITY)
PURCHASE AGREEMENT
April 22, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
RONEY & CO.
As the Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Dear Sirs:
MCN Corporation, a Michigan corporation (the "Company") and the several
Underwriters named in Schedule A hereto (collectively, the "Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 10), for whom Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), Smith Barney Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, Dean Witter Reynolds Inc. and Roney &
Co. are acting as the representatives (in such capacity, such firms shall
hereinafter be referred to as the "Representatives") propose, subject to the
terms and conditions stated herein, to enter into the Purchase Contracts
referred to in the Purchase Contract Agreement dated as of April 22, 1996 (the
"Purchase Contract Agreement") between the Company and The First National Bank
of Chicago, as Purchase Contract Agent (the "Purchase Contract Agent"),
relating to an aggregate of 5,100,000 Preferred Redeemable Increased Dividend
Equity
<PAGE> 2
Securities, 8 3/4% PRIDES, Stated Amount $23.00 per Security (the "PRIDES").
In connection therewith, the Underwriters propose, subject to the terms and
conditions stated herein, to purchase at the direction of the Company, the
underlying Treasury Notes of the United States Government bearing interest at
the rate of 6 1/2% per annum and maturing on April 30, 1999 (the "Treasury
Notes"), having an aggregate principal amount of $117,300,000. The Treasury
Notes will be pledged with Chemical Bank, as collateral agent for the Company
(the "Collateral Agent"), to secure the holders' obligation to purchase common
stock, $.01 par value, of the Company (the "Common Stock") under the Purchase
Contracts. The Company proposes to grant to the Underwriters an option to
enter into Purchase Contracts underlying up to 765,000 additional PRIDES (the
"Option Securities") and, in the event any such additional Purchase Contracts
are entered into, the Underwriters propose to purchase, at the direction of the
Company, the additional Treasury Notes underlying such Option Securities, which
would also be pledged to the Collateral Agent. The aforesaid 5,100,000 PRIDES
(the "Initial Securities") and all or any part of the Option Securities subject
to the over-allotment option described in Section 2(b) hereof are collectively
referred to herein as the "Securities". Capitalized terms used herein without
definition shall be used as defined in the Purchase Contract Agreement.
Prior to the purchase and public offering of the Securities by the
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form
of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take
the form of an exchange of any standard form of written telecommunication
between the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the
Securities will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
The Company, and MCN Financing I and MCN Financing II (collectively, the "MCN
Trusts") have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-01521) and
pre-effective amendment nos. 1 and 2 thereto covering the registration of
securities of the Company and the MCN Trusts, including the Securities and the
Purchase Contracts included in and shares of Common Stock underlying the
Securities, under the Securities Act of 1933, as amended (the "1933 Act"),
including the related preliminary prospectus or prospectuses, and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and the Company has filed such post-effective amendments thereto as may be
required prior to the execution of the Pricing
-2-
<PAGE> 3
Agreement. Such registration statement, as so amended, has been declared
effective by the Commission. Such registration statement, as so amended,
including the exhibits and schedules thereto, if any, and the information, if
any, deemed to be a part thereof pursuant to Rule 430A(b) of the 1933 Act
Regulations (the "Rule 430A Information") or Rule 434(d) of the 1933 Act
Regulations (the "Rule 434 Information"), is referred to herein as the
"Registration Statement"; and the final prospectus and the prospectus
supplement relating to the offering of the Securities, in the form first
furnished to the Underwriters by the Company for use in connection with the
offering of the Securities, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of the applicable
Pricing Agreement; provided, further, that if the Company files a registration
statement with the Commission pursuant to Section 462(b) of the 1933 Act
Regulations (the "Rule 462(b) Registration Statement"), then after such filing,
all references to "Registration Statement" shall be deemed to include the Rule
462(b) Registration Statement; and provided, further, that if the Company
elects to rely upon Rule 434 of the 1933 Act Regulations, then all references
to "Prospectus" shall be deemed to include the final or preliminary prospectus
and the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as
the case may be, in the form first furnished to the Underwriters by the Company
in reliance upon Rule 434 of the 1933 Act Regulations, and all references in
this Purchase Agreement to the date of the Prospectus shall mean the date of
the Term Sheet. A "preliminary prospectus" shall be deemed to refer to any
prospectus used before the registration statement became effective and any
prospectus that omitted, as applicable, the Rule 430A Information, the Rule 434
Information or other information to be included upon pricing in a form of
prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations, that was used after such effectiveness and prior to the execution
and delivery of the applicable Pricing Agreement. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all
-3-
<PAGE> 4
references in this Agreement to amendments or supplements to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to mean
and include the filing of any document under the 1934 Act which is incorporated
by reference in the Registration Statement, such preliminary prospectus or the
Prospectus, as the case may be.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
the Pricing Agreement has been executed and delivered.
SECTION I. Representations and Warranties.
A. The Company represents and warrants to each Underwriter as of the date
hereof and as of the date of the Pricing Agreement (such later date being
hereinafter referred to as the "Representation Date") that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or, to the knowledge of the Company, threatened by the
Commission.
(ii) The Company and the MCN Trusts meet the requirements
for the use of Form S-3 under the 1933 Act. Each of the Registration Statement
and any Rule 462(b) Registration Statement has become effective under the 1933
Act, and at the time of effectiveness and at the Representation Date, the
Registration Statement and any Rule 462(b) Registration Statement and the
Prospectus conformed and will conform in all material respects to the
requirements of the 1933 Act and the 1933 Act Regulations and did not and will
not contain an untrue statement of a material fact and did not and will not
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and the Prospectus, at the time the
Registration Statement became effective (unless the term "Prospectus" refers to
a prospectus which has been provided to the Underwriters by the Company for use
in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
became effective, in which case at the time it is first provided to the
Underwriters for such use) and at the Representation Date and at the Closing
Time referred to in Section 2, did not and will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements contained in or
omitted from the Registration Statement or the Prospectus in reliance upon, and
in conformity with, information furnished to the Company in writing by any
-4-
<PAGE> 5
Underwriter through Merrill Lynch expressly for use in the Registration
Statement or the Prospectus.
(ii) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement or the Prospectus, at
the time they were or hereafter are filed or last amended, as the case may be,
with the Commission, complied and will comply in all material respects with the
requirements of the 1934 Act, and the rules and regulations of Commission
thereunder (the "1934 Act Regulations"), and at the time of filing or as of the
time of any subsequent amendment, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading; and any additional documents
deemed to be incorporated by reference in the Registration Statement or the
Prospectus will, if and when such documents are filed with the Commission, or
when amended, as appropriate, comply in all material respects to the
requirements of the 1934 Act and the 1934 Act Regulations and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter through
Merrill Lynch expressly for use in the Registration Statement or the
Prospectus.
(iv) The accountants who certified the financial
statements and supporting schedules included or incorporated by reference in
the Registration Statement are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(v) The financial statements included or incorporated by
reference in the Registration Statement and the Prospectus, together with the
related schedules and notes, present fairly the financial position of the
Company and its consolidated subsidiaries as at the dates indicated and the
results of their operations for the periods specified. Except as otherwise
stated in the Registration Statement, said financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis. The supporting schedules included or incorporated by
reference in the Registration Statement present fairly the information required
to be stated therein. The ratio of earnings to fixed charges included in the
Prospectus has been calculated in compliance with Item 503(d) of Regulation S-K
of the Commission. The selected financial information and the summary
financial data included in the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement.
-5-
<PAGE> 6
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated therein, (A) there has been no material adverse change and no
development which could reasonably be expected to result in a material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries, considered
as one enterprise, whether or not arising in the ordinary course of business,
(B) there have been no transactions entered into by the Company or any of its
subsidiaries which are material with respect to the Company and its
subsidiaries, considered as one enterprise, other than those in the ordinary
course of business, (C) there has not been any material change in the long term
debt of the Company and (D) except for regular quarterly dividends on Common
Stock of the Company in amounts per share that are consistent with past
practice, there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Michigan, with corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as described
in the Prospectus; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one enterprise.
(viii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted and as described in the Prospectus, and is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise; all of the issued and outstanding
shares of capital stock of each subsidiary of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and all such
shares are owned by the Company, directly or through its subsidiaries, free and
clear of
-6-
<PAGE> 7
any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(ix) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus; since the date indicated in
the Prospectus there has been no change in the consolidated capitalization of
the Company and its subsidiaries (other than changes in outstanding Common
Stock resulting from employee benefit plan or dividend reinvestment and stock
purchase plan transactions); and all of the issued and outstanding capital
stock of the Company has been duly authorized and validly issued, is fully paid
and non-assessable and conforms to the descriptions thereof contained in the
Prospectus and the Registration Statement.
(x) The Securities have been duly authorized by the
Company for issuance and sale to the Underwriters and, when issued and
delivered by the Company pursuant to this Agreement against payment therefor as
provided herein, will be validly issued and fully paid and non-assessable and
conform to all statements relating to the Securities contained in the
Prospectus and the Registration Statement, and the issuance of the Securities
is not subject to preemptive or other similar rights.
(xi) The shares of Common Stock to be issued and sold by the
Company pursuant to the Purchase Contract Agreement (the "Shares") and the
preferred share purchase rights (the "Rights") to be issued with the Shares
have been duly and validly authorized and reserved for issuance; such Shares,
when issued and delivered in accordance with the provisions of the Purchase
Contract Agreement and the Pledge Agreement dated as of April 22, 1996 (the
"Pledge Agreement") among the Company, the Collateral Agent and the Purchase
Contract Agent, will be duly authorized, validly issued and fully paid and
non-assessable and will conform to the descriptions of the Common Stock and the
Rights contained in the Prospectus and the Registration Statement; and the
issuance of such Shares will not be subject to preemptive or other similar
rights.
(xii) Neither the Company nor any of its subsidiaries is
in violation of its charter or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
any other instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is subject, or in violation of
any applicable law, administrative regulation or administrative or court order
or decree, which violation or default would, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or
-7-
<PAGE> 8
business prospects of the Company and its subsidiaries, considered as one
enterprise.
(xiii) The entry into the Purchase Contracts underlying the
Securities by the Company, the offer of the Securities as contemplated herein
and in the Prospectus, the issue and sale of the Shares by the Company pursuant
to the Purchase Contracts; the execution, delivery and performance by the
Company of all of the provisions of this Agreement, the Pricing Agreement, the
Purchase Contracts, the Purchase Contract Agreement and the Pledge Agreement;
the consummation of the transactions herein and therein contemplated; and the
compliance by the Company with its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action of the Company and will
not conflict with or constitute a breach of, or a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Company or any of its subsidiaries is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject, nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any of its
subsidiaries, or any applicable law, administrative regulation or
administrative or court decree.
(xiv) No labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the knowledge of the Company, is imminent;
and the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal suppliers, manufacturers or contractors
which might be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise.
(xv) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company or
any of its subsidiaries which is required to be disclosed in the Registration
Statement or the Prospectus (other than as disclosed therein), or which might
result in any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise, or which might materially and
adversely affect the properties or assets thereof or which might materially and
adversely affect the consummation of this Agreement, the Pricing Agreement, the
Purchase Contracts, the Purchase Contract Agreement or the Pledge Agreement;
all pending legal or governmental proceedings to which the Company or any of
its subsidiaries is a party or of which any of their respective
-8-
<PAGE> 9
property or assets is the subject which are not described in the Registration
Statement or the Prospectus, including ordinary routine litigation incidental
to the business of the Company or any of its subsidiaries, are, considered in
the aggregate, not material; and there are no contracts or documents of the
Company or any of its subsidiaries which are required to be filed as exhibits
to the Registration Statement, or to be incorporated by reference therein, by
the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations, which have not been so filed or incorporated by reference.
(xvi) The Company and its subsidiaries have good and marketable
title to all material real and personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as are
described in the Registration Statement or the Prospectus or such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
its subsidiaries; and any material real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries; the pipeline, distribution
main and underground gas storage easements enjoyed by the Company are valid,
subsisting and enforceable easements with such exceptions as are not material
and do not materially interfere with the conduct of the business of the Company
and its subsidiaries; the Company and its subsidiaries possess all licenses,
franchises, permits, certificates, authorizations, approvals, consents and
orders of all governmental authorities or agencies which are necessary for the
ownership or lease of the material properties owned or leased by each of them
and for the operation of the business now operated by each of them with such
exceptions which, singly or in the aggregate, are not material and do not
materially interfere with the conduct of the business of the Company and its
subsidiaries, considered as one enterprise; all such licenses, franchises,
permits, certificates, orders, authorizations, approvals and consents are in
full force and effect and contain no unduly burdensome provisions that would
interfere with the conduct of the business of the Company and its subsidiaries,
considered as one enterprise and, except as otherwise set forth in the
Registration Statement or the Prospectus, there are no legal or governmental
proceedings pending or threatened that would result in a material modification,
suspension or revocation thereof.
(xvii) No authorization, approval, consent, order, registration
or qualification of or with any court or governmental authority or agency is
required for the entry into the Purchase Contracts underlying the Securities,
the issuance and sale of the Securities hereunder, the issuance and sale of the
Shares by the Company pursuant to such Purchase Contracts or
-9-
<PAGE> 10
the consummation by the Company of the transactions contemplated under this
Agreement, such Purchase Contracts, the Purchase Contract Agreement and the
Pledge Agreement, except such as have been obtained and made under the federal
securities laws and such as may be required under state or foreign securities
or Blue Sky laws.
(xviii) This Agreement has been, and, at the Representation Date,
the Pricing Agreement will have been, duly authorized, executed and delivered
by the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their respective terms.
(xix) The Purchase Contract Agreement and the Pledge Agreement
have been duly authorized, executed and delivered by the Company, and each
constitutes a legal, valid and binding obligation of the Company enforceable in
accordance with its terms.
(xx) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to require
the Company to file a registration statement under the 1933 Act with respect to
any securities of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities registered pursuant to
the Registration Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under the 1933 Act.
(xxi) None of the Company or any of its subsidiaries is an
"investment company" or under the "control" of an "investment company" as such
terms are defined under the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxii) The Company is presently exempt from the provisions of
the Public Utility Holding Company Act of 1935 (except Section 9 thereof) which
would otherwise require it to register thereunder.
(xxiii) The Company is in compliance with all provisions of
Section 1 of the Laws of Florida, Chapter 92-198, An Act Relating to Disclosure
of Doing Business with Cuba.
(xiv) The Company has not taken, directly or indirectly, any
action designed to, or that might be reasonably be expected to, cause or result
in manipulation of the price of the Securities or the Common Stock.
(xxv) No "forward looking statement" (as defined in Rule 175
under the 1933 Act) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable basis
or was disclosed other than in good faith.
-10-
<PAGE> 11
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
SECTION II. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
and each Underwriter, severally and not jointly, agree to enter into the
Purchase Contracts underlying the number of Initial Securities set forth in
Schedule A hereto opposite the name of such Underwriter, plus any additional
Purchase Contracts underlying the number of Initial Securities which such
Underwriter may become obligated to enter into pursuant to the provisions of
Section 10 hereof.
(1) If the Company has elected not to rely upon Rule 430A
of the 1933 Act Regulations, the initial public offering price per Security and
the purchase price per Security to be paid by the several Underwriters for the
Securities have each been determined and set forth in the Pricing Agreement,
dated the date hereof, and any necessary amendments to the Registration
Statement and the Prospectus will be filed before the Registration Statement
becomes effective.
(2) If the Company has elected to rely upon
Rule 430A of the 1933 Act Regulations, the purchase price per Security to be
paid by the several Underwriters shall be an amount equal to the initial public
offering price per Security, less an amount per Security to be determined by
agreement between the Underwriters and the Company. The initial public
offering price per Security shall be a fixed price to be determined by
agreement between the Underwriters and the Company. The initial public
offering price and the purchase price, when so determined, shall be set forth
in the Pricing Agreement. In the event that such prices have not been agreed
upon and the Pricing Agreement has not been executed and delivered by all
parties thereto by the close of business on the fourth business day following
the date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, unless otherwise agreed to by the
Company and the Underwriters.
(b) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants to the Underwriters, severally and not
jointly, the right to enter into at their election up to 765,000 additional
Purchase Contracts at the price per share set forth in the Pricing Agreement.
The option hereby granted will expire automatically at the close of business on
the 30th calendar day after (i) the later of the date the Registration Statement
and any Rule 462(b) Registration Statement becomes effective, if the Company
has elected not to
-11-
<PAGE> 12
rely upon Rule 430A under the 1933 Act Regulations, or (ii) the Representation
Date, if the Company has elected to rely upon Rule 430A under the 1933 Act
Regulations, and may be exercised in whole or in part from time to time only
for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Securities upon notice by the
Underwriters to the Company setting forth the aggregate number of additional
Purchase Contracts to be entered into and the time and date of delivery for the
related Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Underwriters but shall not be later than
seven full business days after the exercise of such option, nor in any event
before the Closing Time, as hereinafter defined, unless otherwise agreed upon
by the Underwriters and the Company. If the option is exercised as to all or
any portion of the Option Securities, each of the Underwriters, acting
severally and not jointly, will enter into that proportion of the total number
of additional Purchase Contracts as to which such election has been exercised
which the number of Initial Securities set forth in Schedule A opposite the
name of such Underwriter bears to the total number of Initial Securities
(subject in each case to such adjustments as the Underwriters in their
discretion shall make to eliminate any fractional Purchase Contracts).
(c) The Underwriters agree to purchase, at the direction of the
Company, the Treasury Notes underlying the Securities with respect to which the
Company and the Underwriters have entered into the Purchase Contracts. The
Treasury Notes will be pledged with the Collateral Agent to secure the holders'
obligations to purchase Common Stock under the Purchase Contracts. Such pledge
shall be effected by the transfer to the Collateral Agent by Federal Reserve
Bank-Wire of the Treasury Notes to be pledged at the Closing Time and
appropriate Date of Delivery, if any, in accordance with the Pledge Agreement.
(d) Delivery of certificates for the Initial Securities with
respect to which each Underwriter enters into Purchase Contracts hereunder
shall be made at the offices of the Representatives in New York for the account
of the Underwriters, against the delivery to the Collateral Agent of the
Treasury Notes relating to such Initial Securities by such Underwriters or on
their behalf. At such same time, the Company will pay to the Representatives,
Underwriters' commissions in the amount of $.69 per Security plus $1.001 per
Security, resulting in a net payment of $1.691 per Security (the
"Commissions"), in same-day funds at the offices of LeBoeuf, Lamb, Greene &
MacRae, L.L.P, 125 West 55th Street, New York, New York 10019 or at such other
place as shall be agreed upon by the Underwriters and the Company, at 10:00
a.m. (New York time) on the third business day after the date the Registration
Statement becomes effective (or, if the Company has elected to rely upon Rule
430A, the third full business day after execution of the Pricing Agreement (or,
if pricing of the Securities occurs after 4:30 p.m. Eastern time, on
-12-
<PAGE> 13
the fourth full business day thereafter)), or such other time not later than
ten business days after such date as shall be agreed upon by the Underwriters
and the Company (such time and date of payment and delivery being herein called
the "Closing Time"). In addition, if the Underwriters enter any or all of the
Purchase Contracts underlying the Option Securities, payment of the Commissions
and delivery of certificates for such Option Securities shall be made at the
offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P. set forth above, or at such
other place as shall be agreed upon by the Underwriters and the Company, on
each Date of Delivery as specified in the relevant notice from the Underwriters
to the Company. Certificates for the Initial Securities and the Option
Securities shall be in such denominations and registered in such names as the
Underwriters may request in writing at least two full business days before the
Closing Time or any Date of Delivery, as the case may be. The certificates for
the Initial Securities and the Option Securities, if any, will be made
available for examination and packaging by the Underwriters no later than 10:00
a.m. (New York City time) on the last business day prior to the Closing Time or
the Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company agrees with each
Underwriter as follows:
(a) Promptly following the execution of this Agreement, the
Company will cause the Prospectus, including as a part thereof a prospectus
supplement relating to the Securities to be filed with the Commission pursuant
to Rule 424 of the 1933 Act Regulations and the Company will promptly advise
the Underwriters when such filing has been made. Prior to the filing, the
Company will cooperate with the Underwriters in the preparation of such
prospectus supplement to assure that the Underwriters have no reasonable
objection to the form or content thereof when filed or mailed.
(b) The Company will comply with the requirements of Rule 430A of
the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations if and as
applicable, and will notify the Underwriters immediately, and confirm the
notice in writing, (i) of the effectiveness of any post-effective amendment to
the Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose and (iv) of the issuance by any
state securities commission or other regulatory authority of any order
suspending the qualification or the exemption from qualification of the
Securities or the Shares under state securities or Blue Sky laws or the
initiation or threatening of any proceeding for such purpose. The Company will
-13-
<PAGE> 14
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(c) The Company will give the Underwriters notice of its intention
to file or prepare any amendment to the Registration Statement (including any
post-effective amendment and any filing under Rule 462(b) of the 1933 Act
Regulations) any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus (including any revised prospectus or Term Sheet
and preliminary prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which differs
from the prospectus on file at the Commission at the time the Registration
Statement became effective, whether or not such revised prospectus or Term
Sheet and preliminary prospectus is required to be filed pursuant to Rule
424(b) of the 1933 Act Regulations), whether pursuant to the 1933 Act, the 1934
Act or otherwise; will furnish the Underwriters with copies of any such Rule
462(b) Registration Statement, Term Sheet, amendment, supplement or revision a
reasonable amount of time prior to such proposed filing or use, as the case may
be; and will not file any such Rule 462(b) Registration Statement, Term Sheet,
amendment, supplement or revision to which the Underwriters or counsel for the
Underwriters shall object.
