<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997, OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
-------------- -------------
COMMISSION FILE NUMBER 1-10070
MCN ENERGY GROUP INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<C> <C>
MICHIGAN 38-2820658
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 GRISWOLD STREET, DETROIT, MICHIGAN 48226
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code 313-256-5500
MCN CORPORATION
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
Number of shares outstanding of each of the registrant's classes of common
stock, as of April 30, 1997:
Common Stock, par value $.01 per share: 68,031,943
================================================================================
<PAGE> 2
INDEX TO FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
COVER....................................................... i
INDEX....................................................... ii
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements................................ 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 1
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders................................................... 22
Item 6. Exhibits and Reports on Form 8-K.................... 23
SIGNATURE................................................... 24
</TABLE>
ii
<PAGE> 3
MCN ENERGY GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First quarter earnings reach new high -- MCN's earnings from continuing
operations for the 1997 quarter increased 3.4% or $2.7 million over the first
quarter of 1996. Earnings from continuing operations for the 1997 twelve-month
period increased 3.3% or $3.7 million over the comparable 1996 period. As
discussed below, this performance primarily reflects the success of the
strategies implemented by the Diversified Energy group.
MCN's earnings comparison was also affected by income from discontinued
operations. As discussed in the "Discontinued Operations" section that follows,
MCN sold The Genix Group, Inc. (Genix) during the second quarter of 1996.
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
-------------- ----------------
1997 1996 1997 1996
----- ----- ------ ------
<S> <C> <C> <C> <C>
NET INCOME (in Millions)
Continuing Operations:
Diversified Energy........................................ $17.9 $ 7.8 $ 41.3 $ 22.0
Gas Distribution.......................................... 63.9 71.3 74.0 89.6
----- ----- ------ ------
81.8 79.1 115.3 111.6
----- ----- ------ ------
Discontinued Operations:
Income from operations.................................... -- 1.0 .6 3.6
Gain on sale.............................................. -- -- 36.2 --
----- ----- ------ ------
-- 1.0 36.8 3.6
----- ----- ------ ------
$81.8 $80.1 $152.1 $115.2
===== ===== ====== ======
EARNINGS PER SHARE
Continuing Operations:
Diversified Energy........................................ $ .26 $ .12 $ .61 $ .34
Gas Distribution.......................................... .95 1.07 1.10 1.35
----- ----- ------ ------
1.21 1.19 1.71 1.69
----- ----- ------ ------
Discontinued Operations:
Income from operations.................................... -- .01 .01 .05
Gain on sale.............................................. -- -- .54 --
----- ----- ------ ------
-- .01 .55 .05
----- ----- ------ ------
$1.21 $1.20 $ 2.26 $ 1.74
===== ===== ====== ======
</TABLE>
Strategic direction -- MCN's objective is to achieve superior, long-term returns
for its shareholders. To accomplish this, MCN will aggressively invest in a
diverse portfolio of domestic and international energy-related projects. The
success of this strategy will be demonstrated by the growth of MCN's earnings
and the total return to its shareholders over time.
1
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
DIVERSIFIED ENERGY
- ---------------------
Earnings continue to rise -- The Diversified Energy group reported an increase
in earnings of $10.1 million and $19.3 million for the 1997 quarter and
twelve-month period, respectively. Increased earnings were driven primarily by
significantly higher levels of operating and joint venture income, partially
offset by increased financing costs as a result of additional capital needed to
fund investments. Diversified Energy continues to provide an increasing portion
of MCN's earnings, contributing 22% in the first quarter of 1997 versus 10% in
the first quarter of 1996 and 36% in the 1997 twelve-month period compared to
20% in the 1996 twelve-month period.
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
---------------- ----------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
DIVERSIFIED ENERGY OPERATIONS (in Millions)
Operating Revenues*......................................... $260.2 $257.4 $737.2 $556.0
Operating Expenses*......................................... 242.8 245.0 691.4 527.7
------ ------ ------ ------
Operating Income............................................ 17.4 12.4 45.8 28.3
------ ------ ------ ------
Equity in Earnings of Joint Ventures........................ 13.4 3.7 26.3 6.7
------ ------ ------ ------
Other Income and (Deductions)*
Interest income........................................... 1.0 .9 3.1 3.3
Interest expense.......................................... (10.1) (7.5) (31.3) (16.9)
Dividends on preferred securities of subsidiaries......... (4.2) (2.4) (14.3) (9.4)
Gains related to DIGP..................................... -- -- 6.4 --
Other..................................................... 2.8 (.6) 2.6 1.9
------ ------ ------ ------
(10.5) (9.6) (33.5) (21.1)
------ ------ ------ ------
Income Before Income Taxes.................................. 20.3 6.5 38.6 13.9
------ ------ ------ ------
Income Taxes
Current and deferred provision............................ 6.4 2.6 13.3 4.8
Federal tax credits....................................... (4.0) (3.9) (16.0) (12.9)
------ ------ ------ ------
2.4 (1.3) (2.7) (8.1)
------ ------ ------ ------
Net Income.................................................. $ 17.9 $ 7.8 $ 41.3 $ 22.0
====== ====== ====== ======
</TABLE>
*Includes intercompany transactions.
OPERATING AND JOINT VENTURE INCOME
Operating and joint venture income increased $14.7 million and $37.1 million for
the quarter and twelve-month periods, respectively, due primarily to continued
growth in Exploration & Production (E&P) operations. Improved results from
Pipelines & Processing also contributed to the increases.
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
---------------- ----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING AND JOINT VENTURE INCOME (in Millions)
Exploration & Production.................................... $ 18.1 $ 6.5 $ 44.8 $ 20.8
Pipelines & Processing...................................... 7.2 2.5 15.4 3.4
Energy Marketing, Gas Storage & Power Generation............ 7.0 7.5 13.5 13.2
Corporate & Other........................................... (1.5) (.4) (1.6) (2.4)
------ ------ ------ ------
$ 30.8 $ 16.1 $ 72.1 $ 35.0
====== ====== ====== ======
</TABLE>
2
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
EXPLORATION & PRODUCTION operating and joint venture income increased $11.6
million for the 1997 quarter and $24.0 million for the twelve-month period. The
results reflect a significant increase in the level of gas and oil produced due
to the development and acquisition of interests in properties during 1995 and
1996. Gas and oil production increased 8.5 Bcf equivalent in the quarter, over a
60% increase from the 1996 level. Results in the 1997 quarter and twelve-month
periods also include a $4.7 million gain related to the sale of certain
undeveloped properties. Additionally, E&P operations have increased Diversified
Energy's earnings through the generation of an increasing amount of gas
production tax credits.