(d) The Company will deliver to the Underwriters as many signed
copies of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein and documents incorporated or deemed to be incorporated by reference
therein) as the Underwriters may reasonably request and will also deliver to
the Underwriters, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits).
If applicable, the copies of the Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(e) The Company will deliver to each Underwriter, without charge,
as many copies of each preliminary prospectus as such Underwriter may
reasonably request, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, from time to time during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. If applicable, the Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically
-14-
<PAGE> 15
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(f) If any event shall occur as a result of which it is necessary,
in the opinion of counsel for the Underwriters, to amend or supplement the
Prospectus or to file under the 1934 Act any document incorporated by reference
in the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser, the
Company will forthwith amend or supplement the Prospectus or file such document
(in form and substance satisfactory to counsel for the Underwriters) so that,
as so amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading, and the
Company will furnish to the Underwriters a reasonable number of copies of such
amendment or supplement.
(g) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities and the Shares for offering and sale
under the applicable securities laws of such states and other jurisdictions of
the United States as the Underwriters may designate; provided, however, that
the Company shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. In each jurisdiction in which
the Securities have been so qualified, the Company will file such statements
and reports as may be required by the laws of such jurisdiction to continue
such qualification in effect for so long as may be required in connection with
distribution of the Securities and the Shares.
(h) The Company will make generally available to its
securityholders as soon as practicable, but not later than 45 days (or 90 days,
in the case of a period that is also the Company's fiscal year) after the close
of the period covered thereby, an earnings statement of the Company and its
subsidiaries (in form complying with the provisions of Rule 158 of the 1933 Act
Regulations) covering a twelve-month period beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(i) The Company will use the net proceeds received by it from the
sale of the Securities in the manner specified in the Prospectus under "Use of
Proceeds".
(j) If, at the time that the Registration Statement became (or in
the case of a post-effective amendment becomes) effective, any information
shall have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the
1933 Act Regulations, then immediately following the execution of the Pricing
Agreement, the
-15-
<PAGE> 16
Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A or Rule 434 and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or Term Sheet, or, if required by
such Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted.
(k) If the Company elects to rely upon Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 of the 1933 Act Regulations by the earlier of (i) 10:00 p.m. Eastern time
on the date of the Pricing Agreement and (ii) the time confirmations are sent
or given, as specified by Rule 462(b)(2).
(l) The Company, during the period when the Prospectus is required
to be delivered under the 1933 Act will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
(m) The Company will use its best efforts to effect the listing of
the Securities and the Shares on the New York Stock Exchange and to cause the
Securities to be registered under the 1934 Act.
(n) During a period of 120 days from the date of the Pricing
Agreement, the Company will not, without the prior written consent of Merrill
Lynch, directly or indirectly, sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, or enter into any agreement to sell, any
Securities, Purchase Contracts or Common Stock or any securities of the Company
similar to the Securities, Purchase Contracts or Common Stock or any security
convertible into or exchangeable or exercisable for Securities, Purchase
Contracts or Common Stock; provided, however, that such restriction shall not
affect the ability of the Company to take any such action (i) in connection
with any employee benefit, dividend reinvestment or stock purchase plan of the
Company or its subsidiaries, or (ii) in connection with the offering of the
Securities made in connection with the Prospectus.
(o) During a period of three years from the Closing Time, to make
generally available to the Underwriters copies of all reports and other
communications (financial or other) mailed to stockholders, and to deliver to
the Underwriters promptly after they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed;
and shall furnish such additional information concerning the business and
financial condition of the Company as the Underwriters may from time to time
reasonably request (such financial statements to be on a consolidated basis
-16-
<PAGE> 17
to the extent the accounts of the Company and its subsidiaries are consolidated
in reports furnished to its stockholders generally or to the Commission).
(p) The Company will reserve and keep available at all times, free
of preemptive or other similar rights and liens and adverse claims, sufficient
shares of Common Stock to satisfy any obligations to issue Shares upon
settlement of the Purchase Contracts.
(q) The Company will supply the Underwriters with copies of all
correspondence to and from, and all documents delivered to and by, the
Commission in connection with the registration of the Securities under the 1933
Act.
(r) The Company will not take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
manipulation of the price of the Securities or the Common Stock.
SECTION 4. Payment of Expenses. The Company agrees with the several
Underwriters to pay all expenses incident to the performance of its obligations
under this Agreement, the Pricing Agreement, the Purchase Contracts, the
Purchase Contract Agreement and the Pledge Agreement, including, without
limitation, expenses related to the following, if incurred: (i) the
preparation, delivery, printing and filing of the Registration Statement and
Prospectus as originally filed (including financial statements and exhibits)
and of each amendment thereto, (ii) the printing and delivery to the
Underwriters of this Agreement, the Pricing Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with
offering, purchase, sale and delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities and the Shares,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors or agents (including the Purchase Contract Agent, Collateral Agent,
transfer agents and registrars), (v) the qualification of the Securities and
the Shares under securities laws in accordance with the provisions of Section
3(g), including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation of
the Blue Sky Survey and any Legal Investment Survey, (vi) the printing and
delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, of each preliminary prospectus,
any Term Sheet and of the Prospectus and any amendments or supplements thereto,
(vii) the printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any Legal Investment Survey, (viii) any fees payable in connection
with the rating of the Securities by nationally recognized statistical rating
organizations; (ix) the filing fees incident to, and the fees and disbursements
of counsel to the Underwriters in connection with,
-17-
<PAGE> 18
the review, if any, by the National Association of Securities Dealers, Inc.
(the "NASD") of the terms of the sale of the Securities; (x) any fees payable
to the Commission; and (xi) the fees and expenses incurred in connection with
the listing of the Securities and the Shares on the New York Stock Exchange.
If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, shall have become effective not later than 5:30 p.m.,
New York City time, on the date hereof, and on the date hereof and at the
Closing Time and any Date of Delivery, no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, and any request on the part of the Commission for additional
information shall have been complied with to the satisfaction of counsel to the
Underwriters. A prospectus containing information relating to the description
of the Securities, the specific method of distribution and similar matters
shall have been filed with the Commission in accordance with Rule 424(b)(1),
(2), (3), (4) or (5), as applicable (or any required post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A), or, if the Company has elected
to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the
Rule 434 Information shall have been filed with the Commission in accordance
with Rule 424(b)(7).
(b) At the Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Time,
of Daniel L. Schiffer, Esq., Senior Vice President, General Counsel and
Secretary of the Company, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Michigan.
-18-
<PAGE> 19
(ii) The Company has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the
Prospectus.
(iii) The Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required.
(iv) The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Prospectus (except for subsequent issuances, if any, pursuant to
employee benefit plan or dividend reinvestment and stock purchase plan
transactions), and the shares of issued and outstanding capital stock
of the Company have been duly authorized and validly issued and are
fully paid and non-assessable.
(v) The Rights to be issued with the
Shares have been duly authorized and, upon issuance of such Shares,
will be validly issued and conform to the description thereof in the
Prospectus.
(vi) Each subsidiary of the Company has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Registration Statement and the Prospectus, and is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or be
in good standing would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its subsidiaries, considered
as one enterprise; all of the issued and outstanding capital stock of
each such subsidiary of the Company has been duly authorized and
validly issued, is fully paid and non-assessable and all such shares
are owned by the Company, directly or through its subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(vii) The Registration Statement,
including any Rule 462(b) Registration Statement, is effective under
the 1933 Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement
-19-
<PAGE> 20
has been issued under the 1933 Act or proceedings therefor initiated,
to the best of such counsel's knowledge, or threatened by the
Commission.
(viii) The Registration Statement,
including any Rule 462(b) Registration Statement, each of the
incorporated documents and the Prospectus, and each amendment or
supplement thereto (other than the financial statements and supporting
schedules and other financial or statistical data included or
incorporated by reference therein, or the exhibits to the Registration
Statement, including any Form T-1, as to which no opinion need be
rendered), as of their respective effective or issue dates, or when
amended, as appropriate, complied as to form in all material respects
with the requirements of the 1933 Act or the 1934 Act and the rules
and regulations of the Commission thereunder.
(ix) The documents incorporated by
reference in the Prospectus at the time they were filed with the
Commission or amended (other than the financial statements and related
schedules and other financial or statistical data included or
incorporated by reference therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act or the 1934 Act, as applicable, and
the rules and regulations of the Commission thereunder; and such
counsel has no reason to believe that any of such documents, when such
documents became effective or were so filed, as the case may be,
contained, in the case of the Registration Statement, an untrue
statement of a material fact, or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and, in the case of other documents which were
filed under the 1934 Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein not misleading.
(x) The Securities have been duly
authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to
this Agreement against payment of the consideration set forth in the
Pricing Agreement, will be validly issued and fully paid and
non-assessable; the Common Stock and the Securities are each
registered under the 1934 Act, and the Securities issuable at Closing
Time and the Shares issuable by the Company pursuant to the Purchase
Contracts have been authorized for listing on the New York Stock
Exchange, upon official notice of issuance.
(xi) The Shares subject to the Purchase
Contract Agreement have been duly and validly authorized and
-20-
<PAGE> 21
reserved for issuance and, when issued and delivered by the Company in
accordance with the provisions of the Purchase Contract Agreement and
the Pledge Agreement, will be fully paid and non-assessable; the
issuance of such Shares will not be subject to preemptive or other
similar rights arising by law or, to the best of such counsel's
knowledge, otherwise.
(xiii) The issuance of the Securities is
not subject to preemptive or other similar rights arising by law or,
to the best of such counsel's knowledge, otherwise.
(xiv) The Purchase Contract Agreement, the
Purchase Contracts underlying the Securities being delivered at the
Closing Time and at any Date of Delivery and the Pledge Agreement have
been duly authorized, executed and delivered by the Company.
(xv) The entry into the Purchase
Contracts underlying the Securities, the offer of the Securities by
the Company as contemplated herein and in the Prospectus, the issue
and sale of the Shares by the Company pursuant to the Purchase
Contracts; the execution, delivery and performance by the Company of
all of the provisions of this Agreement, the Pricing Agreement, the
Purchase Contracts, the Purchase Contract Agreement and the Pledge
Agreement; the consummation of the transactions contemplated herein
and therein; and the compliance by the Company with its obligations
hereunder and thereunder will not result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries, or any applicable law, administrative regulation or
administrative or court decree.
(xv) The Rights to be issued with the
Shares have been duly authorized and, upon issuance of such Shares,
will be validly issued and conform to the description thereof in the
Prospectus.
(xvi) This Agreement and the Pricing
Agreement have each been duly authorized, executed and delivered by
the Company.
(xvi) The certificate(s) used to evidence
the Securities are in a form contemplated by the Purchase Contract
Agreement and comply with all applicable statutory requirements and
with the requirements of the New York Stock Exchange.
(xviii) To the best of such counsel's
knowledge, there are no actions, suits or proceedings before or by any
court or governmental agency or body, domestic or foreign, pending or
threatened which are required to be disclosed in the Registration
Statement or the Prospectus, other than
-21-
<PAGE> 22
those disclosed therein, and all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party
or to which any of their property is subject which are not described
in the Registration Statement or the Prospectus, including ordinary
routine litigation incidental to the business, are, considered in the
aggregate, not material.
(xix) The information in the Prospectus
under the captions "MCN Corporation", "Use of Proceeds",
"Capitalization", "Description of the Securities", "Description of the
Purchase Contracts", "Description of Stock Purchase Contracts and
Stock Purchase Units" and "Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement", to the extent that they involve
matters of law, summaries of legal matters, documents or proceedings,
or legal conclusions, has been reviewed by such counsel and is correct
in all material respects.
(xx) To the best of such counsel's
knowledge and information, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to or incorporated by reference
in the Registration Statement or to be filed as exhibits thereto other
than those described or referred to or incorporated by reference
therein or filed as exhibits thereto; the descriptions thereof or
references thereto are true and correct, and no default exists in the
due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument so described, referred
to, filed or incorporated by reference.
(xxi) The entry into the Purchase
Contracts underlying the Securities, the offer of the Securities by
the Company as contemplated herein and in the Prospectus, the issue
and sale of the Shares by the Company pursuant to the Purchase
Contracts; the execution, delivery and performance by the Company of
all of the provisions of this Agreement, the Pricing Agreement, the
Purchase Contracts, the Purchase Contract Agreement and the Pledge
Agreement; the consummation of the transactions contemplated herein
and therein; and the compliance by the Company with its obligations
hereunder and thereunder have been duly authorized by all necessary
corporate action of the Company and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be
-22-
<PAGE> 23
bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company
or any of its subsidiaries, or any applicable law, administrative
regulation or administrative or court decree.
(xxii) The Company and its subsidiaries
possess all licenses, franchises, permits, certificates,
authorizations, approvals, consents and orders of all governmental
authorities or agencies necessary for the ownership or lease of the
material properties owned or leased by each of them and for the
operation of the business carried on by each of them as described in
the Registration Statement and Prospectus with such exceptions as are
not material and do not materially interfere with the conduct of the
business of the Company and its subsidiaries, considered as one
enterprise; all such licenses, franchises, permits, certificates,
authorizations, approvals, and consents are in full force and effect
and contain no unduly burdensome provisions that would interfere with
the conduct of the business of the Company and its subsidiaries,
considered as one enterprise and, except as otherwise set forth in the
Registration Statement or the Prospectus, there are no legal or
governmental proceedings pending or threatened that would result in a
material modification, suspension or revocation thereof.
(xxiv) None of the Company or any of its
subsidiaries is an "investment company" or under the "control" of an
"investment company" as such terms are defined in the 1940 Act.
(xxiv) The Company is presently exempt from
the provisions of the Public Utility Holding Company Act of 1935
(except Section 9 thereof) which would otherwise require it to
register thereunder.
(xxv) The Company is in compliance with
all provisions of Section 1 of the Laws of Florida, Chapter 92-198, An
Act Relating to Disclosure of Doing Business with Cuba.
Moreover, such counsel shall confirm that nothing has come to such
counsel's attention that would lead such counsel to believe that the
Registration Statement, including any information provided pursuant to
Rule 430A or Rule 434 (except for financial statements and related
schedules and other financial or statistical data included or
incorporated by reference therein, as to which counsel need express no
opinion), at the time it became effective or at the Representation
Date, contained an untrue statement of a material fact or omitted to
state a material fact required
-23-
<PAGE> 24
to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus (except for financial statements and
related schedules and other financial or statistical data included or
incorporated by reference therein, as to which counsel need express no
opinion), at the Representation Date (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters by
the Company for use in connection with the offering of the Securities
which differs from the Prospectus on file at the Commission at the
time the Registration Statement became effective, in which case at the
time it is first provided to the Underwriters for such use) or at
Closing Time, included (or includes) an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(2) The favorable opinion, dated as of Closing Time, of
Skadden, Arps, Slate, Meagher & Flom, special counsel to the Company, in form
and substance satisfactory to counsel for the Underwriters, to the effect that:
(i) The Registration Statement,
including any Rule 462(b) Registration Statement, is effective under
the 1933 Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or
proceedings therefor initiated, to the best of such counsel's
knowledge, or threatened by the Commission.
(ii) The Registration Statement,
including any Rule 462(b) Registration Statement and the Prospectus,
and each amendment or supplement thereto (other than the financial
statements and supporting schedules and other financial or statistical
data included or incorporated by reference therein, or the exhibits to
the Registration Statement, including any Form T-1, as to which no
opinion need be rendered), as of their respective effective or issue
dates, or when amended, as appropriate, complied as to form in all
material respects with the requirements of the 1933 Act and the rules
and regulations of the Commission thereunder.
(iii) The statements in the Prospectus
under the captions "Description of the Securities", "Description of
the Purchase Contracts", "Description of Stock Purchase Contracts and
Stock Purchase Units" and "Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement", to the extent that they involve
matters of law, summaries of legal matters, documents or proceedings,
or
-24-
<PAGE> 25
legal conclusions, has been reviewed by such counsel and is correct in
all material respects.
(iv) Assuming that the Purchase Contract
Agreement, the Purchase Contracts underlying the Securities being
delivered at the Closing Time and at any Date of Delivery and the
Pledge Agreement have been duly authorized, executed and delivered by
the Company under Michigan law, and subject to the enforceability of
the choice of law provisions thereof, each is a valid and legally
binding agreement of the Company (and together they create, to the
extent provided therein, a valid interest of the holders of the
Securities in the Treasury Notes) enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer or conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
and remedies generally and by general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in
equity); provided, however, that based on a review of applicable case
law, and subject to the assumptions and qualifications outlined in a
letter dated April 22, 1996, addressed to Moody's Investor Service
(which will be attached as an exhibit to such opinion), upon the
occurrence of a Termination Event, Section 365(e)(2) of the Bankruptcy
Code (11 U.S.C. Section Section 101-1330, as amended) should not
substantively limit the provisions of Sections 4.2 and 5.8 of the
Purchase Contract Agreement and Section 4(a) of the Pledge Agreement
that require termination of the Purchase Contracts and release of the
Collateral Agent's security interest in the Treasury Notes;
provided, however, that procedural restrictions respecting relief from
the automatic stay under Section 362 of the Code may affect the
timing of the exercise of such rights and remedies.
(v) Assuming that (1) the Pledge
Agreement has been duly authorized, executed and delivered by the
Purchase Contract Agent on behalf of each of the Holders, (2) the
Purchase Contract Agent is duly incorporated and validly existing
under the laws of the state of its incorporation, (3) the Purchase
Contract Agent and each of the Holders has full power, authority and
legal right (including, without limitation, any legal right dependent
upon there being no necessary governmental approvals or filings and no
conflict with laws, governing documents or contracts) to make and
perform its obligations under the Pledge Agreement, (4) the Pledge
Agreement is the legal, valid, binding and enforceable obligation of
the Purchase Contract Agent on behalf of each of the Holders, and (5)
the Purchase Contract Agent and each Holder has sufficient rights in
the Treasury Notes for the security interest of the Collateral Agent
for the benefit of the Company to attach, the "transfer" (within the
meaning of Section 8-313
-25-
<PAGE> 26
of the UCC) of the Treasury Notes to the Collateral Agent for the
benefit of the Company, together with the Pledge Agreement, will
create a valid and perfected security interest in such Treasury Notes
to secure the obligations of the Holders under the Purchase Contracts,
subject to customary qualifications reasonably acceptable to the
Underwriters. References to (x) the "UCC" shall mean the Uniform
Commercial Code as in effect on the date hereof in the State of New
York and (y) "Financial Intermediary" shall mean Chemical Bank acting
solely in its capacity as a "depositary" as defined in 31 C.F.R.
Section 306 or similar federal regulations governing the transfer of
U.S. Government book-entry securities. "Transfer" of the Treasury
Notes to the Collateral Agent for the benefit of the Company will
occur upon the latest of (1) the making by The Federal Reserve Bank of
New York of appropriate entries transferring such Treasury Notes on
its books and records to the book-entry account of the Financial
Intermediary at The Federal Reserve Bank of New York and (2) the
sending of a confirmation by the Financial Intermediary to the
Collateral Agent for the benefit of the Company of the purchase by the
Collateral Agent for the benefit of the Company of such Treasury Notes
and the identification by book-entry by the Financial Intermediary of
such Treasury Notes as belonging to the Collateral Agent for the
benefit of the Company.
(vi) The Shares and the Securities
conform in all material respects to the description thereof contained
in the Prospectus and the Registration Statement.
(vii) No authorization, approval, consent,
order, registration or qualification of or with any court or federal
or New York State governmental authority or agency is required for the
entry into the Purchase Contracts underlying the Securities, the
issuance and sale of the Securities hereunder or the issuance and sale
of the Shares by the Company pursuant to such Purchase Contracts or
the consummation by the Company of any transactions contemplated under
this Agreement, such Purchase Contracts, the Purchase Contract
Agreement and the Pledge Agreement, except such as have been obtained
and made under the federal securities laws or such as may be required
under state or foreign securities or Blue Sky laws.
(viii) The statements in the Prospectus
under the caption "Certain Federal Income Tax Consequences" have been
reviewed by such counsel and, insofar as they constitute legal
conclusions or matters of law, fairly summarize the matters referred
to therein.
Moreover, such counsel shall confirm that nothing has come to such
counsel's attention that would lead such counsel to believe that the
Registration Statement, including any
-26-
<PAGE> 27
information provided pursuant to Rule 430A or Rule 434 (except for
financial statements and related schedules and other financial or
statistical data included or incorporated by reference therein, as to
which counsel need express no opinion), at the time it became
effective or at the Representation Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus (except for financial statements and
related schedules and other financial or statistical data included or
incorporated by reference therein, as to which counsel need express no
opinion), at the Representation Date (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters by
the Company for use in connection with the offering of the Securities
which differs from the Prospectus on file at the Commission at the
time the Registration Statement became effective, in which case at the
time it is first provided to the Underwriters for such use) or at
Closing Time, included (or includes) an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(3) The favorable opinion, dated as of Closing Time, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters, with
respect to the validity of the Securities (including the Purchase Contracts and
the Shares to be issued pursuant to the Purchase Contract Agreement), the
Registration Statement, the Prospectus and other related matters as you may
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters. In
giving their opinion, LeBoeuf, Lamb, Greene & MacRae, L.L.P. may rely as to
matters of Michigan law upon the opinion of Daniel L. Schiffer, Esq., which
opinion shall be in form and substance satisfactory to counsel for the
Underwriters.
(c) At Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development which would reasonably be expected to result in any prospective
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, and the Underwriters shall have received a
certificate of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company, dated as of Closing
Time, to the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties in Section 1 are
-27-
<PAGE> 28
true and correct with the same force and effect as though expressly made at and
as of the Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior
to the Closing Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the Commission.
(d) At the time of the execution of this Agreement, the
Representatives shall have received from Deloitte & Touche LLP a letter dated
such date in form and substance satisfactory to the Representatives, to the
effect set forth below and as to such other matters as the Representatives may
reasonably request, that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries within the meaning of
the 1933 Act and the 1933 Act Regulations;
(ii) In their opinion, the consolidated financial
statements and any supplementary financial information and schedules
audited (and, if applicable, prospective financial statements and/or
pro forma financial information examined) by them and included or
incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1934 Act
and the related published rules and regulations thereunder; and if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the consolidated interim financial statements, selected financial
data, pro forma financial information, prospective financial
statements, consolidating financial statements and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in
their reports thereon, copies of which have been furnished to the
Representatives;
(iii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years included
in the Prospectus and included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted
-28-
<PAGE> 29
auditing standards, including a reading of the unaudited consolidated
financial statements and other information referred to below, a
reading of the latest available unaudited interim consolidated
financial statements of the Company and its subsidiaries, inspection
of the minute books of the Company and its subsidiaries since the
audited consolidated financial statements set forth in the Company's
Annual Report on Form 10-K for the most recent year, inquiries of
officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) The unaudited consolidated financial
statements set forth in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Registration
Statement and the Prospectus as amended or supplemented do not
comply as to form in all material respects with the applicable
accounting requirements of the 1934 Act as they apply to Form
10-Q and the 1934 Act Regulations or are not in conformity
with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited
consolidated financial statements set forth in the Company's
Annual Report on Form 10-K for the most recent year ended
incorporated by reference in the Registration Statement and
the Prospectus as amended or supplemented;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in
the Registration Statement and the Prospectus as amended or
supplemented;
(C) any unaudited pro forma consolidated condensed
financial statements or any unaudited pro forma consolidating
financial statements included or incorporated by reference in
the Prospectus as amended or supplemented do not comply as to
form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations or
the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements;
-29-
<PAGE> 30
(D) As of a specified date not more than five
days prior to the date of delivery of such letter, there has
been any decrease or increase in the common stock (except for
any increases in connection with any employee benefit,
dividend reinvestment or stock purchase plan of the Company)
or any increase or decrease in redeemable cumulative preferred
securities or long-term debt including capital lease
obligations (except for sinking fund and installment
requirements under their long-term debt agreement, terms of
the preferred securities of MCN Michigan Limited Partnership
and purchases in the open market in anticipation thereof) or
any increase in short-term debt, or any decrease in
consolidated common shareholders' equity (other than quarterly
dividends declared to shareholders) of the Company and its
consolidated subsidiaries, in each case as compared with the
corresponding amounts shown in the latest consolidated
statement of financial position incorporated by reference in
the Registration Statement and the Prospectus as amended or
supplemented, except in each case for increases or decreases
which the Prospectus as amended or supplemented, including
financial information incorporated by reference, discloses
have occurred or may occur or which are described in such
letter; and
(E) for the period from the date of the latest
consolidated financial statements included or incorporated by
reference in the Prospectus as amended or supplemented to the
end of the latest period for which consolidated financial
statements are available there were any decreases in
consolidated operating revenues, operating income, net income
or earnings available for Common Stock of the Company and its
consolidated subsidiaries, or any increases in any items
specified by the Representatives, in each case as compared
with the corresponding period in the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus as amended or supplemented,
including financial information incorporated by reference,
discloses have occurred or may occur or which are described in
such letter.
(F) The unaudited consolidated financial
statements referred to in Clause (E) are not stated on a basis
substantially consistent with the audited consolidated
financial statements incorporated by reference in the
Registration Statement and the Prospectus as amended or
supplemented.
-30-
<PAGE> 31
(v) In addition to the limited procedures, inspection of
minute books, inquiries and other procedures referred to in clause
(iii) and (iv) above, they have carried out certain other specified
procedures, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus as amended or supplemented and the
Registration Statement, in the Company's Annual Report on Form 10-K
for the latest year ended and in the Company's Quarterly Reports on
Form 10-Q since the latest Annual Report on Form 10-K and which are
specified by the Representatives, and have compared certain of such
amounts, percentages and financial information with the accounting
records of the Company and its subsidiaries and have found them to be
in agreement.
(e) At the Closing Time, the Representatives shall have received
from Deloitte & Touche LLP a letter, dated as of the Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (d) of this Section, except that the specified date referred to
shall be a date not more than five days prior to the Closing Time.
(f) At Closing Time, and at each Date of Delivery, if any, counsel
for the Underwriters shall have been furnished with such documents and opinions
as they may require for the purpose of enabling them to pass upon the issuance
and sale of the Securities as herein contemplated and related proceedings, or
in order to evidence the accuracy of any of the representations or warranties,
or the fulfillment of any of the conditions herein contained; and all
proceedings taken by the Company in connection with the issuance and sale of
the Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded to any of the Company's securities by any
"nationally recognized statistical rating organization," as that term is
defined by the Commission for purpose of Rule 436(g)(2) under the 1933 Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its ratings of any
of the Company's securities.
(h) At Closing Time, the Securities and the Shares shall have been
approved for listing on the New York Stock Exchange upon notice of issuance.
(i) The NASD shall not have raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.
-31-
<PAGE> 32
(j) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to enter into all or any portion of the
Purchase Contracts underlying the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company hereunder shall be true and correct as
of, and as if made on, each Date of Delivery, and at the relevant Date of
Delivery, the Underwriters shall have received:
(i) A certificate, dated such Date of Delivery, of the
President or a Vice President of the Company and the chief financial
or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(c)
hereof is true and correct as of, and as if made on, such Date of
Delivery.
(2) The favorable opinion of Daniel L. Schiffer, Esq.,
Senior Vice President, General Counsel and Secretary for the Company,
in form and substance satisfactory to counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Securities and
otherwise to the same effect as the opinion required by Section
5(b)(1) hereof.
(3) The favorable opinion of Skadden, Arps, Slate,
Meagher & Flom, special counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities and otherwise to the same
effect as the opinion required by Section 5(b)(2) hereof.
(4) The favorable opinion of LeBoeuf, Lamb, Greene &
MacRae, L.L.P., counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities and otherwise to the same
effect as the opinion required by Section 5(b)(3) hereof.
(5) A letter from Deloitte & Touche LLP in form and
substance satisfactory to the Underwriters and dated such Date of
Delivery, substantially the same in form and substance as the letter
furnished to the Underwriters pursuant to Section 5(d) hereof, except
that the "specified date" in the letter furnished pursuant to this
Section 5(i)(e) shall be a date not more than five days prior to such
Date of Delivery.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice to the Company at any time at or prior
to Closing Time, and such termination shall be without liability of any party
to any other party except as provided in Section 4.
-32-
<PAGE> 33
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the
information deemed to be part of the Registration Statement pursuant
to Rule 430(A) of the 1933 Act Regulations, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by Merrill Lynch), reasonably incurred
in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that the foregoing indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or
-33-
<PAGE> 34
supplement thereto). The foregoing indemnity with respect to any untrue
statement contained in or omission from a preliminary prospectus shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, liability, claim,
damage or expense purchased any of the Securities that are the subject thereof
if such person was not sent or given a copy of the Prospectus (or the
Prospectus as amended or supplemented) (in each case exclusive of the documents
from which information is incorporated by reference) at or prior to the written
confirmation of the sale of such Securities to such person and the untrue
statement contained in or omission from such preliminary prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented).
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agree-
-34-
<PAGE> 35
ment incurred by the Company and one or more of the Underwriters, as incurred,
in such proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting compensation paid by the
Company appearing on the cover page of the Prospectus bears to the initial
public offering price appearing thereon and the Company is responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as such Underwriter, and each
director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers
of the Company submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Company at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
or any development which could reasonably be expected to result in a
prospective material adverse change in the business or the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or any
outbreak of hostilities or escalation of hostilities or other calamity or
crisis, or any change or development involving a prospective change in national
or international political, financial or economic conditions the effect of
which is such as to make it, in the judgment of the Underwriters, impracticable
to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in the Common Stock or any other security of
the Company has been suspended or limited by the Commission, NASD or the New
York Stock Exchange, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange has been
-35-
<PAGE> 36
suspended or limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices for securities have been required, by either of
said Exchanges or by order of the Commission or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal,
New York or Michigan authorities.
(b) If this Agreement and the Pricing Agreement are terminated
pursuant to this Section, such termination shall be without liability of any
party to any other party except as provided in Section 4, and provided,
further, that Sections 1, 6 and 7 shall survive such termination and remain in
full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to enter into the Purchase
Contracts underlying the Initial Securities which it or they are obligated to
enter into under this Agreement and the Pricing Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to enter into all, but not less than
all, of the Purchase Contracts underlying such Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the total number of Initial Securities, the non-defaulting Underwriters
shall be obligated to enter into Purchase Contracts underlying the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of
the Initial Securities, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been
-36-
<PAGE> 37
duly given if mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed to c/o Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated at Merrill Lynch World
Headquarters, World Financial Center, North Tower, New York, New York 10281,
Attention of Anthony V. Leness, Managing Director, with a copy to LeBoeuf,
Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York
10019-5389, Attention: William S. Lamb, Esq.; notices to the Company shall be
directed to it at MCN Corporation, 500 Griswold Street, Detroit, Michigan
48226, Attention of Daniel L. Schiffer, Senior Vice President, General Counsel
and Secretary.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters and the
Company and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the Underwriters and the Company and their respective
successors and legal representatives, and said controlling persons and officers
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time unless otherwise
indicated.
-37-
<PAGE> 38
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Underwriters and the Company in accordance with its terms.
Very truly yours,
MCN CORPORATION
By: /s/ Sebastian Coppola
-----------------------------------
Name: Sebastian Coppola
Title: Vice President and Treasurer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
RONEY & CO.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Anthony V. Leness
----------------------------------------
Authorized Signatory: Anthony V. Leness
Managing Director
For themselves and as the Representatives of the
several Underwriters named in Schedule A hereto.
-38-
<PAGE> 39
<TABLE>
<CAPTION>
SCHEDULE A
Name of Underwriter Number of Shares
------------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860,000
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860,000
Donaldson, Lufkin & Jenrette
Securities Corporation . . . . . . . . . . . . . . . . . . . . . . 860,000
Dean Witter Reynolds Inc. . . . . . . . . . . . . . . . . . . . . . . . . 860,000
Roney & Co., LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . . . . 200,000
A.G. Edwards & Sons, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Robert W. Baird & Co. Incorporated . . . . . . . . . . . . . . . . . . . 100,000
First of Michigan Corporation . . . . . . . . . . . . . . . . . . . . . . 100,000
Edward D. Jones & Co., L.P. . . . . . . . . . . . . . . . . . . . . . . . 100,000
Ladenburg, Thalman & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . 100,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . 5,100,000
=========
</TABLE>
<PAGE> 40
EXHIBIT A
MCN CORPORATION
(A MICHIGAN CORPORATION)
PREFERRED REDEEMABLE INCREASED DIVIDEND EQUITY
SECURITIES (SM), 8 3/4% PRIDES (SM)
(STATED AMOUNT $23.00 PER SECURITY)
PRICING AGREEMENT
April 22, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
RONEY & CO.
As the Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Dear Sirs:
Reference is made to the Purchase Agreement, dated April 22,
1996 (the "Purchase Agreement"), relating to the Purchase Contracts (referred
to in the Purchase Contract Agreement) between MCN Corporation (the "Company")
and the several underwriters named in Schedule A thereto underlying an
aggregate of 5,100,000 Preferred Redeemable Increased Dividend Equity
Securities (SM), 8 3/4% PRIDES (SM) (the "Securities").
Pursuant to Section 2 of the Purchase Agreement, the Company
agrees with each Underwriter as follows:
1. The initial public offering price per security for
the Securities, determined as provided in said Section 2, shall be
$23.00.
2. The purchase price of the Treasury Notes underlying
each Security shall be $24.001.
3. The Company shall pay to the Underwriters commissions
in the amount of $.69 per Security plus $1.001 per Security, resulting
in a net payment of $1.691 per Security as provided in said Section 2.
<PAGE> 41
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Underwriters and the Company in accordance with its terms.
Very truly yours,
MCN CORPORATION
By:________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
RONEY & CO.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _____________________________________
Authorized Signatory:
For themselves and as the Representatives of the
several Underwriters named in the Purchase Agreement.
- 2 -
<PAGE> 1
EXHIBIT 4-9
------------------------------------------------------
------------------------------------------------------
MCN CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS PURCHASE CONTRACT AGENT
---------------------
PURCHASE CONTRACT AGREEMENT
---------------------
DATED AS OF APRIL 22, 1996
-----------------------------------------------------
-----------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions and Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Applicable Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Current Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Deferred Yield Enhancement Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Early Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Early Settlement Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Early Settlement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Early Settlement Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Excess Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expiration Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Final Settlement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Final Settlement Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issuer Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Issuer Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
<S> <C>
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Outstanding Security Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Predecessor Security Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchase Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchased Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reorganization Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Security Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Settlement Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Stated Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Termination Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Threshold Appreciation Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Yield Enhancement Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.2. Compliance Certificates and
Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.3. Form of Documents Delivered to
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1.4. Acts of Holders; Record Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1.5. Notices, etc., to Agent and the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.6. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.7. Effect of Headings and Table
of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1.8. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1.9. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1.10. Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1.11. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 1.14. Inspection of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE II
Security Certificate Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.1. Forms of Security Certificates Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.2. Form of Agent's Certificate of Authentication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III
The Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.1. Title and Terms; Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.2. Rights and Obligations Evidenced by the Security Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.3. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.4. Temporary Security Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.5. Registration; Registration of Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.6. Mutilated, Destroyed, Lost and Stolen Security Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.7. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 3.8. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.9. Securities Not Separable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.10 No Consent to Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
The Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.1. Payment of Interest; Interest Rights Preserved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.2. Transfer of Treasury Notes Upon Occurrence of Termination Event. . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
The Purchase Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.1. Purchase of Shares of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.2. Yield Enhancement Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.3. Deferral of Payment Dates For Yield Enhancement Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.4. Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.5. Issuance of Shares of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.6. Adjustment of Settlement Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.7. Notice of Adjustments and Certain Other Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.8. Termination Event; Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.9. Early Settlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.10. No Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.11. Charges and Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
ARTICLE VI
<S> <C>
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.1. Unconditional Right of Holders to Receive Yield Enhancement Payment. . . . . . . . . . . . . . . . . . . . . . 48
Section 6.2. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.3. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.4. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.5. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.6. Waiver of Stay or Extension Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII
The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.1. Certain Duties and Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.2. Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.3. Certain Rights of Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.4. Not Responsible for Recitals or Issuance of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.5. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.6. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.7. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.8. Corporate Agent Required; Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 7.9. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 7.10. Acceptance of Appointment by Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 7.11. Merger, Conversion, Consolidation or Succession to Business. . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.12. Preservation of Information; Communications to Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.13. No Obligations of Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.14. Tax Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VIII
Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.1. Supplemental Agreements Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.2. Supplemental Agreements with Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.3. Execution of Supplemental Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.4. Effect of Supplemental Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.5. Reference to Supplemental Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE IX
Consolidation, Merger, Sale or Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions. . . . . . . . . . 62
Section 9.2. Rights and Duties of Successor
Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 9.3. Opinion of Counsel to Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
PAGE
ARTICLE X
<S> <C>
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.1. Performance Under Purchase Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.2. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.3. Company to Reserve Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.4. Covenants as to Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 10.5. Statements of Officers of the Company as to Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
EXHIBIT A Form of Security Certificate
</TABLE>
vii
<PAGE> 9
PURCHASE CONTRACT AGREEMENT, dated as of April 22, 1996, between MCN
Corporation, a Michigan corporation (the "Company"), and The First National
Bank of Chicago, a national banking association, acting as purchase contract
agent for the Holders of Securities from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Security Certificates evidencing the Securities.
All things necessary to make the Company's obligations under the
Securities, when the Security Certificates are executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Agent, as
in this Agreement provided, the valid obligations of the Company, and to
constitute these presents a valid agreement of the Company, in accordance with
its terms, have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
Definitions and Other Provisions
of General Application
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular; and
1
<PAGE> 10
(2) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Act" when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean the
Person who is then the Agent hereunder.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 5.1.
"Bankruptcy Code" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"Board of Directors" means the board of directors of the Company or a duly
authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors
2
<PAGE> 11
and to be in full force and effect on the date of such certification and
delivered to the Agent.
"Business Day" means any day that is not a Saturday, Sunday or a day on
which the NYSE or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to be closed.
"Closing Price" has the meaning specified in Section 5.1.
"Collateral Agent" means Chemical Bank, as Collateral Agent under the
Pledge Agreement until a successor Collateral Agent shall have become such
pursuant to the applicable provisions of the Pledge Agreement, and thereafter
"Collateral Agent" shall mean the Person who is then the Collateral Agent
thereunder.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor shall have become such pursuant to the
applicable provision of this Agreement, and thereafter "Company" shall mean
such successor.
"Corporate Trust Office" means the principal corporate trust office of the
Agent at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust
Services Division, except that for purposes of Section 10.2, such term shall
mean the office or agency of the Agent in the Borough of Manhattan, the City of
New York, which office at the date hereof is located at 14 Wall Street, Eighth
Floor, New York, New York 10005.
"Current Market Price" has the meaning specified in Section 5.6(a)(8).
"Deferred Yield Enhancement Payments" has the meaning specified in Section
5.3.
"Depositary" means a clearing agency registered under the Exchange Act
that is designated to act as
3
<PAGE> 12
Depositary for the Securities as contemplated by Section 3.5.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"Excess Treasury Notes" has the meaning specified in Section 4.2.
"Expiration Date" has the meaning specified in Section 1.4.
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Final Settlement Date" means April 30, 1999.
"Final Settlement Fund" has the meaning specified in Section 5.5.
"Global Security Certificate" means a Security Certificate that evidences
all or part of the Securities and is registered in the name of a Depositary or
a nominee thereof.
"Holder," when used with respect to a Security Certificate (or a
Security), means a Person in whose name the Security evidenced by such Security
Certificate (or the Security Certificate evidencing such Security) is
registered in the Security Register, subject to Section 3.7.
4
<PAGE> 13
"Issuer Order" or "Issuer Request" means a written order or request signed
in the name of the Company by its Chairman of the Board, any Vice Chairman, its
President or a Vice President and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Agent.
"NYSE" has the meaning specified in Section 5.1.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, any Vice Chairman of the Board, the President or any Vice President and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by legal counsel,
who may be an employee of or counsel to the Company and who shall be reasonably
acceptable to the Agent.
"Outstanding Securities" means, as of the date of determination, all
Securities evidenced by then Outstanding Security Certificates, except:
(i) If a Termination Event has occurred, Securities for which the
underlying Treasury Notes have been theretofore deposited with the Agent
in trust for the Holders of such Securities; and
(ii) On and after the applicable Early Settlement Date, Securities as
to which the Holder has elected to effect Early Termination of the related
Purchase Contracts;
provided, however, that in determining whether the Holders of the requisite
number of Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
Affiliate of the Company shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Agent shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Agent knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the
5
<PAGE> 14
satisfaction of the Agent the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any Affiliate of the
Company.
"Outstanding Security Certificates" means, as of the date of
determination, all Security Certificates theretofore authenticated, executed
and delivered under this Agreement, except:
(i) Security Certificates theretofore cancelled by the Agent or
delivered to the Agent for cancellation; and
(ii) Security Certificates in exchange for or in lieu of which other
Security Certificates have been authenticated, executed on behalf of the
Holder and delivered pursuant to this Agreement, other than any such
Security Certificate in respect of which there shall have been presented
to the Agent proof satisfactory to it that such Security Certificate is
held by a bona fide purchaser in whose hands the Securities evidenced by
such Security Certificate are valid obligations of the Company.