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
------------------- -------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
EXPLORATION & PRODUCTION STATISTICS*
Gas Production (Bcf)...................................... 18.7 12.5 63.4 37.5
Oil Production (Mbbl)..................................... .6 .2 1.5 .5
Gas and Oil Production (Bcf equivalent)................... 22.0 13.5 72.3 40.5
Average Gas Sales Price (per Mcf)......................... $ 2.01 $ 2.09 $ 1.95 $ 2.05
Average Oil Sales Price (per Bbl)......................... $20.33 $17.14 $20.58 $16.53
</TABLE>
*Average gas and oil sales prices have been adjusted for amounts received or
paid under financial hedging contracts.
E&P operating and joint venture results were also affected by a decline in
natural gas sales prices and an increase in oil sales prices. The average gas
and oil sales prices include the effect of hedging with swap and futures
agreements, which are used to manage Diversified Energy's exposure to the risk
of market price fluctuations. As a result of strong gas prices in the
marketplace, hedging agreements had the effect of reducing the average gas sales
price by $.70 per Mcf for the 1997 quarter and $.46 per Mcf for the current
twelve-month period. Hedging agreements also lowered the average gas sales
prices for the 1996 quarter by $.33 per Mcf, but increased the average gas sales
price for the twelve-month period by $.21 per Mcf. Additionally, E&P's operating
results were affected by higher average production costs per Mcf equivalent.
PIPELINES & PROCESSING operating and joint venture income increased $4.7 million
and $12.0 million for the 1997 quarter and twelve-month period, respectively.
The increases primarily reflect income from the December 1996 acquisition of a
25% interest in Lyondell Methanol Company, L.P., a limited partnership that owns
a 248 million gallon per year methanol production plant in Texas. Results also
reflect a higher level of volumes treated through gas processing plants, as well
as the acquisition of additional interest in pipelines during late 1995 and
1996. The slight decline in transportation volumes during the 1997 quarter
reflects the partial sale of MCN's interest in the Dauphin Island Gathering
project during 1996 (Note 2c).
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
------------------- -------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
PIPELINES & PROCESSING STATISTICS*
Gas Processed (Bcf)....................................... 9.8 9.1 44.9 22.0
Methanol Produced (million gallons)....................... 15.3 -- 25.8 --
Transportation (Bcf)...................................... 18.9 21.1 84.2 25.5
</TABLE>
*Includes MCN's share of joint ventures.
ENERGY MARKETING, GAS STORAGE & POWER GENERATION operating and joint venture
income for the 1997 quarter and twelve-month period remained relatively
consistent with the comparable 1996 periods. The effect on earnings of the 21%
increase in gas sales and exchange deliveries during the 1997 quarter was offset
by reduced marketing margins when compared to the 1996 quarter. The margin
comparison was affected by a spike in gas prices during February 1996 as a
result of an increase in demand for natural gas due to the abnormally cold
winter of 1995-1996. MCN's Energy Marketing group was able to capitalize on this
opportunity during the first quarter of 1996 by taking lower cost gas from
storage and selling it at the higher spot market prices. The significant
increase in gas sales volumes were driven by a 22% increase in sales to
customers in the northeastern United States, as well as additional sales to
cogeneration facilities under long-term gas supply contracts.
3
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
-------------- ----------------
1997 1996 1997 1996
---- ---- ----- -----
<S> <C> <C> <C> <C>
ENERGY MARKETING STATISTICS (Bcf)*
Gas Sales................................................... 88.2 70.8 236.3 198.0
Exchange Deliveries......................................... 8.7 9.4 21.9 16.2
---- ---- ----- -----
96.9 80.2 258.2 214.2
==== ==== ===== =====
</TABLE>
*Includes MCN's share of joint ventures.
Also contributing to the 1997 results were increased earnings from the 30
megawatt (MW) Ada cogeneration facility as a result of Power Generation's
acquisition of the 1% general partnership interest in the fourth quarter of
1996. Additionally, Power Generation experienced higher earnings during the
quarter from its investment in the 50%-owned, 123 MW Michigan Power cogeneration
facility.
RISK MANAGEMENT STRATEGY -- MCN primarily manages commodity price risk by
utilizing futures, options and swap contracts to more closely balance its
portfolio of supply and sales agreements. MCN has hedged most of its gas and oil
production not covered by long-term, fixed-price sales obligations. MCN's Energy
Marketing group coordinates all of MCN's hedging activities to ensure compliance
with risk management policies established by MCN's board of directors. Certain
hedging gains or losses related to gas and oil production are recorded by MCN's
E&P operations. Gains and losses on gas-related hedging transactions that are
not recorded by MCN's E&P group are absorbed by Energy Marketing.
CORPORATE & OTHER operating and joint venture losses reflect administrative
expenses associated with corporate management activities. The Diversified Energy
group has been charged a larger portion of such expenses reflecting its growing
percentage of MCN. The 1997 twelve-month period also includes a $1.7 million
gain from the sale of land by a 50%-owned real estate joint venture.
OTHER INCOME AND DEDUCTIONS
The 1997 quarter and twelve-month period reflect higher interest costs on
increased borrowings required to finance capital investments in the Diversified
Energy group. In addition, the 1997 periods reflect dividends on $80 million of
preferred securities which were issued in July of 1996.
Other income and deductions for the 1997 twelve-month period includes gains
related to Dauphin Island Gathering Partners (DIGP). In a series of transactions
during 1996, MCN sold 64% of its 99% interest in the DIGP partnership, resulting
in pre-tax gains of $8.8 million, of which $2.4 million was deferred (Note 2c).
INCOME TAXES
The current and deferred income tax provision for all periods reflect variations
in pre-tax earnings. These taxes were reduced by an increase in the level of gas
production tax credits generated from E&P projects.
OUTLOOK
MCN plans to continue aggressively growing its E&P reserve base in known
producing areas generating attractive returns and developing reliable, long-term
gas supplies. MCN will also continue to make investments in natural gas and gas
liquid gathering and processing facilities near these known producing areas,
concentrating on those with the highest growth potential. Additionally, MCN will
focus on expanding its Energy Marketing coverage within existing markets as well
as entering new markets through strategic alliances with other energy providers.