"Payment Date" means each April 30 and October 31, commencing October 31,
1996.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Permitted Investments" is defined to mean securities that are (i) direct
obligations of the U.S. for the payment of which its full faith and credit is
pledged, (ii) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the U.S., the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the U.S. or
(iii) mutual funds that invest solely in the above U.S. government obligations.
"Pledge" means the pledge under the Pledge Agreement of the Treasury Notes
constituting a part of the Securities.
6
<PAGE> 15
"Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, among the Company, the Collateral Agent and the Agent, on its own
behalf and as attorney-in-fact for the Holders from time to time of the
Securities.
"Predecessor Security Certificate" of any particular Security Certificate
means every previous Security Certificate evidencing all or a portion of the
rights and obligations of the Holder under the Securities evidenced thereby;
and, for the purposes of this definition, any Security Certificate
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security Certificate shall be deemed to
evidence the same rights and obligations of the Holder as the mutilated,
destroyed, lost or stolen Security Certificate.
"Purchase Contract," when used with respect to any Security, means the
contract obligating the Company to sell and the Holder of such Security to
purchase Common Stock on the terms and subject to the conditions set forth in
Article Five hereof.
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
"Record Date" for the interest and Yield Enhancement Payments payable on
any Payment Date means, as to any Global Security Certificate, the Business Day
next preceding such Payment Date, and as to any other Security Certificate, the
15th day of the month preceding such Payment Date.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Responsible Officer," when used with respect to the Agent, means any
officer of the Agent assigned by the Agent to administer its corporate trust
matters.
"Security" means the collective rights and obligations of a Holder of a
Security Certificate in respect of Treasury Notes with a principal amount equal
to the Stated Amount, subject to the Pledge thereof, and a Purchase Contract.
7
<PAGE> 16
"Security Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Securities specified on
such certificate.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5.
"Settlement Rate" has the meaning specified in Section 5.1.
"Stated Amount" means $23.00.
"Termination Date" means the date, if any, on which a Termination Event
occurs.
"Termination Event" means the occurrence of any of the following events:
(i) at any time on or prior to the Final Settlement Date, a judgment, decree or
order by a court having jurisdiction in the premises shall have been entered
granting relief under the Bankruptcy Code, adjudicating the Company to be
insolvent, or approving as properly filed a petition seeking reorganization or
liquidation of the Company under the Bankruptcy Code or any other similar
applicable Federal or State law, and, unless such judgment, decree or order
shall have been entered within 60 days prior to the Final Settlement Date, such
decree or order shall have continued undischarged and unstayed for a period of
60 days; or (ii) a judgment, decree or order of a court having jurisdiction in
the premises for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Company or of its property, or for
the winding up or liquidation of its affairs, shall have been entered, and,
unless such judgment, decree or order shall have been entered within 60 days
prior to the Final Settlement Date, such judgment, decree or order shall have
continued undischarged and unstayed for a period of 60 days, or (iii) at any
time on or prior to the Final Settle- ment Date the Company shall file a
petition for relief under the Bankruptcy Code, or shall consent to the filing
of a bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization or liquidation under the United States
Bankruptcy Code or any other similar applicable Federal or State law, or shall
consent to the filing of any such petition, or shall consent to the appointment
of a receiver or liquidator or trustee or assignee in bankruptcy or insol-
8
<PAGE> 17
vency of it or of its property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally
as they become due.
"Threshold Appreciation Price" has the meaning specified in Section 5.1.
"TIA" means the Trust Indenture Act of 1939, as amended, or any successor
statute.
"Trading Day" has the meaning specified in Section 5.1.
"Treasury Notes" means 6 1/2% United States Treasury Notes due April 30,
1999.
"Underwriting Agreement" means the Purchase Agreement dated April 22, 1996
between the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Smith Barney Inc., Donaldson, Lufkin & Jenrette Securities Corporation, Dean
Witter Reynolds Inc. and Roney & Co., as representatives of the several
Underwriters named therein.
"Vice President" means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
"Yield Enhancement Payment" means the fee payable by the Company on each
Payment Date in respect of each Purchase Contract, equal to 2 1/4% per annum of
the Stated Amount, computed on the basis of the actual number of days elapsed
in a year of 365 or 366 days, as the case may be, plus any Deferred Yield
Enhancement Payments accrued pursuant to Section 5.3, except that the Yield
Enhancement Payment payable on the first Payment Date will be adjusted so that
the Yield Enhancement Payment payable on such date will be the equivalent of 2
1/4% of the Stated Amount per annum accruing from the date of issuance of the
Securities to October 31, 1996.
Section 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of
9
<PAGE> 18
this Agreement, the Company shall furnish to the Agent an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more
10
<PAGE> 19
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Agent and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 7.1) conclusive in favor of the Agent and the
Company, if made in the manner provided in this Section.
11
<PAGE> 20
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Agent deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security Certificate
evidencing such Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Agent or the Company in reliance thereon, whether or
not notation of such action is made upon such Security Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Agreement to be given, made or taken
by Holders of Securities. If any record date is set pursuant to this paragraph,
the Holders of Outstanding Securities on such record date, and no other
Holders, shall be entitled to take the relevant action, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite number of Outstanding Securities on
such record date. Nothing in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
12
<PAGE> 21
previously set shall automatically and with no action by any Person be
cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite number of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Agent in writing and to each
Holder of Securities in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the Company
may designate any date as the "Expiration Date" and from time to time may
change the Expiration Date to any earlier or later day; provided that no such
change shall be effective unless notice of the proposed new Expiration Date is
given to the Agent in writing, and to each Holder of Securities in the manner
set forth in Section 1.6, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section, the Company shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
paragraph. Notwithstanding the foregoing, no Expiration Date shall be later
than the 180th day after the applicable record date.
Section 1.5. Notices, etc., to Agent and the Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Agreement to be
made upon, given or furnished to, or filed with,
(1) the Agent by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing and personally delivered
or mailed, first-class postage prepaid, to the Agent at One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate
Trust Services Division, or at any other address previously furnished in
writing by the Agent to the Holders and the Company, or
13
<PAGE> 22
(2) the Company by the Agent or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, to the Company at 500 Griswold
Street, Detroit, Michigan 48226, Attention: Treasurer, or at any other
address previously furnished in writing to the Agent by the Company.
Section 1.6. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Agent, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
14
<PAGE> 23
Section 1.8. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefits or any legal or equitable right, remedy
or claim under this Agreement. The Holders from time to time shall be
beneficiaries of this Agreement and shall be bound by all of the terms and
conditions hereof and of the Securities evidenced by their Security
Certificates by their acceptance of delivery thereof.
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
Section 1.12. Legal Holidays.
In any case where any Payment Date, any Early Settlement Date or the Final
Settlement Date shall not be a Business Day, then (notwithstanding any other
provision of this Agreement or of the Securities) payment in respect of
interest on Treasury Notes or Yield Enhancement Payments shall not be made,
Purchase Contracts shall not be performed and Early Settlement shall not be
effected on such date, but such payments shall be made, or the Purchase
Contracts shall be performed or Early Settlement effected, as applicable, on
the next succeeding Business Day with the same force and effect as if made on
such Payment Date, Early Settlement Date or Final Settlement Date, as the case
may be; provided, that no interest
15
<PAGE> 24
shall accrue or be payable by the Company or any Holder for the period from and
after any such Payment Date, Early Settlement Date or Final Settlement Date, as
the case may be.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which, when so executed, shall be deemed an original, but all such counterparts
shall together constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times at the
Corporate Trust Office for inspection by any Holder.
ARTICLE II
Security Certificate Forms
Section 2.1. Forms of Security Certificates Generally.
The Security Certificates (including the form of Purchase Contracts
forming part of the Securities evidenced thereby) shall be in substantially the
form set forth in Exhibit A hereto, with such letters, numbers or other marks
of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Securities are listed or Depositary therefor,
or as may, consistently herewith, be determined by the officers of the Company
executing such Security Certificates, as evidenced by their execution of the
Security Certificates.
The definitive Security Certificates shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing the Security
Certificates, consistent with the provisions of this Agreement, as evidenced by
their execution thereof.
16
<PAGE> 25
Every Global Security Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:
THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY
CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS SECURITY CERTIFICATE IN
WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN
SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Securities
shall be in substantially the form set forth on the form of the Security
Certificates.
ARTICLE III
The Securities
Section 3.1. Title and Terms; Denominations.
The aggregate number of Securities evidenced by Security Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to 5,100,000 (subject to increase up to a maximum of 765,000 to the
extent the over-allotment option of the underwriters under the Underwriting
Agreement is exercised), except for Security Certificates authenticated,
executed and delivered upon registration of transfer of, in exchange for, or in
lieu of, other Security Certificates pursuant to Section 3.4, 3.5, 3.6, 5.9 or
8.5.
The Security Certificates shall be issuable only in registered form and
only in denominations of a single Security and any integral multiple thereof.
17
<PAGE> 26
Section 3.2. Rights and Obligations Evidenced by the Security Certificates.
Each Security Certificate shall evidence the number of Securities
specified therein, with each such Security representing the ownership by the
Holder thereof of Treasury Notes with a principal amount equal to the Stated
Amount, subject to the Pledge of such Treasury Notes by such Holder pursuant to
the Pledge Agreement, and the rights and obligations of the Holder under one
Purchase Contract. The Agent as attorney-in-fact for, and on behalf of, the
Holder shall pledge, pursuant to the Pledge Agreement, dated as of the date
hereof, the Treasury Notes to the Collateral Agent and grant to the Collateral
Agent a security interest in the right, title, and interest of such Holders in
the Treasury Notes, for the benefit of the Company, to secure the obligation of
the Holders under the Purchase Contracts to purchase the Common Stock of the
Company. Prior to the purchase, if any, of shares of Common Stock under the
Purchase Contracts, the Securities shall not entitle the Holders to any of the
rights of a holder of shares of Common Stock, including, without limitation,
the right to vote or receive any dividends or other payments or to consent or
to receive notice as stockholders in respect of the meetings of stockholders or
for the election of directors of the Company or for any other matter, or any
other rights whatsoever as stockholders of the Company, except to the extent
otherwise expressly provided in this Agreement.
Section 3.3. Execution, Authentication, Delivery and Dating.
Upon the execution and delivery of this Agreement, and at any time and
from time to time thereafter, the Company may deliver Security Certificates
executed by the Company to the Agent for authentication, execution on behalf of
the Holders and delivery, together with its Issuer Order for authentication of
such Security Certificates, and the Agent in accordance with such Issuer Order
shall authenticate, execute on behalf of the Holder and deliver such Security
Certificates.
The Security Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or one
of its
18
<PAGE> 27
Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Security Certificates may be manual or facsimile.
Security Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such Security
Certificates or did not hold such offices at the date of such Security
Certificates.
No Purchase Contract underlying a Security evidenced by a Security
Certificate shall be valid until such Security Certificate has been executed on
behalf of the Holder by the manual signature of an authorized signatory of the
Agent, as such Holder's attorney-in-fact. Such signature by an authorized
signatory of the Agent shall be conclusive evidence that the Holder of such
Security Certificate has entered into the Purchase Contracts underlying the
Securities evidenced by such Security Certificate.
Each Security Certificate shall be dated the date of its authentication.
No Security Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on
such Security Certificate a certificate of authentication substantially in the
form provided for herein executed by an authorized signatory of the Agent by
manual signature, and such certificate upon any Security Certificate shall be
conclusive evidence, and the only evidence, that such Security Certificate has
been duly authenticated and delivered hereunder.
Section 3.4. Temporary Security Certificates.
Pending the preparation of definitive Security Certificates, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holders, and deliver, in lieu of such definitive
Security Certificates, temporary Security Certificates which are in
substantially the form set
19
<PAGE> 28
forth in Exhibit A hereto, with such letters, numbers or other marks of
identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Securities are listed, or as may, consistently
herewith, be determined by the officers of the Company executing such Security
Certificates, as evidenced by their execution of the Security Certificates.
If temporary Security Certificates are issued, the Company will cause
definitive Security Certificates to be prepared without unreasonable delay.
After the preparation of definitive Security Certificates, the temporary
Security Certificates shall be exchangeable for definitive Security
Certificates upon surrender of the temporary Security Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Security
Certificates, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Security Certificates of authorized
denominations and evidencing a like number of Securities as the temporary
Security Certificate or Security Certificates so surrendered. Until so
exchanged, the temporary Security Certificates shall in all respects evidence
the same benefits and the same obligations with respect to the Securities
evidenced thereby as definitive Security Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
The Agent shall keep at the Corporate Trust Office a register (the
register maintained in such office being herein referred to as the "Security
Register") in which, subject to such reasonable regulations as it may
prescribe, the Agent shall provide for the registration of Security
Certificates and of transfers of Security Certificates (the Agent, in such
capacity, the "Security Registrar").
Upon surrender for registration of transfer of any Security Certificate at
the Corporate Trust Office, the Company shall execute and deliver to the Agent,
and the Agent shall authenticate, execute on behalf of the desig-
20
<PAGE> 29
nated transferee or transferees, and deliver, in the name of the
designated transferee or transferees, one or more new Security Certificates of
any authorized denominations and evidencing a like number of Securities.
At the option of the Holder, Security Certificates may be exchanged for
other Security Certificates, of any authorized denominations and evidencing a
like number of Securities, upon surrender of the Security Certificates to be
exchanged at the Corporate Trust Office. Whenever any Security Certificates are
so surrendered for exchange, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver the Security Certificates which the Holder making the exchange is
entitled to receive.
All Security Certificates issued upon any registration of transfer or
exchange of a Security Certificate shall evidence the ownership of the same
number of Securities and be entitled to the same benefits and subject to the
same obligations, under this Agreement as the Securities evidenced by the
Security Certificate surrendered upon such registration of transfer or
exchange.
Every Security Certificate presented or surrendered for registration of
transfer or for exchange shall (if so required by the Agent) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Agent duly executed, by the Holder thereof or his attorney
duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Security Certificate, but the Company and the Agent may require
payment from the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Security Certificates, other than any exchanges
pursuant to Sections 3.6 and 8.5 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder and deliver any Security
Certificate presented or surrendered for registration of transfer or
21
<PAGE> 30
for exchange on or after the Final Settlement Date or the Termination Date. In
lieu of delivery of a new Security Certificate, upon satisfaction of the
applicable conditions specified above in this Section and receipt of
appropriate registration or transfer instructions from such Holder, the Agent
shall (i) if the Final Settlement Date has occurred, deliver the shares of
Common Stock issuable in respect of the Purchase Contracts forming a part of
the Securities evidenced by such Security Certificate, or (ii) if a Termination
Event shall have occurred prior to the Final Settlement Date, transfer the
principal amount of the Treasury Notes evidenced thereby, in each case subject
to the applicable conditions and in accordance with the applicable provisions
of Article Five hereof.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Security Certificates:
(1) Each Global Security Certificate authenticated and executed on
behalf of the Holders under this Agreement shall be registered in the name
of the Depositary designated for such Global Security Certificate or a
nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security Certificate shall
constitute a single Security Certificate for all purposes of this
Agreement.
(2) Notwithstanding any other provision in this Agreement, no Global
Security Certificate may be exchanged in whole or in part for Security
Certificates registered, and no transfer of a Global Security Certificate
in whole or in part may be registered, in the name of any Person other
than the Depositary for such Global Security Certificate or a nominee
thereof unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security
Certificate or (ii) has ceased to be a clearing agency registered under
the Exchange Act or (B) there shall have occurred and be continuing a
default by the Company in respect to its obligations under one or more
Purchase Contracts.
(3) Subject to Clause (2) above, any exchange of a Global Security
Certificate for other Security
22
<PAGE> 31
Certificates may be made in whole or in part, and all Security
Certificates issued in exchange for a Global Security Certificate or any
portion thereof shall be registered in such names as the Depositary for
such Global Security Certificate shall direct.
(4) Every Security Certificate authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Security Certificate or any portion thereof, whether pursuant to this
Section, Section 3.4, 3.6, 5.9 or 8.5 or otherwise, shall be
authenticated, executed on behalf of the Holders and delivered in the form
of, and shall be, a Global Security Certificate, unless such Security
Certificate is registered in the name of a Person other than the
Depositary for such Global Security Certificate or a nominee thereof.
Section 3.6. Mutilated, Destroyed, Lost and Stolen Security Certificates.
If any mutilated Security Certificate is surrendered to the Agent, the
Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, a new Security Certificate, evidencing the same number of Securities
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i) evidence to
their satisfaction of the destruction, loss or theft of any Security
Certificate, and (ii) such security or indemnity as may be required by them to
save each of them and any agent of any of them harmless, then, in the absence
of notice to the Company or the Agent that such Security Certificate has been
acquired by a bona fide purchaser, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of any such destroyed, lost or stolen Security
Certificate, a new Security Certificate, evidencing the same number of
Securities and bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on
23
<PAGE> 32
behalf of the Holder, and deliver to the Holder, a Security Certificate on or
after the Final Settlement Date or the Termination Date. In lieu of delivery of
a new Security Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Agent shall (i) if the Final
Settlement Date has occurred, deliver the shares of Common Stock issuable in
respect of the Purchase Contracts forming a part of the Securities evidenced by
such Security Certificate, or (ii) if a Termination Event shall have occurred
prior to the Final Settlement Date, transfer the principal amount of the
Treasury Notes evidenced thereby, in each case subject to the applicable
conditions and in accordance with the applicable provisions of Article Five
hereof.
Upon the issuance of any new Security Certificate under this Section, the
Company and the Agent may require the payment by the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Agent)
connected therewith.
Every new Security Certificate issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security Certificate shall constitute an original
additional contractual obligation of the Company and of the Holder, whether or
not the destroyed, lost or stolen Security Certificate shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Security Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
settlement of mutilated, destroyed, lost or stolen Security Certificates.
Section 3.7. Persons Deemed Owners.
Prior to due presentment of a Security Certificate for registration of
transfer, the Company and the Agent, and any agent of the Company or the Agent,
may treat the Person in whose name such Security Certificate is regis-
24
<PAGE> 33
tered as the owner of the Securities evidenced thereby, for the purpose of
receiving payments of interest on the Treasury Notes, receiving payments
of Yield Enhancement Payments, performance of the Purchase Contracts and for
all other purposes whatsoever, whether or not the payment of interest on the
Treasury Notes or any Yield Enhancement Payment payable in respect of the
Purchase Contracts constituting a part of the Securities evidenced thereby
shall be overdue and notwithstanding any notice to the contrary, and neither
the Company nor the Agent, nor any agent of the Company or the Agent, shall be
affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Security
Certificate, nothing herein shall prevent the Company, the Agent or any agent
of the Company or the Agent, from giving effect to any written certification,
proxy or other authorization furnished by any Depositary (or its nominee), as a
Holder, with respect to such Global Security Certificate or impair, as between
such Depositary and owners of beneficial interests in such Global Security
Certificate, the operation of customary practices governing the exercise of
rights of such Depositary (or its nominee) as Holder of such Global Security
Certificate.
Section 3.8. Cancellation.
All Security Certificates surrendered for delivery of shares of Common
Stock on or after the Final Settlement Date, transfer of Treasury Notes after
the occurrence of a Termination Event or pursuant to an Early Settlement or
registration of transfer or exchange shall, if surrendered to any Person other
than the Agent, be delivered to the Agent and, if not already cancelled, shall
be promptly cancelled by it. The Company may at any time deliver to the Agent
for cancellation any Security Certificates previously authenticated, executed
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Security Certificates so delivered shall, upon Issuer
Order, be promptly cancelled by the Agent. No Security Certificates shall be
authenticated, executed on behalf of the Holder and delivered in lieu of or in
exchange for any Security Certificates cancelled as provided in this Section,
except as expressly permitted by this Agreement. All
25
<PAGE> 34
cancelled Security Certificates held by the Agent shall be disposed of as
directed by Issuer Order.
If the Company or any Affiliate of the Company shall acquire any Security
Certificate, such acquisition shall not operate as a cancellation of such
Security Certificate unless and until such Security Certificate is delivered to
the Agent cancelled or for cancellation.
Section 3.9. Securities Not Separable.
Notwithstanding anything contained herein or in the Security Certificates
to the contrary, for so long as the Purchase Contract comprising a portion of a
Security remains in effect, such Security shall not be separable into its
constituent parts, for purposes of transfer or exchange of such Security, and
the rights and obligations of the Holder of such Security in respect of the
Treasury Notes and Purchase Contracts comprising such Security may be acquired,
and may be transferred and exchanged, only as a Security. Other than a
Security Certificate evidencing a Security, no Holder of a Security, or any
transferee thereof, shall be entitled to receive a certificate evidencing the
ownership of Treasury Notes or the rights and obligations of the Holder and the
Company under a Purchase Contract for so long as the Purchase Contract
underlying the Security remains in effect.
Section 3.10. No Consent To Assumption
Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company or
its trustee in the event that the Company becomes the debtor under the
Bankruptcy Code.
26
<PAGE> 35
ARTICLE IV
The Treasury Notes
Section 4.1. Payment of Interest; Interest Rights Preserved.
Interest on any Treasury Note which is paid on any Payment Date shall,
subject to receipt thereof by the Agent from the Collateral Agent as provided
by the terms of the Pledge Agreement, be paid to the Person in whose name the
Security Certificate (or one or more Predecessor Security Certificates) of
which such Treasury Note is a part is registered at the close of business on
the Record Date next preceding such Payment Date. The Agent, on behalf of the
Holders, shall (to compensate the Company for its delivery to the Holders of
Treasury Notes that include accrued interest) remit to the Company interest on
any Treasury Note for the semi-annual interest payment due on April 30, 1996,
subject to receipt thereof by the Agent as provided by the terms of the Pledge
Agreement, except for an amount representing accrued interest on any Treasury
Note from the date of issuance of the Securities until April 30, 1996 (the
"Holders' Accrued Interest"). The Holders' Accrued Interest, when received
from the Collateral Agent, will be invested by the Agent in Permitted
Investments on behalf of the Holder until the first Payment Date, at which time
such amount, and any reinvestment income thereon, net of expenses therewith,
will be paid to the Person in whose name the Security Certificate (or one or
more Predecessor Security Certificates) of which such Treasury Note is a part
is registered at the close of business on the Record Date next preceding such
Payment Date.
Except as otherwise provided in the immediately preceding sentence, each
Security Certificate evidencing Treasury Notes delivered under this Agreement
upon registration of transfer of or in exchange for or in lieu of any other
Security Certificate shall carry the rights to interest accrued and unpaid, and
to accrue, which were carried by the Treasury Notes underlying such other
Security Certificate.
In the case of any Security with respect to which Early Settlement of the
underlying Purchase Contract is
27
<PAGE> 36
effected on an Early Settlement Date after any Record Date and on or prior to
the next succeeding Payment Date, interest on the Treasury Notes underlying
such Security otherwise payable on such Payment Date shall be payable on such
Payment Date notwithstanding such Early Settlement, and such interest shall,
subject to receipt thereof by the Agent, be paid to the Person in whose name
the Security Certificate (or one or more Predecessor Security Certificates) is
registered at the close of business on the Record Date. Except as otherwise
expressly provided in the immediately preceding sentence, in the case of any
Security with respect to which Early Settlement of the underlying Purchase
Contract is effected on an Early Settlement Date, interest on the related
Treasury Notes that would otherwise be payable after the Early Settlement Date
shall not be payable hereunder to the Holder of such Security.
Section 4.2. Transfer of Treasury Notes Upon Occurrence of Termination Event.
Upon the occurrence of a Termination Event and the transfer to the Agent
of the Treasury Notes underlying such Securities pursuant to the terms of the
Pledge Agreement, the Agent shall request transfer instructions with respect to
such Treasury Notes from each Holder of Securities by written request mailed to
such Holder at his address as it appears in the Security Register, in respect
of the Treasury Notes underlying the Security Certificate held by such Holder.
Upon surrender to the Agent of a Security Certificate with such transfer
instructions in proper form for transfer of the Treasury Notes by Federal
Reserve Bank-Wire or other appropriate procedure, the Agent shall transfer the
Treasury Notes evidenced by such Security Certificate to such Holder in
accordance with such instructions. If a Security Certificate is not duly
surrendered to the Agent with appropriate transfer instructions, the Agent
shall hold the Treasury Notes evidenced by such Security Certificate as
custodian for the Holder of such Security Certificate.
Treasury Notes shall be transferred only in denominations of $1,000 and
integral multiples thereof. As promptly as practicable following the occurrence
of a Termination Event, the Agent shall determine the excess of (i) the
aggregate principal amount of Treasury Notes underlying the Outstanding
Securities over (ii) the
28
<PAGE> 37
aggregate principal amount of Treasury Notes in denominations of $1,000 and
integral multiples thereof transferrable to Holders of record on the date of
such Termination Event (such excess being herein referred to as the "Excess
Treasury Notes"). As soon as practicable after transfer to the Agent of the
Treasury Notes underlying the Outstanding Securities as provided in the Pledge
Agreement, the Agent shall sell the Excess Treasury Notes to or through one or
more U.S. Government securities dealers at then prevailing prices. The Agent
shall deduct from the proceeds of such sales all commissions and other
out-of-pocket transaction costs incurred in connection with such sales of
Excess Treasury Notes and, until the net proceeds of such sale or sales have
been distributed to Holders of the Securities, the Agent shall hold such
proceeds as custodian for the Holders of Securities. Such proceeds shall be
held by the Agent uninvested without liability to any Person for interest or
other compensation thereon. Each Holder shall be entitled to receive a
portion, if any, of such net proceeds in lieu of Treasury Notes with a
principal amount of less than $1,000 determined by multiplying the aggregate
amount of such net proceeds by a fraction, the numerator of which is the
fraction of $1,000 in principal amount of Treasury Notes to which such Holder
would otherwise be entitled (after taking into account all Securities then held
by such Holder) and the denominator of which is the aggregate principal amount
of Excess Treasury Notes.
ARTICLE V
The Purchase Contracts
Section 5.1. Purchase of Shares of Common Stock.
Each Purchase Contract shall obligate the Holder of the related Security
to purchase, and the Company to sell, on the Final Settlement Date at a price
equal to the Stated Amount, a number of shares of Common Stock equal to the
Settlement Rate, unless, on or prior to the Final Settlement Date, there shall
have occurred a Termination Event or an Early Settlement with respect to the
Security of which such Purchase Contract is a part. The "Settlement Rate" is
equal to (a) if the Applicable Market Value (as defined below) is greater than
$27.60
29
<PAGE> 38
(the "Threshold Appreciation Price"), .833 of a share of Common Stock per
Purchase Contract, (b) if the Applicable Market Value is less than or equal to
the Threshold Appreciation Price but is greater than the Stated Amount, a
fractional share of Common Stock per Purchase Contract equal to the Stated
Amount divided by the Applicable Market Value (rounded upward or downward to
the nearest 1/10,000th of a share) and (c) if the Applicable Market Value is
less than or equal to the Stated Amount, one share of Common Stock per Purchase
Contract, in each case subject to adjustment as provided in Section 5.6. As
provided in Section 5.10, no fractional shares of Common Stock will be issued
upon settlement of Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Prices per
share of Common Stock on each of the twenty consecutive Trading Days ending on
the second Trading Day immediately preceding the Final Settlement Date. The
"Closing Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such
date or, if the Common Stock is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the Common
Stock is not so listed on a United States national or regional securities
exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock is
not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the Common Stock.
Each Holder of a Security Certificate evidencing Securities, by his
acceptance thereof, authorizes the
30
<PAGE> 39
Agent to enter into and perform the related Purchase Contracts on his behalf as
his attorney-in-fact, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform his obligations under such Purchase Contracts,
consents to the provisions hereof, authorizes the Agent as his attorney-in-fact
to enter into and perform the Pledge Agreement on his behalf as his
attorney-in-fact, and consents to and agrees to be bound by the Pledge of the
Treasury Notes underlying such Security Certificate pursuant to the Pledge
Agreement; provided that upon an Event of Termination the rights of the Holder
of such Security under the Purchase Contract may be enforced without regard to
any other rights or obligations. Each Holder of a Security, by his acceptance
thereof, further covenants and agrees, that, to the extent and in the manner
provided in Section 5.4 and the Pledge Agreement, but subject to the terms
thereof, payments in respect of principal of the Treasury Notes on the Final
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.
Upon registration of transfer of a Security Certificate evidencing
Purchase Contracts, the transferee shall be bound (without the necessity of any
other action on the part of such transferee), under the terms of this
Agreement, the Purchase Contracts evidenced thereby and the Pledge Agreement
and the transferor shall be released from the obligations under the Purchase
Contracts evidenced by the Security Certificates so transferred. The Company
covenants and agrees, and each Holder of a Security Certificate, by his
acceptance thereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
Section 5.2. Yield Enhancement Payments.
Subject to Section 5.3, the Company shall pay, on each Payment Date, the
Yield Enhancement Payments payable in respect of each Purchase Contract to the
Person in whose name the Security Certificate (or one or more Predecessor
Security Certificates) evidencing such Purchase Contract is registered at the
close of business on the Record Date next preceding such Payment Date. The
Yield Enhancement Payment will be payable at the office
31
<PAGE> 40
of the Agent in The City of New York maintained for that purpose or, at the
option of the Company, by check mailed to the address of the Person entitled
thereto at such address as it appears on the Security Register.
Each Security Certificate delivered under this Agreement upon registration
of transfer of or in exchange for or in lieu of any other Security Certificate
shall carry the rights to Yield Enhancement Payments accrued and unpaid, and to
accrue, which were carried by the Purchase Contracts evidenced by such other
Security Certificate.
In the case of any Security with respect to which Early Settlement of the
underlying Purchase Contract is effected on an Early Settlement Date after any
Record Date and on or prior to the next succeeding Payment Date, Yield
Enhancement Payments otherwise payable on such Payment Date shall be payable on
such Payment Date notwithstanding such Early Settlement, and such Yield
Enhancement Payments shall be paid to the Person in whose name the Security
Certificate evidencing such Security (or one or more Predecessor Security
Certificates) is registered at the close of business on such Record Date.
Except as otherwise expressly provided in the immediately preceding sentence,
in the case of any Security with respect to which Early Settlement of the
underlying Purchase Contract is effected on an Early Settlement Date, Yield
Enhancement Payments that would otherwise be payable after the Early Settlement
Date with respect to the Purchase Contract underlying such Security shall not
be payable.
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.
Section 5.3. Deferral of Payment Dates For Yield Enhancement Payment.
The Company shall have the right, at any time prior to the Final
Settlement Date, to defer the payment of any or all of the Yield Enhancement
Payments otherwise payable on any Payment Date, but only if the Company shall
give the Holders and the Agent written notice of its
32
<PAGE> 41
election to defer such payment (specifying the amount to be deferred) at least
ten Business Days prior to the earlier of (i) the next succeeding Payment Date
or (ii) the date the Company is required to give notice of the Record Date or
Payment Date with respect to payment of such Yield Enhancement Payment to the
New York Stock Exchange or other applicable self-regulatory organization or to
Holders of the Securities, but in any event not less than two Business Days
prior to such Record Date. Any Yield Enhancement Payments so deferred shall
bear additional Yield Enhancement Payments thereon at the rate of 8 3/4% per
annum (computed on the basis of the actual number of days elapsed in a year of
365 or 366 days, as the case may be), compounding on each succeeding Payment
Date, until paid in full (such deferred installments of Yield Enhancement
Payments together with the additional Yield Enhancement Payments accrued
thereon, are referred to herein as the "Deferred Yield Enhancement Payments").
Deferred Yield Enhancement Payments shall be due on the next succeeding Payment
Date except to the extent that payment is deferred pursuant to this Section. No
Yield Enhancement Payments may be deferred to a date that is after the Final
Settlement Date or, with respect to any particular Purchase Contract, Early
Settlement thereof.
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 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 as provided in Section 5.10.
In the event the Company exercises its option to defer the payment of
Yield Enhancement Payments, then, until the Deferred Yield Enhancement Payments
have been made, (a) the Company shall not declare or pay dividends
33
<PAGE> 42
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 (i)
purchase 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.
Section 5.4. Payment of Purchase Price.
Unless a Holder settles the underlying Purchase Contract either through
the early delivery of cash to the Purchase Contract Agent in the manner
described in Section 5.9 or otherwise, the purchase price for the shares of
Common Stock purchased pursuant to a Purchase Contract shall be paid by
application of payments received by the Company on the Final Settlement Date
from the Collateral Agent pursuant to the Pledge Agreement in respect of the
principal of the Treasury Notes Pledged to secure the obligations of the
relevant Holder under such Purchase Contract. Such application shall satisfy
in full the obligations under such Purchase Contract of the Holder of the
Security of which such Purchase Contract is a part. The Company shall not be
obligated to issue any shares of Common Stock in respect of a Purchase Contract
or deliver any certificates therefor to the Holder unless it shall have
received payment in full of the aggregate purchase price for the shares of
Common Stock to be purchased thereunder in the manner herein set forth.
34
<PAGE> 43
Section 5.5. Issuance of Shares of Common Stock.
Unless a Termination Event shall have occurred on or prior to the Final
Settlement Date, on the Final Settlement Date, upon its receipt of payment in
full of the purchase price for the shares of Common Stock purchased by the
Holders pursuant to the foregoing provisions of this Article, and in payment of
Deferred Yield Enhancement Payments, if any, owed by the Company to the Holders
and subject to Section 5.6(b), the Company shall issue and deposit with the
Agent, for the benefit of the Holders of the Outstanding Securities, one or
more certificates representing the new shares of Common Stock registered in the
name of the Agent (or its nominee) as custodian for the Holders (such
certificates for shares of Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the "Final
Settlement Fund") to which the Holders are entitled hereunder. Subject to the
foregoing, upon surrender of a Security Certificate to the Agent on or after
the Final Settlement Date, together with settlement instructions thereon duly
completed and executed, the Holder of such Security Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Common Stock which such Holder is entitled to receive
pursuant to the provisions of this Article Five (after taking into account all
Securities then held by such Holder) together with cash in lieu of fractional
shares as provided in Section 5.10 and any dividends or distributions with
respect to such shares constituting part of the Final Settlement Fund, but
without any interest thereon, and the Security Certificate so surrendered shall
forthwith be cancelled. Such shares shall be registered in the name of the
Holder or the Holder's designee as specified in the settlement instructions on
the Security Certificate. If any shares of Common Stock issued in respect of a
Purchase Contract and in payment of any Deferred Yield Enhancement Payments are
to be registered to a Person other than the Person in whose name the Security
Certificate evidencing such Purchase Contract is registered, no such
registration shall be made unless the Person requesting such registration has
paid any transfer and other taxes required by reason of such registration in a
name other than that of the registered Holder of the Security Certificate
evidencing such Purchase Contract or has established to the
35
<PAGE> 44
satisfaction of the Company that such tax either has been paid or is not
payable.
Section 5.6. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other distribution
on any class of Common Stock of the Company in Common Stock, the Settlement
Rate in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend or
other distribution shall be increased by dividing such Settlement Rate by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
increase to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purposes of this
paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants, to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price per share of the
Common Stock on the date fixed for the determination of stockholders entitled
to receive such rights, options or warrants (other than pursuant to a dividend
reinvestment plan), the Settlement Rate in effect at the opening of business on
the day following the date fixed for such determination shall be
36
<PAGE> 45
increased by dividing such Settlement Rate by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase
at such Current Market Price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
shall not issue any such rights, options or warrants in respect of shares of
Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the Settlement Rate in
effect at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase
or reduction, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision,
split or combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in paragraph (2)
of this Section, any dividend or distribution paid exclusively in cash and any
dividend or distribution referred to in paragraph (1) of this Section), the
Settlement Rate shall be adjusted so that the
37
<PAGE> 46
same shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current Market Price per share of
the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution filed with the Agent)
of the portion of the assets or evidences of indebtedness so distributed
applicable to one share of Common Stock and the denominator shall all be such
Current Market Price per share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
distribution. In any case in which this paragraph (4) is applicable, paragraph
(2) of this Section shall not be applicable.
(5) In case the Company shall, (I) by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed in
a Reorganization Event to which Section 5.6(b) applies or as part of a
distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (II) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such distribution and in
respect of which no adjustment pursuant to this paragraph (5) or paragraph (6)
of this Section has been made and (III) the aggregate of any cash plus the fair
market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) of consideration
payable in respect of any tender or exchange offer by the Company or any of its
subsidiaries for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of the distribution described in clause
(I) above and in respect of which no adjustment pursuant to this paragraph (5)
or paragraph (6) of this Section has been made, exceeds 15% of the product of
the Current Market Price per share of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such
date, then, and in each such case,
38
<PAGE> 47
immediately after the close of business on such date for determination, the
Settlement Rate shall be increased so that the same shall equal the rate
determined by dividing the Settlement Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of which
shall be equal to the Current Market Price per share of the Common Stock on the
date fixed for such determination less an amount equal to the quotient of (x)
the combined amount distributed or payable in the transactions described in
clauses (I), (II) and (III) above and (y) the number of shares of Common Stock
outstanding on such date for determination and (ii) the denominator of which
shall be equal to the Current Market Price per share of the Common Stock on
such date for determination.
(6) In case (I) a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) that combined together with (II) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (III) the aggregate
amount of any distributions to all holders of the Company's Common Stock made
exclusively in cash within the 12 months preceding the expiration of such
tender or exchange offer and in respect of which no adjustment pursuant to
paragraph (5) of this Section or this paragraph (6) has been made, exceeds 15%
of the product of the Current Market Price per share of the Common Stock as of
the last time (the "Expiration Time") tenders could have
39
<PAGE> 48
been made pursuant to such tender or exchange offer (as it may be amended)
times the number of shares of Common Stock outstanding (including any tendered
shares) on the Expiration Time, then, and in each such case, immediately prior
to the opening of business on the day after the date of the Expiration Time,
the Settlement Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Settlement Rate immediately prior to the close of
business on the date of the Expiration Time by a fraction (i) the numerator of
which shall be equal to (A) the product of (I) the Current Market Price per
share of the Common Stock on the date of the Expiration Time and (II) the
number of shares of Common Stock outstanding (including any tendered shares) on
the Expiration Time less (B) the amount of cash plus the fair market value
(determined as aforesaid) of the aggregate consideration payable to
stockholders based on the transactions described in clauses (I), (II) and (III)
above (assuming in the case of clause (I) the acceptance, up to any maximum
specified in the terms of the tender or exchange offer, of Purchased Shares),
and (ii) the denominator of which shall be equal to the product of (A) the
Current Market Price per share of the Common Stock as of the Expiration Time
and (B) the number of shares of Common Stock outstanding (including any
tendered shares) as of the Expiration Time less the number of all shares
validly tendered and not withdrawn as of the Expiration Time (the shares deemed
so accepted, up to any such maximum, being referred to as the "Purchased
Shares").
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.6(b) applies) shall be deemed to
involve (a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and the "date fixed for such determination"
within the meaning of paragraph (4) of this Section), and (b) a subdivision,
split or combination, as the case may be, of the number of shares of Common
Stock out- standing immediately prior to such reclassification into the number
of shares of Common Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day upon which such
subdivision or split becomes effective" or "the day upon which such combination
be-
40
<PAGE> 49
comes effective", as the case may be, and "the day upon which such subdivision,
split or combination becomes effective" within the meaning of paragraph (3)
of this Section).
(8) The "Current Market Price" per share of Common Stock on any day means
the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date", when used with
respect to any issuance or distribution, shall mean the first date on which the
Common Stock trades regular way on such exchange or in such market without the
right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share to the next lower 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 therein; provided, however,
that any adjustments which by reason of this subparagraph are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. If an adjustment is made to the Settlement Rate pursuant to
paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a), an
adjustment shall also be made to the Applicable Market Value solely to
determine which of clauses (a), (b) or (c) of the definition of Settlement Rate
in Section 5.1 will apply on the Final Settlement Date. Such adjustment shall
be made by multiplying the Applicable Market Value by a fraction of which the
numerator shall be the Settlement Rate immediately after such adjustment
pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section
5.6(a) and the denominator shall be the Settlement Rate immediately before such
adjustment.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of shares
41
<PAGE> 50
of Common Stock resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or from any
event treated as such for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event. In
the event of (i) any consolidation or merger of the Company, with or into
another Person (other than a merger or consolidation in which the Company is
the continuing corporation and in which the Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash,
securities or other property of the Company or another corporation), (ii) any
sale, transfer, lease or conveyance to another Person of the property of the
Company as an entirety or substantially as an entirety, (iii) any statutory
exchange of securities of the Company with another Person (other than in
connection with a merger or acquisition) or (iv) any liquidation, dissolution
or winding up of the Company other than as a result of or after the occurrence
of a Termination Event (any such event, a "Reorganization Event"), the
Settlement Rate will be adjusted to provide that each Holder of Securities will
receive on the Final Settlement Date with respect to each Purchase Contract
forming a part thereof, the kind and amount of securities, cash and other
property receivable upon such Reorganization Event by a Holder of the number of
shares of Common Stock issuable on account of each Purchase Contract if the
Final Settlement Date had occurred immediately prior to such Reorganization
Event, assuming such Holder of Common Stock is not a Person with which the
Company consolidated or into which the Company merged or which merged into the
Company or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an Affiliate of a constituent Person, and failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such Reorganization Event
(provided that if the kind or amount of securities, cash and other property
receivable upon such Reorganization Event is not the same for each share of
Common Stock held immediately prior to such Reorganization Event by other than
a constituent Person or an Affiliate thereof and in respect of which such
rights of election shall not have been exercised ("non-electing share"), then
for the purpose of this Section the kind and amount of securities, cash and
other property receivable upon such Reorganization Event
42
<PAGE> 51
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). In the event
of such a Reorganization Event, the Person formed by such consolidation, merger
or exchange or the Person which acquires the assets of the Company or, in the
event of a liquidation or dissolution of the Company, the Company or a
liquidating trust created in connection therewith, shall execute and deliver to
the Agent an agreement supplemental hereto providing that the Holders of each
Outstanding Security shall have the rights provided by this Section 5.6. Such
supplemental agreement shall provide for adjustments which, for events
subsequent to the effective date of such supplemental agreement, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section. The above provisions of this Section shall similarly apply to
successive Reorganization Events.