MCN's Power Generation business is expected to make significant investments in
international projects over the next several years as evidenced by a 1997
agreement to acquire a 40% interest in an India joint venture (Note 2a).
4
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
GAS DISTRIBUTION
- -------------------
Results reflect warmer weather -- The Gas Distribution group reported a decline
in earnings of $7.4 million and $15.6 million for the 1997 quarter and
twelve-month period, respectively. The decreases reflect lower gross margins
resulting from reduced gas sales and end user transportation deliveries due to
warmer weather, as well as higher operating expenses.
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
--------------- -------------------
1997 1996 1997 1996
------ ------ -------- --------
<S> <C> <C> <C> <C>
GAS DISTRIBUTION OPERATIONS (in Millions)
Operating Revenues*
Gas sales................................................. $481.7 $487.9 $1,096.8 $1,039.4
End user transportation................................... 26.0 26.4 82.1 83.0
Intermediate transportation............................... 14.8 11.4 51.9 42.6
Other..................................................... 11.9 12.9 41.2 50.8
------ ------ -------- --------
534.4 538.6 1,272.0 1,215.8
Cost of Gas................................................. 307.1 302.5 650.8 581.0
------ ------ -------- --------
Gross Margin................................................ 227.3 236.1 621.2 634.8
------ ------ -------- --------
Other Operating Expenses*
Operation and maintenance................................. 75.2 69.9 303.7 291.0
Depreciation, depletion and amortization.................. 25.7 24.5 100.0 93.1
Property and other taxes.................................. 17.9 18.4 61.8 60.3
------ ------ -------- --------
118.8 112.8 465.5 444.4
------ ------ -------- --------
Operating Income............................................ 108.5 123.3 155.7 190.4
------ ------ -------- --------
Equity in Earnings of Joint Ventures........................ 1.0 .4 1.9 1.3
------ ------ -------- --------
Other Income and (Deductions)*
Interest income........................................... 1.2 .6 4.6 4.0
Interest expense.......................................... (14.2) (12.6) (52.9) (45.5)
Minority interest......................................... (.3) (.3) (1.0) (2.1)
Other..................................................... .7 (.7) 2.0 (5.6)
------ ------ -------- --------
(12.6) (13.0) (47.3) (49.2)
------ ------ -------- --------
Income Before Income Taxes.................................. 96.9 110.7 110.3 142.5
Income Taxes................................................ 33.0 39.4 36.3 52.9
------ ------ -------- --------
Net Income.................................................. $ 63.9 $ 71.3 $ 74.0 $ 89.6
====== ====== ======== ========
</TABLE>
* Includes intercompany transactions.
GROSS MARGIN
Gross margin decreases -- Gas Distribution gross margin (operating revenues less
cost of gas) decreased $8.8 million and $13.6 million for the 1997 quarter and
twelve-month period, respectively, reflecting lower gas sales and transportation
deliveries due primarily to the warmer weather. These declines were partially
offset by increased revenues as a result of the continued growth in intermediate
transportation services.
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
-------------- --------------
1997 1996 1997 1996
----- ---- ---- -----
<S> <C> <C> <C> <C>
EFFECT OF WEATHER ON GAS MARKETS AND EARNINGS
Percentage Colder (Warmer) Than Normal...................... (3.3)% 5.7% 1.0% 6.0%
Increase (Decrease) From Normal in:
Gas markets (in Bcf)...................................... (3.1) 5.4 2.4 12.2
Net income (in millions).................................. $(2.8) $4.9 $2.2 $11.1
Earnings per share........................................ $(.04) $.07 $.03 $ .17
</TABLE>
5
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
GAS SALES AND END USER TRANSPORTATION revenues in total decreased $6.6 million
in the 1997 quarter and increased by $56.5 million in the 1997 twelve-month
period. Revenues were affected by lower gas sales and end user transportation
deliveries primarily due to the warmer weather in the 1997 periods as compared
to the same 1996 periods. However, the decline in gas sales revenues for the
1997 twelve-month period attributable to reduced sales volumes was more than
offset by higher revenues necessary to recover higher gas costs as subsequently
discussed. The decrease in end user transportation revenues for the 1997
twelve-month period was mitigated by increased deliveries to a cogeneration
facility under a long-term transportation contract.
<TABLE>
<CAPTION>
QUARTER 12 MONTHS
--------------- ---------------
1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
GAS DISTRIBUTION MARKETS (in Bcf)
Gas Sales................................................... 94.6 103.6 212.0 222.9
End User Transportation..................................... 44.4 47.5 143.8 149.6
----- ----- ----- -----
139.0 151.1 355.8 372.5
Intermediate Transportation*................................ 140.6 148.0 520.1 409.9
----- ----- ----- -----
279.6 299.1 875.9 782.4
===== ===== ===== =====
</TABLE>
*Includes intercompany volumes.
INTERMEDIATE TRANSPORTATION revenues increased by $3.4 million and $9.3 million
in the 1997 quarter and twelve-month period, respectively. The significant
increase in the 1997 twelve-month period was primarily the result of additional
volumes transported in connection with the recently expanded northern Michigan
gathering system along with higher volumes transported for fixed-fee customers.
The expansion of the northern Michigan gathering system enabled MichCon to
transport an additional 2.3 Bcf and 81.5 Bcf in the 1997 quarter and
twelve-month periods, respectively. The slight decrease in intermediate
transportation deliveries for the 1997 quarter is due primarily to lower volumes
transported for two major fixed-fee customers. Although volumes associated with
these fixed-fee customers may vary, the related revenues are not significantly
affected.
OTHER OPERATING REVENUES decreased by $1.0 million and $9.6 million in the 1997
quarter and twelve-month period, respectively, primarily due to a decrease in
conservation revenues resulting from the discontinuance of MichCon's energy
conservation programs. As discussed in the "Operation and Maintenance" section
that follows, this decrease in revenues is offset by a corresponding decrease in
expenses related to the conservation programs.
COST OF GAS
Cost of gas is affected by variations in sales volumes and cost of gas rates.