Section 5.7. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
(i) forthwith compute the adjusted Settlement Rate in accordance with
Section 5.6 and prepare and transmit to the Agent an Officers' Certificate
setting forth the Settlement Rate, the method of calculation thereof in
reasonable detail, and the facts requiring such adjustment and upon which
such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an event
that permits or requires an adjustment to the Settlement Rate pursuant to
Section 5.6 (or if the Company is not aware of such occurrence, as soon as
practicable after becoming so aware), provide a written notice to the
Holders of the Securities 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 adjusted
Settlement Rate.
43
<PAGE> 52
(b) The Agent shall not at any time be under any duty or responsibility
to any holder of Securities to determine whether any facts exist which may
require any adjustment of the Settlement Rate, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the
method employed in making the same. The Agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of
Common Stock, or of any securities or property, which may at the time be issued
or delivered with respect to any Purchase Contract; and the Agent makes no
representation with respect thereto. The Agent shall not be responsible for any
failure of the Company to issue, transfer or deliver any shares of Common Stock
pursuant to a Purchase Contract or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article.
Section 5.8. Termination Event; Notice.
The Purchase Contracts and the obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Yield
Enhancement Payment, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Agent or the Company, if,
on or prior to the Final Settlement Date, a Termination Event shall have
occurred. Upon and after the occurrence of a Termination Event, the Securities
shall thereafter represent the right to receive the Treasury Notes forming a
part of such Securities in accordance with the provisions of Section 4.2 and
the Pledge Agreement. Upon the occurrence of a Termination Event, the Company
shall promptly but in no event after two business days thereafter give written
notice to the Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the Security Register.
Section 5.9. Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section
5.9 at the option of the Holder thereof, any Purchase Contracts underlying
Securities having an aggregate Stated Amount equal to $23,000 or an integral
multiple thereof may be settled early ("Early Settlement") as provided herein.
In order to exercise the
44
<PAGE> 53
right to effect Early Settlement with respect to any Purchase Contracts, the
Holder of the Security Certificate evidencing such Purchase Contracts shall
deliver such Security Certificate to the Agent at the Corporate Trust Office
duly endorsed for transfer to the Company or in blank with the form of Election
to Settle Early on the reverse thereof duly completed and accompanied by
payment in the form of a certified or cashier's check payable to the order of
the Company in immediately available funds in an amount (the "Early Settlement
Amount") equal to (i) the product of (A) the Stated Amount times (B) the number
of Purchase Contracts with respect to which the Holder has elected to effect
Early Settlement plus (ii) if such delivery is made with respect to any
Purchase Contracts during the period from the close of business on any Record
Date next preceding any Payment Date to the opening of business on such Payment
Date, an amount equal to the sum of (x) the Yield Enhancement Payments payable
on such Payment Date with respect to such Purchase Contracts plus (y) the
interest on the related Treasury Notes payable on such Payment Date. Except as
provided in the immediately preceding sentence and subject to the second to
last paragraph of Section 5.2, no payment or adjustment shall be made upon
Early Settlement of any Purchase Contract on account of any Yield Enhancement
Payments accrued on such Purchase Contract or on account of any dividends on
the Common Stock issued upon such Early Settlement. If the foregoing
requirements are first satisfied with respect to Purchase Contracts underlying
any Securities at or prior to 5:00 p.m., New York City time, on a Business Day,
such day shall be the "Early Settlement Date" with respect to such Securities
and if such requirements are first satisfied after 5:00 p.m., New York City
time, on a Business Day or on a day that is not a Business Day, the "Early
Settlement Date" with respect to such Securities shall be the next succeeding
Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Company shall issue, and the Holder shall be entitled
to receive, a number of shares of Common Stock on account of each Purchase
Contract as to which Early Settlement is effected equal to the Early Settlement
Rate; provided, however, that upon the Early Settlement of the Purchase
Contracts, the Holder of such related Securities will forfeit the right to
receive any Deferred Yield Enhancement Payments.
45
<PAGE> 54
The Early Settlement Rate shall initially be equal to .833 and shall be
adjusted in the same manner and at the same time as the Settlement Rate is
adjusted. As promptly as practicable after Early Settlement of Purchase
Contracts in accordance with the provisions of this Section 5.9, the Company
shall issue and shall deliver to the Agent at the Corporate Trust Office a
certificate or certificates for the full number of shares of Common Stock
issuable upon such Early Settlement together with payment in lieu of any
fraction of a share, as provided in Section 5.10.
(c) The Company shall cause the shares of Common Stock issuable, and
Treasury Notes deliverable, upon Early Settlement of Purchase Contracts to be
issued and delivered, in the case of such shares of Common Stock, and released
from the Pledge by the Collateral Agent and transferred, in the case of such
Treasury Notes, to the Agent, for delivery to the Holder thereof or its
designee, no later than the third Business Day after the applicable Early
Settlement Date.
(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt thereof from the Company or the Collateral Agent, as applicable, the
Agent shall, in accordance with the instructions provided by the Holder thereof
on the applicable form of Election to Settle Early on the reverse of the
Security Certificate evidencing the related Securities, (i) transfer the
Treasury Notes forming a part of such Securities and (ii) deliver a certificate
or certificates for the full number of shares of Common Stock issuable upon
such Early Settlement together with payment in lieu of any fraction of a share,
as provided in Section 5.10.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Security Certificate, upon such Early Settlement the Company shall execute and
the Agent shall authenticate, countersign and deliver to the Holder thereof, at
the expense of the Company, a Security Certificate evidencing the Securities as
to which Early Settlement was not effected.
46
<PAGE> 55
Section 5.10. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Final Settlement Date
or upon Early Settlement of any Purchase Contracts or with respect to the
payment of Deferred Yield Enhancement Payments, if any, on the Final Settlement
Date. If Security Certificates evidencing more than one Purchase Contract shall
be surrendered for settlement at one time by the same Holder, the number of
full shares of Common Stock which shall be delivered upon settlement shall be
computed on the basis of the aggregate number of Purchase Contracts evidenced
by the Security Certificates so surrendered. Instead of any fractional share of
Common Stock which would otherwise be deliverable upon settlement of any
Purchase Contracts on the Final Settlement Date or upon Early Settlement or
with respect to the payment of any Deferred Yield Enhancement Payments, the
Company, through the Agent, shall make a cash payment in respect of such
fractional interest in an amount equal to the value of such fractional shares
at the Closing Price per share on the Trading Day immediately preceding the
Final Settlement Date or the related Early Settlement Date, respectively. The
Company shall provide the Agent from time to time with sufficient funds to
permit the Agent to make all cash payments required by this Section 5.10 in a
timely manner.
Section 5.11. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the shares of Common Stock pursuant to the
Purchase Contracts and in payment of any Deferred Yield Enhancement Payments;
provided, however, that the Company shall not be required to pay any such tax
or taxes which may be payable in respect of any exchange of or substitution for
a Security Certificate evidencing a Purchase Contract or any issuance of a
share of Common Stock in a name other than that of the registered Holder of a
Security Certificate surrendered in respect of the Purchase Contracts evidenced
thereby, other than in the name of the Agent, as custodian for such Holder, and
the Company shall not be required to issue or deliver such share certificates
or Security Certificates unless or until the Person or Persons requesting the
transfer or issuance thereof shall
47
<PAGE> 56
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Yield Enhancement
Payment.
The Holder of any Security shall have the right, which is absolute and
unconditional (subject to the right of the Company to defer payment thereof
pursuant to Section 5.3 and subject to the forfeiture of any Deferred Yield
Enhancement Payments upon Early Settlement pursuant to Section 5.9(b)), to
receive payment of each installment of the Yield Enhancement Payment with
respect to the Purchase Contract constituting a part of such Security on the
respective Payment Date for such Security and to purchase Common Stock pursuant
to such Purchase Contract and, in each such case, to institute suit for the
enforcement of any such payment and right to purchase Common Stock, and such
rights shall not be impaired without the consent of such Holder.
Section 6.2. Restoration of Rights and Remedies.
If any Holder of Securities has instituted any proceeding to enforce any
right or remedy under this Agreement and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company and such Holder shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of such
Holder shall continue as though no such proceeding had been instituted.
Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement of mutilated,
destroyed, lost or stolen Security Certificates in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the
48
<PAGE> 57
Holders of Securities is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy shall
impair any such right or remedy or constitute a waiver of any such right. Every
right and remedy given by this Article or by law to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by such
Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of any Security by
his acceptance of the Security Certificate evidencing such Security shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Agreement, or in any
suit against the Agent for any action taken, suffered or omitted by it as
Agent, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; provided that the provisions of
this Section shall not apply to any suit instituted by the Company, to any suit
instituted by the Agent, to any suit instituted by any Holder of Securities, or
group of Holders, holding in the aggregate more than 10% of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the interest on any Treasury Note or the Yield Enhancement Payment
on any Purchase Contract on or after the respective Payment Date therefor
constituting a part of the Securities held by such Holder, or for enforcement
of the right to purchase shares of Common Stock under the Purchase Contracts
constituting a part of the Securities held by such Holder.
49
<PAGE> 58
Section 6.6. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Agent or the Holders, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities.
(a)(1) The Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically set forth
in this Agreement and the Pledge Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Agent; and
(2) in the absence of bad faith or negligence on its part, the Agent
may, with respect to the Securities, conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Agent and conforming to the
requirements of this Agreement, but in the case of any certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Agent, the Agent shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(b) No provision of this Agreement shall be construed to relieve the Agent
from liability for its own
50
<PAGE> 59
negligent action, its own negligent failure to act, or its own wilful
misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Agent was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if adequate indemnity is not provided to it.
(c) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Agent shall be subject to the provisions of this Section.
Section 7.2. Notice of Default.
Within 30 days after the occurrence of any default by the Company
hereunder, of which a Responsible Officer of the Agent has actual knowledge,
the Agent shall transmit by mail to all Holders of Securities, as their names
and addresses appear in the Security Register, notice of such default
hereunder, unless such default shall have been cured or waived.
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
51
<PAGE> 60
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Agent (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely
upon an Officers' Certificate of the Company;
(d) the Agent may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Agent 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 Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters related to the issuance of the Securities and the
execution, delivery and performance of the Purchase Contracts as it may see
fit, and, if the Agent shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and promises
of the Company, personally or by agent or attorney; and
(f) the Agent may execute any of its powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder.
52
<PAGE> 61
Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Security Certificates shall be
taken as the statements of the Company and the Agent assumes no responsibility
for their accuracy. The Agent makes no representations as to the validity or
sufficiency of either this Agreement or of the Securities, or of the Pledge
Agreement or the Pledge. The Agent shall not be accountable for the use or
application by the Company of the proceeds in respect of the Purchase
Contracts.
Section 7.5. May Hold Securities.
Any Security Registrar or any other agent of the Company, or the Agent and
its Affiliates, in their individual or any other capacity, may become the owner
or pledgee of Securities and may otherwise deal with the Company, the
Collateral Agent or any other Person with the same rights it would have if it
were not Security Registrar or such other agent, or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated from
the other funds except to the extent required by law. The Agent shall be under
no obligation to invest or pay interest on any money received by it hereunder
except pursuant to the provisions of Section 4.1 or as otherwise agreed in
writing with the Company.
Section 7.7. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Agent from time to time reasonable compensation for
all services rendered by it hereunder;
(2) except as otherwise expressly provided herein, to reimburse the
Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Agent in accordance with any provision of
this Agreement (including the reasonable compensation and the expenses and
disbursements
53
<PAGE> 62
of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Agent and any predecessor Agent for, and to hold
each of them harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a member of a bank
holding company having) a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority and having
a Corporate Trust Office in the Borough of Manhattan, The City of New York, if
there be such a corporation in the Borough of Manhattan, The City of New York
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Agent shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appoint-
54
<PAGE> 63
ment by the successor Agent in accordance with the applicable requirements of
Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof to
the Company 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall
not have been delivered to the Agent within 30 days after the giving of such
notice of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent and the
Company.
(d) if at any time
(1) the Agent fails to comply with Section 310(b) of the TIA, as if
the Agent were an indenture trustee under an indenture qualified under the
TIA, after written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six months, or
(2) the Agent shall cease to be eligible under Section 7.8 and shall
fail to resign after written request therefor by the Company or by any
such Holder, or
(3) the Agent shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Agent or of its property shall
be appointed or any public officer shall take charge or control of the
Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
55
<PAGE> 64
(e) If the Agent shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Agent for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Agent and shall
comply with the applicable requirements of Section 7.10. If no successor Agent
shall have been so appointed by the Company and accepted appointment in the
manner required by Section 7.10, any Holder who has been a bona fide Holder of
a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to give,
notice of each resignation and each removal of the Agent and each appointment
of a successor Agent by mailing written notice of such event by first-class
mail, postage prepaid, to all Holders of Securities as their names and
addresses appear in the Security Register. Each notice shall include the name
of the successor Agent and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every such
successor Agent so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or
conveyance, shall become vested with all the rights, powers, agencies and
duties of the retiring Agent; but, on the request of the Company or the
successor Agent, such retiring Agent shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Agent all the
rights, powers and trusts of the retiring Agent and shall duly assign, transfer
and deliver to such successor Agent all property and money held by such
retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
56
<PAGE> 65
(c) No successor Agent shall accept its appointment unless at the time of
such acceptance such successor Agent shall be qualified and eligible under this
Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Security Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Agent then in office, any successor by merger, conversion or consolidation to
such Agent may adopt such authentication and execution and deliver the Security
Certificates so authenticated and executed with the same effect as if such
successor Agent had itself authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Security Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Agent, and furnish to the Agent reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their
rights under this Agreement or under the Securities and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Agent shall, within five Business Days after the receipt
of such application, afford such applicants access to the
57
<PAGE> 66
information preserved at the time by the Agent in accordance with Section
7.12(a).
(c) Every Holder of Securities, by receiving and holding the Security
Certificates evidencing the same, agrees with the Company and the Agent that
none of the Company, the Agent nor any agent of any of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with Section 7.12(b), regardless of
the source from which such information was derived.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligations and shall not be subject to any liability under this
Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Security Certificate, by his acceptance thereof, shall be
deemed to have agreed, that the Agent's execution of the Security Certificates
on behalf of the Holders shall be solely as agent and attorney-in-fact for the
Holders, and that the Agent shall have no obligation to perform such Purchase
Contracts on behalf of the Holders, except to the extent expressly provided in
Article Five hereof.
Section 7.14. Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the Company, will
comply with all applicable certification, information reporting and withholding
(including "backup" withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i) any payments made
with respect to the Securities or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Securities. Such
compliance shall include, without limitation, the preparation and timely filing
of required returns and the timely payment of all amounts required to be
withheld to the appropriate taxing authority or its designated agent.
(b) The Agent shall comply with any direction received from the Company
with respect to the application of such requirements to particular payments or
Holders or
58
<PAGE> 67
in other particular circumstances, and may for purposes of this Agreement rely
on any such direction in accordance with the provisions of Section 7.1(a)(2)
hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or to its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the Agent, at any time
and from time to time, may enter into one or more agreements supplemental
hereto, in form satisfactory to the Company and the Agent, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company
herein and in the Security Certificates; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(4) to make provision with respect to the rights of Holders pursuant
to the requirements of Section 5.6(b); or
(5) except as provided for in Section 5.6, to cure any ambiguity, to
correct or supplement any provisions herein which may be inconsistent with
any other provisions herein, or to make any other provisions with respect
to such matters or questions
59
<PAGE> 68
arising under this Agreement, provided such action shall not adversely
affect the interests of the Holders.
Section 8.2. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% of the
Outstanding Securities, by Act of said Holders delivered to the Company and the
Agent, the Company when authorized by a Board Resolution, and the Agent may
enter into an agreement or agreements supplemental hereto for the purpose of
modifying in any manner the terms of the Securities, or the provisions of this
Agreement or the rights of the Holders in respect of the Securities; provided,
however, that no such supplemental agreement shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change any Payment Date;
(2) 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;
(3) reduce any Yield Enhancement Payment or any Deferred Yield
Enhancement Payment, or change any place where, or the coin or currency in
which, any Yield Enhancement Payment is payable;
(4) impair the right to institute suit for the enforcement of any
Purchase Contract;
(5) reduce the number of shares of Common Stock to be purchased
pursuant to any Purchase Contract, increase the price to purchase shares
of Common Stock upon settlement of any Purchase Contract, change the
Final Settlement Date or otherwise adversely affect the Holder's rights
under any Purchase Contract; or
(6) reduce the percentage of the Outstanding Securities the consent
of whose Holders is required for any such supplemental agreement.
60
<PAGE> 69
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby
of the agencies created by this Agreement, the Agent shall be entitled to
receive and (subject to Section 7.1) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental agreement
is authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Holder of Security Certificates theretofore or thereafter authenticated,
executed on behalf of the Holders and delivered hereunder shall be bound
thereby.
Section 8.5. Reference to Supplemental Agreements.
Security Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Security Certificates so
modified as to conform, in the opinion of the Agent and the Company, to any
such supplemental agreement may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Agent in
exchange for Outstanding Security Certificates.
61
<PAGE> 70
ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.
The Company covenants that it will not merge or consolidate with any other
Person or sell, assign, transfer, lease or convey all or substantially all of
its properties and assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i) either the Company
shall be the continuing corporation, or the successor (if other than the
Company) shall be a corporation organized and existing under the laws of the
United States of America or a State thereof or the District of Columbia and
such corporation shall expressly assume all the obligations of the Company
under the Purchase Contracts, this Agreement and the Pledge Agreement by one or
more supplemental agreements in form satisfactory to the Agent and the
Collateral Agent, executed and delivered to the Agent and the Collateral Agent
by such corporation, and (ii) the Company or such successor corporation, as the
case may be, shall not, immediately after such merger or consolidation, or such
sale, assignment, transfer, lease or conveyance, be in default in the
performance of any covenant or condition hereunder, under any of the Securities
or under the Pledge Agreement.
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by the successor corporation
in accordance with Section 9.1, such successor corporation shall succeed to and
be substituted for the Company with the same effect as if it had been named
herein as the Company. Such successor corporation thereupon may cause to be
signed, and may issue either in its own name or in the name of MCN Corporation,
any or all of the Security Certificates evidencing Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Agent; and, upon the order of such
62
<PAGE> 71
successor corporation, instead of the Company, and subject to all the terms,
conditions and limitations in this Agreement prescribed, the Agent shall
authenticate and execute on behalf of the Holders and deliver any Security
Certificates which previously shall have been signed and delivered by the
officers of the Company to the Agent for authentication and execution, and any
Security Certificate evidencing Securities which such successor corporation
thereafter shall cause to be signed and delivered to the Agent for that
purpose. All the Security Certificates so issued shall in all respects have the
same legal rank and benefit under this Agreement as the Security Certificates
theretofore or thereafter issued in accordance with the terms of this Agreement
as though all of such Security Certificates had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in the Security Certificates evidencing Securities thereafter to be
issued as may be appropriate.
Section 9.3. Opinion of Counsel to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
Covenants
Section 10.1. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from time
to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.
63
<PAGE> 72
Section 10.2. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New
York an office or agency where Security Certificates may be presented or
surrendered for acquisition of shares of Common Stock upon settlement or Early
Settlement and for transfer of Treasury Notes upon occurrence of a Termination
Event, where Security Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Agreement may be served. The Company will
give prompt written notice to the Agent of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Agent
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Company hereby
appoints the Agent as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where Security Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company will
give prompt written notice to the Agent of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby designates as the place of payment for the Securities the
Corporate Trust Office and appoints the Agent at its Corporate Trust Office as
paying agent in such city.
Section 10.3. Company to Reserve Common Stock.
The Company shall at all times prior to the Final Settlement Date reserve
and keep available, free from preemptive rights, out of its authorized but
unissued Common Stock the full number of shares of Common Stock issuable (x)
against tender of payment in respect of all Purchase Contracts constituting a
part of the Securities evidenced by Outstanding Security Certificates and (y)
in
64
<PAGE> 73
payment of Deferred Yield Enhancement Payments, if any, owed by the Company to
the Holders.
Section 10.4. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be issued
against tender of payment in respect of any Purchase Contract constituting a
part of the Outstanding Securities and in payment of any Deferred Yield
Enhancement Payments will, upon issuance, be duly authorized, validly issued,
fully paid and nonassessable.
Section 10.5. Statements of Officers of the Company as to Default.
The Company will deliver to the Agent, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions hereof, and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
65
<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
MCN CORPORATION
Attested by
/s/ Daniel L. Schiffer By: /s/ Sebastian Coppola
- ----------------------- -------------------------------
Senior Vice President, Name: Sebastian Coppola
General Counsel and Title: Vice President and
Secretary Treasurer
THE FIRST NATIONAL BANK OF
CHICAGO
Attested by
/s/ Steven M. Wagner By: /s/ Janice Ott Rotunno
- ---------------------- -------------------------------
Vice President and Name: Janice Ott Rotunno
Senior Counsel Title: Assistant Vice President
66
<PAGE> 75
EXHIBIT A
MCN CORPORATION
8 3/4% PREFERRED REDEEMABLE INCREASED
DIVIDEND EQUITY SECURITIES
(STATED AMOUNT $23.00 PER SECURITY)
No. Securities
This Security Certificate certifies that is the registered
Holder of the number of Securities set forth above. Each Security represents
(i) ownership by the Holder of 6 1/2% United States Treasury Notes due April
30, 1999 ("Treasury Notes") with a principal amount equal to the Stated Amount,
subject to the Pledge of such Treasury Notes by such Holder pursuant to the
Pledge Agreement, and (ii) the rights and obligations of the Holder under one
Purchase Contract with MCN Corporation, a Michigan corporation (the "Company").
The Treasury Notes represented by this Security Certificate were acquired by
the Underwriters on behalf of the Company with the proceeds of the offering of
this Security Certificate and other funds provided by the Company and are being
conveyed to the Holder of this Security Certificate and pledged pursuant to the
Pledge Agreement simultaneously therewith.
Pursuant to the Pledge Agreement, the Treasury Notes constituting part of
each Security evidenced hereby have been pledged to the Collateral Agent to
secure the obligations of the Holder under the Purchase Contract comprising a
portion of such Security.
The Pledge Agreement provides that all payments of principal of, or
interest on, any Treasury Notes comprising a portion of the Securities received
by the Collateral Agent shall be paid by the Collateral Agent by wire transfer
in same day funds no later than 1:00 p.m., New York City time, on the Business
Day such payment is received by the Collateral Agent (provided that in the
event such payment is received by the Collateral Agent on a day that is not a
Business Day or after 1:00 p.m., New
1
<PAGE> 76
York City time, on a Business Day, then such payment shall be made no later
than 10:00 a.m., New York City time, on the next succeeding Business Day) (i)
in the case of (A) interest payments and (B) any principal payments with
respect to any Treasury Notes that have been released from the Pledge pursuant
to the Pledge Agreement, to the Agent to the account designated by it for such
purpose and (ii) in the case of principal payments on any Pledged Treasury
Notes (as defined in the Pledge Agreement), at the direction of the Agent on
behalf of the Holders, to the Company, in full satisfaction of the respective
obligations of the Holders of the Securities of which such Pledged Treasury
Securities are a part under the Purchase Contracts forming a part of such
Securities. Interest on any Treasury Note forming part of a Security evidenced
hereby which is paid on any April 30 or October 31, commencing October 31,
1996 (a "Payment Date"), shall, subject to receipt thereof by the Agent from
the Collateral Agent, be paid to the Person in whose name this Security
Certificate (or a Predecessor Security Certificate) is registered at the close
of business on the Record Date next preceding such Payment Date. The Agent, on
behalf of the Holders, shall (to compensate the Company for its delivery to the
Holders of Treasury Notes that include accrued interest) remit to the Company
interest on any Treasury Note for the semi-annual interest payment due on April
30, 1996, subject to receipt thereof by the Agent as provided by the terms of
the Pledge Agreement, except for an amount representing accrued interest on any
Treasury Note from the date of issuance of the Securities until April 30, 1996
(the "Holders' Accrued Interest"). The Holders' Accrued Interest, when
received from the Collateral Agent, will be invested by the Agent in Permitted
Investments on behalf of the Holder until the first Payment Date, at which time
such amount, and any reinvestment income thereon, net of expenses therewith,
will be paid to the Person in whose name the Security Certificate (or one or
more Predecessor Security Certificates) of which such Treasury Note is a part
is registered at the close of business on the Record Date next preceding such
Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this
Security Certificate to purchase, and the Company to sell, on April 30, 1999
(the "Final Settlement Date"), at a price equal to $23.00 (the "Stated
2
<PAGE> 77
Amount"), a number of shares of Common Stock, par value $.01 per share ("Common
Stock"), of the Company, equal to the Settlement Rate, unless on or prior to
the Final Settlement Date there shall have occurred a Termination Event or
Early Settlement with respect to the Security of which such Purchase Contract
is a part, all as provided in the Purchase Contract Agreement and more fully
described on the reverse hereof. The purchase price for the shares of Common
Stock purchased pursuant to each Purchase Contract evidenced hereby, if not
paid earlier, shall be paid on the Final Settlement Date by application of
payment received in respect of the principal of the Treasury Notes pledged to
secure the obligations under such Purchase Contract of the Holder of the
Security of which such Purchase Contract is a part.
The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of a Security evidenced hereby an amount (the "Yield
Enhancement Payment") equal to 2 1/4% per annum of the Stated Amount, computed
on the basis of the actual number of days elapsed in a year of 365 or 366 days,
as the case may be, subject to deferral at the option of the Company as
provided in the Purchase Contract Agreement and more fully described on the
reverse hereof; except that the Yield Enhancement Payment payable on the first
Payment Date will be adjusted so that the Yield Enhancement Payment payable on
such date will be the equivalent of 2 1/4% of the Stated Amount per annum
accruing from the date of issuance of the Securities to October 31, 1996. Such
Yield Enhancement Payment shall be payable to the Person in whose name this
Security Certificate (or a Predecessor Security Certificate) is registered at
the close of business on the Record Date next preceding such Payment Date.
Interest on the Treasury Notes and the Yield Enhancement Payment will be
payable at the office of the Agent in The City of New York or, at the option of
the Company, by check mailed to the address of the Person entitled thereto as
such address appears on the Security Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
3
<PAGE> 78
Unless the certificate of authentication hereon has been executed by the
Agent by manual signature, this Security Certificate shall not be entitled to
any benefit under the Pledge Agreement or the Purchase Contract Agreement or be
valid or obligatory for any purpose.
4
<PAGE> 79
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
MCN CORPORATION
By:
_________________________
Name:
Title:
Attest:
________________________
HOLDER SPECIFIED ABOVE (as to obligations
of such Holder under the Purchase Contracts
evidenced hereby)
By: THE FIRST NATIONAL BANK OF CHICAGO,
not individually but solely as
Attorney-in-Fact of such Holder
By:_________________________________
Dated:
This is one of the Security Certificates referred to in the within
mentioned Purchase Contract Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:_________________________________
5
<PAGE> 80
(Form of Reverse of Security Certificate]
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of April 22, 1996 (the "Purchase Contract Agreement"),
between the Company and The First National Bank of Chicago, as Purchase
Contract Agent (herein called the "Agent"), to which Purchase Contract
Agreement and supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Agent, the Company, and the Holders and
of the terms upon which the Security Certificates are, and are to be, executed
and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this
Security Certificate to purchase, and the Company to sell, on the Final
Settlement Date at a price equal to the Stated Amount, a number of shares of
Common Stock of the Company equal to the Settlement Rate, unless, on or prior
to the Final Settlement Date, there shall have occurred a Termination Event or
an Early Settlement with respect to the Security of which such Purchase
Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable
Market Value (as defined below) is greater than $27.60 (the "Threshold
Appreciation Price"), .833 of a share of Common Stock per Purchase Contract,
(b) if the Applicable Market Value is less than or equal to the Threshold
Appreciation Price but is greater than the Stated Amount, a fractional share of
Common Stock per Purchase Contract equal to the Stated Amount divided by the
Applicable Market Value and (c) if the Applicable Market Amount is less than or
equal to the Stated Amount, one share of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase Contract. No
fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing Prices per
share of Common Stock on each of the twenty consecutive Trading Days ending on
the second Trading Day immediately preceding the Final Settlement Date. The
"Closing Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price)
6
<PAGE> 81
of the Common Stock on the New York Stock Exchange (the "NYSE") on such date
or, if the Common Stock is not listed for trading on the NYSE on any such date,
as reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the Common
Stock is not so listed on a United States national or regional securities
exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock is
not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the Common Stock.
The purchase price for the shares of Common Stock purchased pursuant to
each Purchase Contract shall be paid by application of payments received by the
Company on the Final Settlement Date from the Collateral Agent at the direction
of the Agent on behalf of the Holders pursuant to the Pledge Agreement in
respect of the principal of the Treasury Notes pledged to secure the
obligations of the relevant Holder under such Purchase Contract.
The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.
Subject to the next succeeding paragraph, the Company shall pay, on each
Payment Date, the Yield Enhancement Payment payable in respect of each Purchase
Contract to the Person in whose name the Security Certificate evidencing such
Purchase Contract is registered at the close of business on the Record Date
next preceding such Payment Date. Yield Enhancement Payments will be payable at
7
<PAGE> 82
the office of the Agent in The City of New York or, at the option of the
Company, by check mailed to the address of the Person entitled thereto at such
address as it appears on the Security Register.
The Company shall have the right, at any time prior to the Final
Settlement Date, to defer the payment of any or all of the Yield Enhancement
Payments otherwise payable on any Payment Date, but only if the Company shall
give the Holders and the Agent written notice of its election to defer such
payment (specifying the amount to be deferred) as provided in the Purchase
Contract Agreement. Any Yield Enhancement Payments so deferred shall bear
additional Yield Enhancement Payments thereon at the rate of 8 3/4% per annum
(computed on the basis of the actual number of days elapsed in a year of 365 or
366 days, as the case may be), compounding on each succeeding Payment Date,
until paid in full (such deferred installments of Yield Enhancement Payments
together with the additional Yield Enhancement Payments accrued thereon, are
referred to herein as the "Deferred Yield Enhancement Payments"). Deferred
Yield Enhancement Payments shall be due on the next succeeding Payment Date
except to the extent that payment is deferred pursuant to the Purchase Contract
Agreement. No Yield Enhancement Payments may be deferred to a date that is
after the Final Settlement Date.
In the event that the Company elects to defer the payment of Yield
Enhancement Payments on the Purchase Contracts until the Final Settlement Date,
the Holder of this Security Certificate 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 the Holder of the Security Certificate of Securities divided by (y)
the Applicable Market Value. No fractional shares of Common Stock will be
issued with respect to the payment of Deferred Yield Enhancement Payments on
the Final Settlement Date, as provided in the Purchase Contract Agreement.
In the event the Company exercises its option to defer the payment of
Yield Enhancement Payments, then, until the Deferred Yield Enhancement Payments
have been made, (a) the Company shall not declare or pay dividends
8
<PAGE> 83
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 (i)
purchase 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.
The Purchase Contracts and the obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Yield
Enhancement Payment or any Deferred Yield Enhancement Payments, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Agent or the Company, if, on or prior to the Final
Settlement Date, a Termination Event shall have occurred. Upon the occurrence
of a Termination Event, the Company shall promptly but in no event after two
business days thereafter give written notice to the Agent, the Collateral Agent
and to the Holders, at their addresses as they appear in the Security Register.
Upon and after the occurrence of a Termination Event, the Collateral Agent
shall release the Treasury Notes from the Pledge in accordance with the
provisions of the Pledge Agreement. The Securities shall thereafter represent
the right to receive the Treasury Notes forming a part of such Securities in
accordance with the provisions of the Purchase Contract Agreement and the
Pledge Agreement.
9
<PAGE> 84
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement at the option of the Holder thereof, Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $23,000 or an
integral multiple thereof may be settled early ("Early Settlement") as provided
in the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this
Security Certificate, the Holder of this Security Certificate shall deliver
this Security Certificate to the Agent at the Corporate Trust Office duly
endorsed for transfer to the Company or in blank with the form of Election to
Settle Early set forth below duly completed and accompanied by payment in the
form of a certified or cashier's check payable to the order of the Company in
immediately available funds in an amount (the "Early Settlement Amount") equal
to (i) the product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement, plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record Date next
preceding any Payment Date to the opening of business on such Payment Date, an
amount equal to the sum of (x) the Yield Enhancement Payments payable on such
Payment Date with respect to such Purchase Contracts plus (y) the interest with
respect to the related Treasury Notes payable on such Payment Date. Upon Early
Settlement of Purchase Contracts by a Holder of the related Securities, the
Treasury Notes underlying such Securities shall be released from the Pledge as
provided in the Pledge Agreement and the Holder shall be entitled to receive, a
number of shares of Common Stock on account of each Purchase Contract forming
part of a Security as to which Early Settlement is effected equal to the Early
Settlement Rate; provided however, that upon the Early Settlement of the
Purchase Contracts, the Holder thereof will forfeit the right to receive any
Deferred Yield Enhancement Payments on such Purchase Contracts. The Early
Settlement Rate shall initially be equal to .833 and shall be adjusted in the
same manner and at the same time as the Settlement Rate is adjusted as provided
in the Purchase Contract Agreement.
The Security Certificates are issuable only in registered form and only in
denominations of a single Security and any integral multiple thereof. The
transfer
10
<PAGE> 85
of any Security Certificate will be registered and Security Certificates
may be exchanged as provided in the Purchase Contract Agreement. The
Security Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. For so long as the Purchase
Contract underlying a Security remains in effect, such Security shall not
be separable into its constituent parts, and the rights and obligations of
the Holder of such Security in respect of the Treasury Notes and Purchase
Contract constituting such Security may be transferred and exchanged only
as a Security.
Upon registration of transfer of this Security Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee, except as may be required by the Agent pursuant to the Purchase
Contract Agreement), under the terms of the Purchase Contract Agreement and the
Purchase Contracts evidenced hereby and the transferor shall be released from
the obligations under the Purchase Contracts evidenced by this Security
Certificate. The Company covenants and agrees, and the Holder, by his
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Security Certificate, by his acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Securities evidenced hereby on his behalf as his
attorney-in-fact, expressly withholds 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,
agrees to be bound by the terms and provisions thereof, covenants and agrees to
perform his obligations under such Purchase Contracts, consents to the
provisions of the Purchase Contract Agreement, authorizes the Agent to enter
into and perform the Pledge Agreement on his behalf as his attorney-in-fact,
and consents to the Pledge of the Treasury Notes underlying this Security
11
<PAGE> 86
Certificate pursuant to the Pledge Agreement. The Holder further covenants and
agrees, that, to the extent and in the manner provided in the Purchase Contract
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
in respect of principal of the Treasury Notes on the Final Settlement Date
shall be paid by the Collateral Agent to the Company in satisfaction of such
Holder's obligations under such Purchase Contract and such Holder shall acquire
no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% of
the Outstanding Securities.
All terms used herein which are defined in the Purchase Contract Agreement
have the meanings set forth therein.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company or
the Agent may treat the Person in whose name this Security Certificate is
registered as the owner of the Securities evidenced hereby for the purpose of
receiving payments of interest on the Treasury Notes, receiving payments of
Yield Enhancement Payments and any Deferred Yield Enhancement Payments,
performance of the Purchase Contracts and for all other purposes whatsoever,
whether or not any payments in respect thereof be overdue and notwithstanding
any notice to the contrary, and neither the Company, the Agent nor any such
agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Agent.
12
<PAGE> 87
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Final Settlement Date of the
Purchase Contracts underlying the number of Securities evidenced by this
Security Certificate be registered in the name of, and delivered, together with
a check in payment for any fractional share, to the undersigned at the address
indicated below unless a different name and address have been indicated below.
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated: _____________________ _______________________
Signature
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the Holder,
please print such Person's name
and address:
Please print name and address of
Registered Holder:
________________________ ______________________
Name Name
_________________________ ______________________
Address Address
_________________________ ______________________
_________________________ ______________________
Social Security or other
Taxpayer Identification
Number, if any
______________________
13
<PAGE> 88
ELECTION TO SETTLE EARLY
The undersigned Holder of this Security Certificate hereby irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Securities evidenced by this Security Certificate
specified below. The option to effect Early Settlement may be exercised only
with respect to Purchase Contracts underlying Securities with an aggregate
Stated Amount equal to $_______ or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Security Certificate representing any Securities evidenced hereby as to which
Early Settlement of the related Purchase Contracts is not effected, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. Treasury Notes deliverable upon such Early
Settlement will be transferred in accordance with the transfer instructions set
forth below. If shares are to be registered in the name of a Person other than
the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:___________________ _______________________
Signature
14
<PAGE> 89
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If shares or Security Certifi- REGISTERED HOLDER
cates are to be registered in
the name of and delivered to
and Treasury Notes are to be
transferred to a Person other
than the Holder, please print
such Person's name and address:
Please print name and address of
Registered Holder:
_________________________ ______________________
Name Name
_________________________ ______________________
Address Address
_________________________ ______________________
_________________________ ______________________
Social Security or other
Taxpayer Identification
Number, if any
______________________
Transfer Instructions for Treasury Notes Transferable Upon Early Settlement or
a Termination Event:
________________________________________________
________________________________________________
_________________________________________________
15
<PAGE> 1
EXHIBIT 4-10
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of April 22, 1996 (this "Agreement"), among
MCN Corporation, a Michigan corporation (the "Company"), Chemical Bank, a New
York banking corporation, not individually but solely as collateral agent (in
such capacity, together with its successors in such capacity, the "Collateral
Agent"), and The First National Bank of Chicago, not individually but solely as
purchase contract agent and as attorney-in-fact of the Holders (as hereinafter
defined) from time to time of the Securities (as hereinafter defined) (in such
capacity, together with its successors in such capacity, the "Purchase Contract
Agent") under the Purchase Contract Agreement (as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there will be issued 8 3/4% Preferred Redeemable
Increased Dividend Equity Securities (the "Securities").
Each Security consists of (a) one Purchase Contract (as hereinafter
defined) and (b) 6 1/2% United States Treasury Notes due April 30, 1999
("Treasury Notes") having a principal amount equal to $23.00 (the "Stated
Amount") and maturing on April 30, 1999 (the "Final Settlement Date"), subject
to the pledge of such Treasury Notes created hereby.
The Company has caused the Underwriters, on its behalf, to purchase
the Treasury Notes, to be settled on April 26, 1996, with the proceeds of the
offering of the Securities and other funds to be provided by the Company. The
Company will convey such Treasury Notes to the Holders as a part of the
Securities.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders (as defined in the Purchase Contract Agreement)
from time to
<PAGE> 2
time of the Securities have authorized the Purchase Contract Agent, as
attorney-in-fact of such Holders, among other things to execute and deliver
this Agreement on behalf of such Holders and to grant the pledge provided
hereby of the Treasury Notes constituting part of such Securities as provided
herein and subject to the terms hereof.
Accordingly, the Company, the Collateral Agent and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact of the Holders from
time to time of the Securities, agree as follows:
Section 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular; and
(2) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision.
"Act" has the meaning specified in the Purchase Contract Agreement.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Applicable Treasury Regulations" means Subpart O- Book-Entry
Procedure of Title 31 of the Code of Federal Regulations (31 CFR (S) 306.115
et. seq.) and any other regulations of the United States Treasury Department
from time to time applicable to the transfer or pledge of book-entry U.S.
Treasury Securities.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
2
<PAGE> 3
"Board Resolution" has the meaning specified in the Purchase Contract
Agreement.
"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.
"Collateral Agent" has the meaning specified in the first paragraph of
this instrument.
"Collateral Account" means the account maintained at Chemical Bank in
the name "Chemical Bank as Collateral Agent of MCN Corporation as pledgee of
the First National Bank of Chicago as Purchase Contract Agent".
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Early Settlement" has the meaning specified in the Purchase Contract
Agreement.
"Early Settlement Amount" has the meaning specified in the Purchase
Contract Agreement.
"Final Settlement Date" has the meaning specified in the Recitals.
"Holder" when used with respect to a Security, or a Purchase Contract
constituting a part thereof, has the meaning specified in the Purchase Contract
Agreement.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company and who shall be
reasonably acceptable to the Collateral Agent or the Purchase Contract Agent,
as the case may be.
"Outstanding Securities" has the meaning specified in the Purchase
Contract Agreement.
"Outstanding Security Certificates" has the meaning specified in the
Purchase Contract Agreement.
3
<PAGE> 4
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" has the meaning specified in Section 2 hereof.
"Pledged Treasury Notes" has the meaning specified in Section 2
hereof.
"Purchase Contract" has the meaning specified in the Purchase Contract
Agreement.
"Purchase Contract Agent" has the meaning specified in the first
paragraph of this instrument.
"Security" has the meaning specified in the Recitals.
"Security Certificate" has the meaning specified in the Purchase
Contract Agreement.
"Stated Amount" has the meaning specified in the Recitals.
"Termination Event" has the meaning specified in the Purchase Contract
Agreement.
"Treasury Notes" has the meaning specified in the Recitals.