Through the Gas Cost Recovery (GCR) mechanism, MichCon's rates are set to
recover 100% of prudently and reasonably incurred gas costs. Therefore,
fluctuations in cost of gas sold have little or no effect on gross margins and
earnings.
Cost of gas sold increased in the 1997 quarter and twelve-month period due to
higher spot market prices for natural gas purchases. The increase in market
prices paid for gas resulted in an increase in the cost of gas sold per thousand
cubic feet of $.37 (13%) and $.46 (17%) in the 1997 quarter and twelve-month
period, respectively, from the comparable 1996 periods.
OTHER OPERATING EXPENSES
OPERATION AND MAINTENANCE expenses for the 1997 quarter and twelve-month periods
increased from the comparable 1996 periods due mainly to increased costs
associated with uncollectible gas accounts. Partially offsetting these higher
costs were decreased benefit costs, primarily pension and retiree healthcare
costs, and lower expenses associated with the discontinuance of MichCon's energy
conservation programs.
DEPRECIATION AND DEPLETION increased in both 1997 periods due to higher plant
balances, reflecting capital expenditures of $456.8 million over the past two
calendar years. Depreciation and depletion expenses are expected to increase in
future years due to higher planned capital investments. MichCon filed an
application with the MPSC to lower its depreciation rates, which could partially
offset the anticipated increase in depreciation expense in 1997 and future
years.
6
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
INCOME TAXES
Income taxes decreased for the 1997 quarter and twelve-month period due
primarily to decreases in earnings. Income taxes were also reduced by $2.7
million and $1.1 million during the 1997 and 1996 twelve-month periods,
respectively, due to the favorable resolution of prior years' tax issues.
OUTLOOK
Gas Distribution's strategy is to grow revenues and reduce its costs in order to
maintain strong returns and provide customers with quality service at
competitive prices. Revenue growth will be achieved through the expansion of its
residential, commercial and industrial customer base. In 1997 Gas Distribution
will concentrate on adding new customers in current service areas and better
penetration of previous expansion projects. Gas Distribution will continue
initiatives to increase productivity and improve customer services in order to
strengthen its competitive position in the gas industry. Management is
continually assessing ways to improve cost competitiveness. Among the cost
savings initiatives, Gas Distribution and other Michigan utilities are exploring
opportunities to share the cost of common, duplicative functions in order to
obtain greater efficiencies and increase customer value.
DISCONTINUED OPERATIONS
- -----------------------------
In June 1996, MCN completed the sale of its computer operations subsidiary,
Genix, to Affiliated Computer Services, Inc., resulting in an after-tax gain of
$36.2 million. Although Genix had experienced significant growth in revenues and
operating income over the past several years, MCN's focused strategy is to
invest in energy-related projects that generate higher rates of return.
CAPITAL RESOURCES AND LIQUIDITY
OPERATING ACTIVITIES
- -----------------------
MCN's cash flow from operating activities increased $49.7 million during the
1997 quarter from the comparable 1996 period. The increase was due primarily to
a decrease in working capital requirements.
FINANCING ACTIVITIES
- -----------------------
MCN issues new shares of common stock pursuant to its Dividend Reinvestment and
Stock Purchase Plan and various employee benefit plans. During 1997, MCN
anticipates the issuance of new shares of common stock pursuant to these plans,
generating approximately $19 million. During the first three months of 1997,
issuances under these plans generated proceeds of $5.4 million.
In March 1997, MCN issued 2.645 million FELINE PRIDES yielding 8% and generating
net proceeds of $127.4 million (Note 3b). Proceeds from the issuance were used
to reduce short-term debt incurred by the Diversified Energy Group to fund
capital investments and for general corporate purposes. The FELINE PRIDES are
currently rated the equivalent of "BBB+" by the major rating agencies.
DIVERSIFIED ENERGY
In January 1997, MCNIC issued $150 million of medium-term notes using the
proceeds to repay short-term debt and for general corporate purposes.
MCNIC has established credit lines to allow for borrowings of up to $100 million
under a 364-day revolving credit facility and up to $300 million under a
three-year revolving credit facility. The facilities support MCNIC's $400
million commercial paper program, which is used to finance capital investments
of the Diversified Energy group and working capital requirements of its gas
marketing operations. During the first three months of 1997, MCNIC repaid $196.2
million of commercial paper, leaving a balance of $133.6 million outstanding
under this program at March 31, 1997.
GAS DISTRIBUTION
Cash and cash equivalents normally increase and short-term debt is reduced in
the first part of each year as gas inventories are depleted and funds are
received from winter heating sales. During the latter part of the year, cash and
7
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Concluded)
cash equivalents normally decrease as funds are used to finance increases in gas
inventories and customer accounts receivable. To meet its seasonal short-term
borrowing needs, MichCon normally issues commercial paper which is backed by
credit lines with several banks. MichCon has established credit lines to allow
for borrowings of up to $150 million under a 364-day revolving credit facility
and up to $150 million under a three-year revolving credit facility. During the
first three months of 1997, MichCon repaid $79.2 million of commercial paper,
leaving a balance of $159.1 million outstanding as of March 31, 1997 under these
lines.
During April 1997, subsidiaries of MichCon borrowed $40 million under a
nonrecourse credit agreement that matures in 2005. Proceeds were used to finance
the expansion of its northern Michigan pipeline system.
MichCon has available a Trust Demand Note program which allows it to borrow up
to $25 million. At March 31, 1997, there were no borrowings outstanding under
this program.
MichCon anticipates the issuance of $85 million of first mortgage bonds in the
second quarter of 1997. The funds from this issuance will be used to repay
short-term debt which was used to retire first mortgage bonds in May 1997, to
fund capital expenditures and for general corporate purposes.
INVESTING ACTIVITIES
- ----------------------
Capital investments equaled $133.4 million in the 1997 quarter compared to
$177.2 million for the same period in 1996. The 1997 investments include higher
levels of investments in E&P properties as well as investments in power
generation projects in India. The first quarter 1996 investments include the
$78.6 million DIGP acquisition.
<TABLE>
<CAPTION>
Quarter
-------------------
1997 1996
------ ------
<S> <C> <C>
CAPITAL INVESTMENTS (in Millions)
Consolidated Capital Expenditures:
Diversified Energy........................................ $ 72.7 $ 60.4
Gas Distribution.......................................... 24.5 29.9
Discontinued Operations................................... -- 6.2
------ ------
97.2 96.5
------ ------
MCN's Share of Joint Venture Capital Expenditures:
Pipelines & Processing.................................... 11.2 .3
Other..................................................... .6 1.8
------ ------
11.8 2.1
------ ------
Acquisitions (Note 2)....................................... 24.4 78.6
------ ------
Total Capital Investments................................... $133.4 $177.2
====== ======
</TABLE>
OUTLOOK
- ---------
Capital investments in 1997 are expected to reach $1.1 billion -- MCN's
strategic direction is to grow significantly by investing in a portfolio of
energy-related projects. For 1997, MCN anticipates investing approximately $900
million in Diversified Energy and the remainder in Gas Distribution. Within
Diversified Energy, approximately $450 million will be invested in E&P projects
for drilling operations and to acquire reserves in the Michigan, Appalachian,
Midcontinent, Gulf Coast and Rocky Mountain regions. Diversified Energy will
invest the remaining $450 million in gas gathering, gas processing and power
generation projects.
The proposed level of investments for 1997 increases capital requirements
materially in excess of internally generated funds and requires the issuance of
additional debt and equity securities. MCN's actual capital requirements and
general market conditions will dictate the timing and amount of future
issuances. It is management's opinion that MCN and its subsidiaries will have
sufficient capital resources, both internal and external, to meet anticipated
capital requirements.
8
<PAGE> 11
MCN ENERGY GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- --------------------------
1997 1996 1997 1996
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
OPERATING REVENUES.......................................... $788,761 $790,638 $1,995,391 $1,759,782
-------- -------- ---------- ----------
OPERATING EXPENSES
Cost of gas............................................... 499,545 512,429 1,180,694 1,010,327
Operation and maintenance................................. 98,421 86,352 384,049 341,557
Depreciation, depletion and amortization.................. 43,457 34,798 154,649 122,246
Property and other taxes.................................. 21,472 21,352 74,547 66,948
-------- -------- ---------- ----------
662,895 654,931 1,793,939 1,541,078
-------- -------- ---------- ----------
OPERATING INCOME............................................ 125,866 135,707 201,452 218,704
-------- -------- ---------- ----------
EQUITY IN EARNINGS OF JOINT VENTURES........................ 14,361 4,043 28,185 8,044
-------- -------- ---------- ----------
OTHER INCOME AND (DEDUCTIONS)
Interest income........................................... 2,212 1,545 7,901 7,083
Interest on long-term debt................................ (18,982) (16,139) (69,360) (50,450)
Other interest expense.................................... (4,730) (4,101) (11,893) (12,066)
Dividends on preferred securities of subsidiaries......... (4,229) (2,362) (14,241) (9,554)
Gains related to DIGP (Note 2c)........................... -- -- 6,384 --
Minority interest......................................... (353) (365) (1,047) (2,292)
Other..................................................... 3,021 (1,245) 1,646 (3,074)
-------- -------- ---------- ----------
(23,061) (22,667) (80,610) (70,353)
-------- -------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES....... 117,166 117,083 149,027 156,395
INCOME TAX PROVISION........................................ 35,397 38,029 33,743 44,733
-------- -------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS........................... 81,769 79,054 115,284 111,662
-------- -------- ---------- ----------
DISCONTINUED OPERATIONS, NET OF TAXES (Note 2d)
Income from operations.................................... -- 1,013 582 3,571
Gain on sale.............................................. -- -- 36,176 --
-------- -------- ---------- ----------
-- 1,013 36,758 3,571
-------- -------- ---------- ----------
NET INCOME.................................................. $ 81,769 $ 80,067 $ 152,042 $ 115,233
======== ======== ========== ==========
EARNINGS PER SHARE
Continuing Operations..................................... $ 1.21 $ 1.19 $ 1.71 $ 1.69
-------- -------- ---------- ----------
Discontinued Operations (Note 2d)
Income from operations.................................. -- .01 .01 .05
Gain on sale............................................ -- -- .54 --
-------- -------- ---------- ----------
-- .01 .55 .05
-------- -------- ---------- ----------
$ 1.21 $ 1.20 $ 2.26 $ 1.74
======== ======== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING........................... 67,547 66,566 67,187 66,216
======== ======== ========== ==========
DIVIDENDS DECLARED PER SHARE................................ $ .2425 $ .2325 $ .9500 $ .9100
======== ======== ========== ==========
</TABLE>
CONSOLIDATED STATEMENT OF RETAINED EARNINGS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- --------------------------
1997 1996 1997 1996
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE -- BEGINNING OF PERIOD.............................. $305,352 $218,425 $283,046 $228,137
ADD -- NET INCOME........................................... 81,769 80,067 152,042 115,233
-------- -------- ---------- ----------
387,121 298,492 435,088 343,370
DEDUCT -- CASH DIVIDENDS DECLARED ON COMMON STOCK........... 16,333 15,446 63,761 60,324
OTHER............................................. 427 -- 966 --
-------- -------- ---------- ----------
BALANCE -- END OF PERIOD.................................... $370,361 $283,046 $370,361 $283,046
======== ======== ========== ==========
</TABLE>
The notes to the consolidated financial statements are an integral part of these
statements.