Section 2. The Pledge. The Holders from time to time of the Securities
acting through the Purchase Contract Agent, as their attorney-in-fact, hereby
pledge and grant to the Collateral Agent for the benefit of the Company, as
collateral security for the performance when due by such Holders of their
respective obligations under the Purchase Contracts comprising a portion of
such Securities, a security interest in all of the right, title and interest of
such Holders in the Treasury Notes constituting a part of such Securities.
Concurrently with the execution and delivery of the Securities, the initial
Holders and the Purchase Contract Agent shall (i) cause the Treasury Notes to
be transferred to the Collateral Agent by Federal Reserve Bank-Wire to the
account of the
4
<PAGE> 5
Collateral Agent and (ii) the Collateral Agent shall credit the Treasury Notes
to the Collateral Account; in each case pursuant to Applicable Treasury
Regulations and to the Uniform Commercial Code to the extent such laws are
applicable. The pledge provided in this Section 2 is herein referred to as the
"Pledge" and the Treasury Notes subject to the Pledge, excluding any Treasury
Notes released from the Pledge as provided in Section 4 hereof, are hereinafter
referred to as the "Pledged Treasury Notes." Subject to the Pledge, and to the
provisions of Section 4.1 of the Purchase Contract Agreement, the Holders from
time to time of the Securities shall have full beneficial ownership of the
Treasury Notes constituting a part of such Securities.
Section 3. Distribution of Principal and Interest. (a) All payments of
principal of, or interest on, any Treasury Notes constituting part of the
Securities received by the Collateral Agent shall be paid by the Collateral
Agent by wire transfer in same day funds no later than 1:00 p.m., New York City
time, on the Business Day such interest payment is received by the Collateral
Agent (provided that in the event such interest payment is received by the
Collateral Agent on a day that is not a Business Day or after 1:00 p.m., New
York City time, on a Business Day, then such payment shall be made no later
than 10:00 a.m., New York City time, on the next succeeding Business Day) (i)
in the case of (A) interest payments and (B) any principal payments with
respect to any Treasury Notes that have been released from the Pledge pursuant
to Section 4 hereof, to the Purchase Contract Agent to the account designated
by it for such purpose and (ii) in the case of principal payments on any
Pledged Treasury Notes, the Purchase Contract Agent on behalf of the Holders
hereby directs the Collateral Agent to make such payments to the Company, in
full satisfaction of the respective obligations of the Holders of the
Securities of which such Pledged Treasury Notes are a part under the Purchase
Contracts forming a part of such Securities. All such payments received by the
Purchase Contract Agent as provided herein shall be applied by the Purchase
Contract Agent pursuant to the provisions of the Purchase Contract Agreement,
including the provisions of Section 4.1 of the Purchase Contract Agreement with
regard to the semi-annual interest payment due on the Treasury Notes on April
30, 1996. If, notwithstanding the foregoing, the Purchase Contract Agent shall
receive any payments of
5
<PAGE> 6
principal on account of any Pledged Treasury Notes, the Purchase Contract Agent
shall hold the same as trustee of an express trust for the benefit of the
Company (and promptly deliver over to the Company) for application to the
obligations of the Holders of the Securities of which such Treasury Notes are a
part under the Purchase Contracts relating to the Securities of which such
Treasury Notes are a part, and such Holders shall acquire no right, title or
interest in any such payments of principal so received.
Section 4. Release of Pledged Treasury Notes. (a) Upon written notice
to the Collateral Agent by the Company or the Purchase Contract Agent that
there has occurred a Termination Event, resulting in the termination of the
Purchase Contracts in accordance with Section 5.8 of the Purchase Contract
Agreement, the Collateral Agent shall release all Pledged Treasury Notes from
the Pledge and shall transfer all such Treasury Notes, free and clear of any
lien, pledge or security interest created hereby, to the Purchase Contract
Agent.
If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail immediately to effectuate the release and transfer of all Pledged
Treasury Notes as provided by this Section 4(a), the Purchase Contract Agent
shall, subject to Section 6.12, (i) use its best efforts to obtain an opinion
of a nationally recognized law firm reasonably acceptable to the Collateral
Agent to the effect that, as a result of the Company's being the debtor in such
a bankruptcy case, the Collateral Agent will not be prohibited from releasing
or transferring the Treasury Notes as provided in this Section 4(a), and shall
deliver such opinion to the Collateral Agent within ten days after the
occurrence of such Termination Event, and if (y) the Purchase Contract Agent
shall be unable to obtain such opinion within ten days after the occurrence of
such Termination Event or (z) the Collateral Agent shall continue, after
delivery of such opinion, to refuse to effectuate the release and transfer of
all Pledged Treasury Notes as provided in this Section 4(a), then the Purchase
Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court with
jurisdiction of the Company's case under the Bankruptcy Code seeking an order
requiring the Collateral
6
<PAGE> 7
Agent to effectuate the release and transfer of all Pledged Treasury Notes as
provided by this Section 4(a) or (ii) commence an action or proceeding like
that described in subsection (i)(z) hereof within ten days after the occurrence
of such Termination Event.
(b) Upon written notice to the Collateral Agent by the Purchase
Contract Agent that one or more Holders of Securities have elected to effect
Early Settlement of their respective obligations under the Purchase Contracts
forming a part of such Securities in accordance with the terms of the Purchase
Contracts and the Purchase Contract Agreement (setting forth the number of such
Purchase Contracts as to which such Holders have elected to effect Early
Settlement), and that the Purchase Contract Agent has received from such
Holders, and paid to the Company, the related Early Settlement Amounts pursuant
to the terms of the Purchase Contracts and the Purchase Contract Agreement and
that all conditions to such Early Settlement have been satisfied, then the
Collateral Agent shall release from the Pledge, Pledged Treasury Notes with a
principal amount equal to the product of (i) the Stated Amount times (ii) the
number of such Purchase Contracts as to which such Holders have elected to
effect Early Settlement.
(c) Transfers of Treasury Notes pursuant to Section 4(a) or (b) shall
be by Federal Reserve Bank-Wire or in another appropriate manner, (i) if the
Collateral Agent shall have received such notification at or prior to 11:00
a.m., New York City time, on a Business Day, then no later than 2:00 p.m., New
York City time, on such Business Day and (ii) if the Collateral Agent shall
have received such notification on a day that is not a Business Day or after
11:00 a.m., New York City time, on a Business Day, then no later than 10:00
a.m., New York City time, on the next succeeding Business Day.
Section 5. Rights and Remedies. (a) The Collateral Agent shall have
all of the rights and remedies with respect to the Pledged Treasury Notes of a
secured party under the Uniform Commercial Code as in effect in the State of
New York (the "Code") (whether or not the Code is in effect in the jurisdiction
where the rights and remedies are asserted) and such additional rights and
remedies to which a secured party is entitled under the
7
<PAGE> 8
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of principal payments of any
Pledged Treasury Notes as provided in Section 3 hereof in satisfaction of the
obligations of the Holder of the Securities of which such Pledged Treasury
Notes are a part under the Purchase Contracts forming a part of such
Securities, the Collateral Agent shall have and may exercise, with reference to
such Pledged Treasury Notes and such obligations of such Holder, any and all of
the rights and remedies available to a secured party under the Code after
default by a debtor, and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of principal of or interest on
the Pledged Treasury Notes.
(d) The Purchase Contract Agent agrees that, from time to time, upon
the written request of the Collateral Agent, the Purchase Contract Agent shall
execute and deliver such further documents and do such other acts and things as
the Collateral Agent may reasonably request in order to maintain the Pledge,
and the perfection and priority thereof, and to confirm the rights of the
Collateral Agent hereunder.
Section 6. The Collateral Agent and the Purchase Contract Agent. It is
hereby agreed as follows:
6.01. Appointment, Powers and Immunities. The Collateral Agent
shall act as agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this
Agreement, together with such other powers as are reasonably
incidental thereto. The Collateral Agent: (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement
and no implied covenants or obligations shall be inferred from this
Agreement against the Collateral Agent, nor shall the Collateral Agent
be bound by the
8
<PAGE> 9
provisions of any agreement by any party hereto beyond the specific
terms hereof; (b) shall not be responsible for any recitals contained
in this Agreement, or in any certificate or other document referred to
or provided for in, or received by it under, this Agreement, the
Securities or the Purchase Contract Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement (other than as against the Collateral Agent), the
Securities or the Purchase Contract Agreement or any other document
referred to or provided for herein or therein or for any failure by
the Company or any other Person (except the Collateral Agent) to
perform any of its obligations hereunder or thereunder; (c) shall not
be required to initiate or conduct any litigation or collection
proceedings hereunder (except pursuant to directions furnished under
Section 6.02 hereof); (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other
document or instrument referred to or provided for herein or in
connection herewith or therewith, except for its own negligence; and
(e) shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect
to, any securities or other property deposited hereunder. Subject to
the foregoing, during the term of this Agreement, the Collateral Agent
shall take all reasonable action in connection with the safe keeping
and preservation of the Pledged Treasury Notes hereunder.
No provision of this Agreement shall require the Collateral
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder. In no
event shall the Collateral Agent be liable for any amount in excess of
the value of the Pledged Treasury Notes.
6.02. Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to
the Collateral Agent, to direct the time, method and place of
conducting any proceeding for any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the
Collateral Agent, or to
9
<PAGE> 10
direct the taking or refraining from taking of any action authorized
by this Agreement; provided, however, that (i) such direction shall
not conflict with the provisions of any law or of this Agreement and
(ii) the Collateral Agent shall be adequately indemnified as provided
herein. Nothing in this Section 6.02 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to take
any action which it deems proper and which is not inconsistent with
such direction.
6.03. Reliance by Collateral Agent. The Collateral Agent shall
be entitled to rely upon any certification, order, judgment, opinion,
notice or other communication (including, without limitation, any
thereof by telephone, telecopy, telex, telegram or cable) believed by
it to be genuine and correct and to have been signed or sent by or on
behalf of the proper Person or Persons (without being required to
determine the correctness of any fact stated therein), and upon advice
and statements of legal counsel and other experts selected by the
Collateral Agent. As to any matters not expressly provided for by
this Agreement, the Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in
accordance with instructions given by the Company in accordance with
this Agreement.
6.04. Rights in Other Capacities. The Collateral Agent and its
affiliates may (without having to account therefor to the Company)
accept deposits from, lend money to, make investments in and generally
engage in any kind of banking, trust or other business with the
Purchase Contract Agent and any Holder of Securities (and any of their
subsidiaries or affiliates) as if it were not acting as the Collateral
Agent, and the Collateral Agent and its affiliates may accept fees and
other consideration from the Purchase Contract Agent and any Holder of
Securities without having to account for the same to the Company,
provided that the Collateral Agent covenants and agrees with the
Company that the Collateral Agent shall not accept, receive or permit
there to be created in its favor any security interest, lien or other
encumbrance of any kind in or upon the Pledged Treasury Notes.
10
<PAGE> 11
6.05. Non-Reliance on Collateral Agent. The Collateral Agent
shall not be required to keep itself informed as to the performance or
observance by the Purchase Contract Agent or any Holder of Securities
of this Agreement, the Purchase Contract Agreement, the Securities or
any other document referred to or provided for herein or therein or to
inspect the properties or books of the Purchase Contract Agent or any
Holder of Securities. The Collateral Agent shall not have any duty or
responsibility to provide the Company with any credit or other
information concerning the affairs, financial condition or business of
the Purchase Contract Agent or any Holder of Securities (or any of
their affiliates) that may come into the possession of the Collateral
Agent or any of its affiliates.
6.06. Compensation and Indemnity. The Company agrees: (i) to
pay the Collateral Agent from time to time reasonable compensation for
all services rendered by it hereunder and (ii) to indemnify the
Collateral Agent for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of its powers and duties under this Agreement,
including the costs and expenses (including reasonable fees and
expenses of counsel) of defending itself against any claim or
liability in connection with the exercise or performance of such
powers and duties.
6.07. Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting
claims by or among the parties hereto and/or any other Person with
respect to any funds or property deposited hereunder, the Collateral
Agent shall be entitled, at its sole option, to refuse to comply with
any and all claims, demands or instructions with respect to such
property or funds so long as such dispute or conflict shall continue,
and the Collateral Agent shall not be or become liable in any way to
any of the parties hereto for its failure or refusal to comply with
such conflicting claims, demands or instructions. The Collateral Agent
shall be entitled to refuse to act until either (i) such conflicting
or adverse
11
<PAGE> 12
claims or demands shall have been finally determined by a court of
competent jurisdiction or settled by agreement between the conflicting
parties as evidenced in a writing, satisfactory to the Collateral
Agent or (ii) the Collateral Agent shall have received security or an
indemnity satisfactory to the Collateral Agent sufficient to save the
Collateral Agent harmless from and against any and all loss, liability
or expense which the Collateral Agent may incur by reason of its
acting. The Collateral Agent may in addition elect to commence an
interpleader action or seek other judicial relief or orders as the
Collateral Agent may deem necessary. Notwithstanding anything
contained herein to the contrary, the Collateral Agent shall not be
required to take any action that is in its opinion contrary to law or
to the terms of this Agreement, or which would in its opinion subject
it or any of its officers, employees or directors to liability.
6.08. Resignation of Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as provided
below, (a) the Collateral Agent may resign at any time by giving
notice thereof to the Company and the Purchase Contract Agent, (b) the
Collateral Agent may be removed at any time by the Company and (c)
if the Collateral Agent fails to perform any of its material
obligations hereunder in any material respect for a period of not
less than 20 days after receiving written notice of such failure by
the Purchase Contract Agent and such failure shall be continuing, the
Collateral Agent may be removed by the Purchase Contract Agent. The
Purchase Contract Agent shall promptly notify the Company of any
removal of the Collateral Agent pursuant to clause (c) of the
immediately preceding sentence. Upon any such resignation or removal,
the Company shall have the right to appoint a successor Collateral
Agent. If no successor Collateral Agent shall have been so appointed
and shall have accepted such appointment within 30 days after the
retiring Collateral Agent's giving of notice of resignation or such
removal, then the retiring Collateral Agent may petition any court of
competent jurisdiction for the appointment of a successor Collateral
Agent. The Collateral Agent shall be a bank which has an office in New
12
<PAGE> 13
York, New York with a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral
Agent, and the retiring Collateral Agent shall take all appropriate
action to transfer any money and property held by it hereunder
(including the Pledged Treasury Notes) to such successor Collateral
Agent. The retiring Collateral Agent shall, upon such succession, be
discharged from its duties and obligations as Collateral Agent
hereunder. After any retiring Collateral Agent's resignation hereunder
as Collateral Agent, the provisions of this Section 6 shall continue
in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as the Collateral Agent.
Promptly following the removal or resignation of the
Collateral Agent the Company shall give written notice thereof to
Moody's Investors Services, Inc.
6.09. Right to Appoint Agent or Advisor. The Collateral Agent
shall have the right to appoint agents or advisors in connection with
any of its duties hereunder, and the Collateral Agent shall not be
liable for any action taken or omitted by such agents or advisors
selected in good faith.
6.10. Survival. The provisions of this Section 6 shall survive
termination of this Agreement and the resignation or removal of the
Collateral Agent.
6.11. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or its
officers, employees or agents be liable under this Agreement to any
third party for indirect, special, punitive, or consequential loss or
damage of any kind whatsoever, including lost profits, whether or not
the likelihood of such loss or damage was known to the Collateral
Agent, or any of them, incurred without any act or deed that is found
to be attributable to gross negligence on the part of the Collateral
Agent.
13
<PAGE> 14
6.12. The Purchase Contract Agent. The duties and
responsibilities of the Purchase Contract Agent under this Agreement
shall in each case be governed by Article VII of the Purchase Contract
Agreement.
Section 7. Amendment.
7.01. Amendment Without Consent of Holders. Without the consent of any
Holders, the Company, the Collateral Agent and the Purchase Contract Agent, at
any time and from time to time, may amend this Agreement, in form satisfactory
to the Company, the Collateral Agent and the Purchase Contract Agent, for any
of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of
the Company; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent or Purchase Contract Agent;
or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other such
provisions herein, or to make any other provisions with respect to
such matters or questions arising under this Agreement, provided such
action shall not adversely affect the interests of the Holders.
7.02. Amendment with Consent of Holders. With the consent of the
Holders of not less than 66 2/3% of the Outstanding Securities, by Act of said
Holders delivered to the Company, the Purchase Contract Agent and the
Collateral Agent, the Company, when authorized by a Board Resolution, the
Purchase Contract Agent and the Collateral Agent may amend this Agreement for
the purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Securities; provided, however, that no
such supplemental agreement shall, without the consent of the Holder of each
Outstanding Security affected thereby,
14
<PAGE> 15
(1) 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; or
(2) otherwise effect any action that would require the consent
of the Holder of each Outstanding Security affected thereby pursuant
to the Purchase Contract Agreement if such action were effected by an
agreement supplemental thereto; or
(3) reduce the percentage of Outstanding Securities the
consent of whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
7.03. Execution of Amendments. In executing any amendment permitted by
this Section, the Collateral Agent and the Purchase Contract Agent shall be
entitled to receive and (subject to Section 6.01 hereof, with respect to the
Collateral Agent, and Section 7.1 of the Purchase Contract Agreement, with
respect to the Purchase Contract Agent) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
such execution and delivery have been satisfied.
7.04. Effect of Amendments. Upon the execution of any amendment under
this Section, this Agreement shall be modified in accordance therewith, and
such amendment shall form a part of this Agreement for all purposes; and every
Holder of Security Certificates theretofore or thereafter authenticated,
executed on behalf of the Holders and delivered under the Purchase Contract
Agreement shall be bound thereby.
7.05. Reference to Amendments. Security Certificates authenticated,
executed on behalf of the Holders and delivered after the execution of any
amendment pursuant to this Section may, and shall if required by the Collateral
Agent or the Purchase Contract Agent, bear a notation in form approved by the
Purchase Contract Agent and the Collateral Agent as to any matter provided for
in such amendment. If the Company shall so determine, new Security Certificates
so modified as to conform, in the opinion of the Collat-
15
<PAGE> 16
eral Agent, the Purchase Contract Agent and the Company, to any such amendment
may be prepared and executed by the Company and authenticated, executed on
behalf of the Holders and delivered by the Purchase Contract Agent in
accordance with the Purchase Contract Agreement in exchange for Outstanding
Security Certificates.
Section 8. Miscellaneous.
8.01. No Waiver. No failure on the part of the Collateral Agent or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral
Agent or any of its agents of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies herein are cumulative and are not exclusive of any
remedies provided by law.
8.02. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Company, the
Collateral Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, hereby submit to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. The Company, the
Collateral Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
16
<PAGE> 17
8.03. Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof or, as to any party, at such other address as shall
be designated by such party in a notice to the other parties. Except as
otherwise provided in this Agreement, all such communications shall be deemed
to have been duly given when transmitted by telecopier or personally delivered
or, in the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
8.04. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the Company,
the Collateral Agent and the Purchase Contract Agent, and the Holders from time
to time of the Securities, by their acceptance of the same, shall be deemed to
have agreed to be bound by the provisions hereof and to have ratified the
agreements of, and the grant of the Pledge hereunder by, the Purchase Contract
Agent.
8.05. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.06. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
8.07. Expenses, etc. The Company agrees to reimburse the Collateral
Agent for: (a) all reasonable out-of-pocket costs and expenses of the
Collateral Agent (including, without limitation, the reasonable fees and
expenses of
17
<PAGE> 18
counsel to the Collateral Agent), in connection with (i) the negotiation,
preparation, execution and delivery or performance of this Agreement and (ii)
any modification, supplement or waiver of any of the terms of this Agreement;
(b) all reasonable costs and expenses of the Collateral Agent (including,
without limitation, reasonable fees and expenses of counsel) in connection with
(i) any enforcement or proceedings resulting or incurred in connection with
causing any Holder of Securities to satisfy its obligations under the Purchase
Contracts forming a part of the Securities and (ii) the enforcement of this
Section 8.07; and (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any other document referred to herein and all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated hereby.
8.08. Security Interest Absolute. All rights of the Collateral Agent
and security interests hereunder, and all obligations of the Holders from time
to time of the Securities hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any provision of
the Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of the
obligations of Holders of Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase
Contract Agreement or any Purchase Contract or any other agreement or
instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
18
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
MCN Corporation
By:/s/ Sebastian Coppola
-------------------------
Name: Sebastian Coppola
Title: Vice President and
Treasurer
Address for Notices:
MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
Telecopy: (313) 256-5871
The First National Bank of Chicago
as Purchase Contract Agent and as
attorney-in-fact of the Holders
from time to time of the Securities
By: /s/ Janice Ott Rotunno
---------------------------
Name:Janice Ott Rotunno
Title: Assistant Vice President
Address for Notices:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Ser-
vices Division
Telecopy: (312) 407-4656
19
<PAGE> 20
Chemical Bank
as Collateral Agent
By: /s/ L. O'Brien
----------------------
Name: L. O'Brien
Title: Senior Trust Officer
Address for Notices:
Chemical Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust Admin-
istration Department
Telecopy: (212) 946-7800
20