9
<PAGE> 12
MCN ENERGY GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------------------- ------------
1997 1996 1996
---------- ---------- ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents, at cost (which approximates
market value)........................................... $ 41,520 $ 25,338 $ 30,462
Accounts receivable, less allowance for doubtful accounts
of $25,274, $17,769 and $18,487, respectively........... 401,701 450,163 362,596
Accrued unbilled revenues................................. 72,373 73,201 108,509
Accrued gas cost recovery revenues........................ 21,500 35,362 27,672
Gas in inventory (Note 4)................................. 38,611 14,113 79,161
Property taxes assessed applicable to future periods...... 51,141 48,987 62,966
Gas receivable............................................ 29,540 26,324 18,062
Other..................................................... 25,658 31,659 34,800
---------- ---------- ----------
682,044 705,147 724,228
---------- ---------- ----------
DEFERRED CHARGES AND OTHER ASSETS
Investment in and advances to joint ventures.............. 295,942 207,968 265,388
Deferred swap losses and receivables (Note 5)............. 60,329 47,135 65,051
Deferred postretirement benefit costs..................... 4,784 12,310 5,559
Deferred environmental costs.............................. 31,116 31,016 31,233
Prepaid benefit costs..................................... 54,961 43,761 59,248
Other..................................................... 100,741 105,616 100,341
---------- ---------- ----------
547,873 447,806 526,820
---------- ---------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost
Exploration & Production.................................. 1,047,517 634,214 981,901
Pipelines & Processing.................................... 28,582 23,015 27,895
Gas Distribution.......................................... 2,706,962 2,519,769 2,689,039
Other..................................................... 19,838 71,247 18,722
---------- ---------- ----------
3,802,899 3,248,245 3,717,557
Less -- Accumulated depreciation and depletion............ 1,375,077 1,254,220 1,335,201
---------- ---------- ----------
2,427,822 1,994,025 2,382,356
---------- ---------- ----------
$3,657,739 $3,146,978 $3,633,404
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.......................................... $ 219,475 $ 255,702 $ 317,922
Notes payable............................................. 211,345 176,919 336,126
Current portion of long-term debt and capital lease
obligations............................................. 84,853 5,276 84,747
Gas inventory equalization (Note 4)....................... 97,084 84,576 --
Federal income, property and other taxes payable.......... 88,993 75,403 97,646
Customer deposits......................................... 12,650 10,875 12,881
Other..................................................... 77,142 88,043 97,873
---------- ---------- ----------
791,542 696,794 947,195
---------- ---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes......................... 161,095 144,447 149,838
Unamortized investment tax credit......................... 34,451 36,328 34,919
Tax benefits amortizable to customers..................... 116,095 114,151 116,496
Deferred swap gains and payables (Note 5)................. 50,406 44,475 48,365
Accrued environmental costs............................... 35,000 35,000 35,000
Minority interest......................................... 18,059 18,057 17,911
Other..................................................... 69,929 83,518 73,263
---------- ---------- ----------
485,035 475,976 475,792
---------- ---------- ----------
LONG-TERM DEBT, including capital lease obligations (Note
3a)....................................................... 1,223,509 1,137,703 1,252,040
---------- ---------- ----------
MCN-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARIES HOLDING SOLELY SUBORDINATED DEBENTURES OF MCN
(Note 3b)................................................. 305,840 96,480 173,809
---------- ---------- ----------
CONTINGENCIES (Note 6)
COMMON SHAREHOLDERS' EQUITY
Common stock.............................................. 680 668 673
Additional paid-in capital................................ 503,607 456,955 493,469
Retained earnings......................................... 370,361 283,046 305,352
Yield enhancement, contract and issuance costs (Note
3b)..................................................... (22,036) -- (14,492)
Unearned compensation..................................... (799) (644) (434)
---------- ---------- ----------
851,813 740,025 784,568
---------- ---------- ----------
$3,657,739 $3,146,978 $3,633,404
========== ========== ==========
</TABLE>
The notes to the consolidated financial statements are an integral part of this
statement.
10
<PAGE> 13
MCN ENERGY GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income................................................ $ 81,769 $ 80,067
Adjustments to reconcile net income to net cash provided
from operating activities
Depreciation, depletion and amortization
Per statement of income............................... 43,457 34,798
Charged to other accounts............................. 1,930 3,606
Deferred income taxes -- current........................ (12,337) 8,613
Deferred income taxes and investment tax credit, net.... 10,388 17,565
Equity in earnings of joint ventures, net of
distribution........................................... (1,172) (1,448)
Other................................................... (1,003) 112
Changes in assets and liabilities, exclusive of changes
shown separately....................................... 46,859 (23,119)
--------- ---------
Net cash provided from operating activities........ 169,891 120,194
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Notes payable, net........................................ (122,381) (68,716)
Common stock dividends paid............................... (16,333) (15,446)
Issuance of common stock.................................. 5,398 4,378
Issuance of preferred securities (Note 3b)................ 127,418 --
Issuance of long-term debt (Note 3a)...................... 149,190 199,729
Long-term commercial paper, net........................... (176,235) (59,654)
Retirement of long-term debt and preferred stock.......... (1,664) (4,497)
Other..................................................... (164) --
--------- ---------
Net cash provided from (used for) financing
activities........................................ (34,771) 55,794
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures...................................... (96,911) (89,717)
Acquisitions (Notes 2a and 2c)............................ (24,400) (78,620)
Investment in joint ventures.............................. (10,023) (49)
Return of investment in joint ventures.................... 4,000 --
Other..................................................... 3,272 (1,523)
--------- ---------
Net cash used for investing activities............. (124,062) (169,909)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 11,058 6,079
CASH AND CASH EQUIVALENTS, JANUARY 1........................ 30,462 19,259
--------- ---------
CASH AND CASH EQUIVALENTS, MARCH 31......................... $ 41,520 $ 25,338
========= =========
CHANGES IN ASSETS AND LIABILITIES, EXCLUSIVE OF CHANGES
SHOWN SEPARATELY
Accounts receivable, net.................................. $ (37,627) $(131,248)
Accrued unbilled revenues................................. 36,136 19,209
Accrued/deferred gas cost recovery revenues............... 6,172 (35,940)
Gas in inventory.......................................... 40,550 57,650
Accounts payable.......................................... (98,447) 38,518
Gas inventory equalization................................ 97,084 84,576
Federal income, property and other taxes payable.......... (8,653) (7,981)
Other current assets and liabilities...................... 250 (1,093)
Deferred assets and liabilities........................... 11,394 (46,810)
--------- ---------
$ 46,859 $ (23,119)
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest, net of amounts capitalized.................... $ 27,988 $ 14,256
Federal income taxes.................................... 17,500 --
Noncash investing activities:
Property purchased under capital leases................. $ 273 $ 6,765
</TABLE>
The notes to the consolidated financial statements are an integral part of this
statement.
11
<PAGE> 14
MCN ENERGY GROUP INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying consolidated financial statements should be read in conjunction
with MCN's 1996 Annual Report on Form 10-K. Certain reclassifications have been
made to the prior year's financial statements to conform with the 1997
presentation. In the opinion of management, the unaudited information furnished
herein reflects all adjustments (consisting of only recurring adjustments or
accruals) necessary for a fair presentation of the financial statements for the
periods presented.
Because of seasonal and other factors, revenues, expenses, net income and
earnings per share for the interim periods should not be construed as
representative of revenues, expenses, net income and earnings per share for all
or any part of the balance of the current year or succeeding periods.
2. ACQUISITIONS AND DISPOSITIONS
A. TORRENT POWER PRIVATE LIMITED
In March 1997, MCN acquired a 40% interest in Torrent Power Private
Limited, an India joint venture that holds minority interests in electric
companies and power generation facilities located in the state of Gujarat,
India. The total cost of the acquisition will be approximately $57,000,000
of which $24,400,000 was incurred in March 1997. The remainder is expected
to be paid in the second quarter of 1997. Specifically, the joint venture
has a 21% interest in Ahmedabad Electricity Company Limited (AEC), a 43%
interest in Surat Electricity Company Limited (SEC) and a 30% interest in
Gujarat Torrent Energy Corporation (GTEC). AEC serves the city of Ahmedabad
and has 550 megawatts (MW) of electric generating capacity. SEC provides
electricity to the city of Surat. GTEC is currently constructing a 655 MW
dual fuel generation facility, the first phase of which is expected to be
operational in late 1997 and fully completed by the end of 1998. In
addition to equity investments, the construction of this facility will be
funded through nonrecourse project financing of which the portion
attributable to MCN's interest will be approximately $60,000,000.
B. MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP
During April 1997, MCN signed an agreement to purchase an 18.1% general
partnership interest in Midland Cogeneration Venture Limited Partnership
(MCV), a partnership that leases and operates a cogeneration facility in
Midland, Michigan. The facility can produce up to 1,370 MW of electricity
and 1.35 million pounds of process steam per hour which it sells primarily
to Consumers Energy Corporation, Dow Chemical Company and Dow Corning
Corporation. The investment will total $54,750,000 and be accounted for
under the equity method. Closing of the agreement is expected in May 1997
and is subject to certain regulatory approvals.
C. DAUPHIN ISLAND GATHERING PARTNERS
As discussed in MCN's 1996 Annual Report on Form 10-K, MCN acquired a 99%
interest in Dauphin Island Gathering Partners (DIGP), a general partnership
that owns a 90-mile gas gathering system in the Mobile Bay area of offshore
Alabama, in the first quarter of 1996. Through a series of transactions in
1996, MCN sold 64% of its interest in DIGP which resulted in pre-tax gains
of $8,782,000 of which $2,398,000 was deferred due to a related option
agreement.
D. THE GENIX GROUP, INC.
As discussed in MCN's 1996 Annual Report on Form 10-K, MCN completed the
sale of its computer operations subsidiary, The Genix Group, Inc., to
Affiliated Computer Services, Inc. in June 1996. The sale resulted in an
after-tax gain of $36,176,000.
12
<PAGE> 15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. CAPITALIZATION
A. LONG-TERM DEBT
The following long-term debt was issued during the first quarter of 1997
(in thousands):
<TABLE>
<CAPTION>
ISSUE DATE DESCRIPTION AMOUNT ISSUED
---------------------------------------------------------------------------------
<S> <C> <C>
January 1997 MCNIC Medium-Term Notes
6.89%, due January 2002 $90,000
7.12%, due January 2004 $60,000
---------------------------------------------------------------------------------
</TABLE>
Additionally, in April 1997, subsidiaries of MichCon borrowed $40,000,000
under a nonrecourse credit agreement at an average interest rate of 6.45%.
Under the terms of the agreement, certain alternative variable interest
rates are available at the borrowers' options during the life of the
agreement. Quarterly principal payments commence in June 1997 with the
final installment due November 2005. The loan is secured by a pledge of the
stock of the borrowers and a security interest in certain of their assets.
B. FELINE PRIDES
In March 1997, MCN issued 2,645,000 FELINE PRIDES yielding 8% with a stated
amount of $50 per security. Each security initially consists of a stock
purchase contract and a preferred security of MCN Financing III.
Under each stock purchase contract, MCN is obligated to sell and the FELINE
PRIDES holder is obligated to purchase in May 2000 for $50, between 1.4132
and 1.7241 shares of MCN common stock. The exact number of MCN common
shares to be sold is dependent on the market value of a share in May 2000,
but will not be less than 3,737,988 or more than 4,560,345 shares. MCN is
also obligated to pay the FELINE PRIDES holders a quarterly contract
adjustment payment at an annual rate of .75% of the stated amount. MCN has
recorded the present value of the contract adjustment payments, totaling
$2,661,015, as a liability and a reduction to Common Shareholders' Equity
on MCN's Consolidated Statement of Financial Position. The liability will
be reduced when the contract adjustment payments are made. MCN has the
right to defer the contract adjustment payments, in which case MCN cannot
declare dividends on its common stock until the contract adjustment
payments have been made. In addition, MCN has incurred costs of
approximately $4,900,000 in conjunction with the issuance and similarly has
recorded these costs as a reduction to Common Shareholders' Equity.
MCN Financing III (the Trust), a business trust wholly-owned by MCN, was
formed for the sole purpose of issuing preferred securities and lending the
gross proceeds thereof to MCN. In March 1997, the Trust issued 2,645,000
shares of 7.25% redeemable preferred securities, at the liquidation
preference value of $50 per share. The Trust invested the $132,250,000 of
gross proceeds from the issuance of the preferred securities, as well as
$4,090,250 of proceeds from the issuance of common securities to MCN in an
equivalent amount of 7.25% Junior Subordinated Debentures of MCN. The
$136,340,250 of Junior Subordinated Debentures are due May 2002 and are the
sole assets of the Trust. Upon maturity of the debentures, the Trust is
required to redeem the preferred securities.
Holders of the preferred securities are entitled to receive cumulative
dividends at an annual rate of 7.25% of the liquidation preference value.
Dividends are payable quarterly and in substance are tax deductible by MCN.
MCN has the right to extend interest payment periods on the debentures for
successive periods, however not beyond the May 2002 maturity date. As a
consequence, quarterly dividend payments on the preferred securities can be
deferred by the Trust during any such interest payment period. In the event
that MCN exercises this right, MCN may not declare dividends on its common
stock.
13
<PAGE> 16
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In the event of default, holders of the preferred securities will be
entitled to exercise and enforce the Trust's creditor rights against MCN,
which may include acceleration of the principal amount due on the
debentures. MCN has issued a guaranty with respect to payments on the
preferred securities. This guaranty, taken together with MCN's obligations
under the debentures, the related indenture, and the Trust documents,
provides a full and unconditional guaranty of the Trust's obligations under
the preferred securities to the extent the Trust has funds available
therefor.
The preferred securities are pledged as collateral to secure the FELINE
PRIDES holders' obligation to purchase MCN common stock under the stock
purchase contracts. Each holder has the right after issuance of the FELINE
PRIDES to substitute for the preferred securities, zero coupon U.S.
Treasury Securities maturing in May 2000. Each FELINE PRIDES holder has the
option to use the preferred securities or the treasury securities to
satisfy the May 2000 purchase contract commitment.
4. GAS IN INVENTORY
Inventory gas is priced on a last-in, first-out (LIFO) basis. In anticipation
that interim inventory reductions will be replaced prior to year end, the cost
of gas for net withdrawals from inventory is generally recorded at the estimated
average purchase rate for the calendar year. The excess of these charges over
the LIFO cost is credited to the gas inventory equalization account. During
interim periods when there are net injections to inventory, the equalization
account is reversed. Approximately 30.7 billion cubic feet (Bcf) and 23.8 Bcf of
gas was in inventory at March 31, 1997 and 1996, respectively.
5. ACCOUNTING FOR COMMODITY SWAP AGREEMENTS
As discussed in MCN's 1996 Annual Report on Form 10-K, MCN manages commodity
price risk through the use of various derivative instruments and limits the use
of such instruments to hedging activities. If MCN did not use derivative
instruments, its exposure to such risk would be higher. Although this strategy
reduces risk, it also limits potential gains from favorable changes in commodity
prices. Natural gas and oil swap agreements are used to manage exposure to the
risk of market price fluctuations on gas sale contracts, and gas and oil
production. Market value changes of swap contracts are recorded as deferred
gains or losses until the hedged transactions are completed, at which time the
realized gains or losses are included as adjustments to revenues. The offsets to
the unrealized losses are recorded as deferred payables and the offsets to the
unrealized gains are recorded as deferred receivables.
The following assets and liabilities related to the use of gas and oil swap
agreements are reflected in the Consolidated Statement of Financial Position:
<TABLE>
<CAPTION>
March 31, December 31,
------------------ ------------
1997 1996 1996
------- ------- ------------
<S> <C> <C> <C>
(in Thousands)
DEFERRED SWAP LOSSES AND RECEIVABLES
Unrealized losses......................................... $46,740 $31,108 $ 53,166
Deferred receivables...................................... 13,589 16,027 11,885
------- ------- --------
$60,329 $47,135 $ 65,051
======= ======= ========
DEFERRED SWAP GAINS AND PAYABLES
Unrealized gains.......................................... $10,737 $13,773 $ 5,519
Deferred payables......................................... 54,572 38,855 64,641
------- ------- --------
65,309 52,628 70,160
Less -- Current portion................................... 14,903 8,153 21,795
------- ------- --------
$50,406 $44,475 $ 48,365
======= ======= ========
</TABLE>
14
<PAGE> 17
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. CONTINGENCIES
MCN is involved in certain legal and administrative proceedings before various
courts and governmental agencies concerning claims arising in the ordinary
course of business. Management cannot predict the final disposition of such
proceedings, but believes that adequate provision has been made for probable
losses. It is management's belief, after discussion with legal counsel, that the
ultimate resolution of those proceedings still pending will not have a material
adverse effect on MCN's financial statements.
7. CONSOLIDATING FINANCIAL STATEMENTS
Debt securities issued by MCNIC are subject to a support agreement between MCN
and MCNIC, under which MCN has committed to make payments of interest and
principal on MCNIC's securities in the event of failure to pay by MCNIC. Under
the terms of the support agreement, the assets of MCN, other than MichCon, and
any cash dividends paid to MCN by any of its subsidiaries are available as
recourse to holders of MCNIC's securities. The carrying value of MCN's assets on
an unconsolidated basis, primarily investments in its subsidiaries other than
MichCon, is $575,949,000 at March 31, 1997.
The following MCN consolidating financial statements are presented and include
separately MCNIC, MichCon and MCN and other subsidiaries. MCN has determined
that separate financial statements and other disclosures concerning MCNIC are
not material to investors. The other MCN subsidiaries represent Citizens Gas
Fuel Company, Blue Lake Holdings, Inc., MCN Michigan Limited Partnership, MCN
Financing I and MCN Financing III.
15
<PAGE> 18
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCN ELIMINATIONS
AND OTHER AND CONSOLIDATED
SUBSIDIARIES MCNIC MICHCON RECLASSIFICATIONS TOTALS
------------ -------- -------- ----------------- ------------
THREE MONTHS ENDED MARCH 31, 1997
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES................................. $ 6,937 $260,154 $527,445 $ (5,775) $788,761
------- -------- -------- -------- --------
OPERATING EXPENSES
Cost of gas...................................... 3,813 196,317 303,273 (3,858) 499,545
Operation and maintenance........................ 54 26,179 74,105 (1,917) 98,421
Depreciation, depletion and amortization......... 552 17,404 25,501 -- 43,457
Property and other taxes......................... 698 2,980 17,794 -- 21,472
------- -------- -------- -------- --------
5,117 242,880 420,673 (5,775) 662,895
------- -------- -------- -------- --------
OPERATING INCOME................................... 1,820 17,274 106,772 -- 125,866
------- -------- -------- -------- --------
EQUITY IN EARNINGS OF JOINT VENTURES AND
SUBSIDIARIES..................................... 81,647 13,160 310 (80,756) 14,361
------- -------- -------- -------- --------
OTHER INCOME AND (DEDUCTIONS)
Interest income.................................. 4,348 969 1,209 (4,314) 2,212
Interest on long-term debt....................... 141 (8,383) (10,740) -- (18,982)
Other interest expense........................... (230) (5,923) (2,891) 4,314 (4,730)
Dividends on preferred securities of
subsidiaries................................... -- -- -- (4,229) (4,229)
Minority interest................................ -- (15) (338) -- (353)
Other............................................ (56) 2,876 201 -- 3,021
------- -------- -------- -------- --------
4,203 (10,476) (12,559) (4,229) (23,061)
------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES......................... 87,670 19,958 94,523 (84,985) 117,166
INCOME TAX PROVISION............................... 942 2,125 32,330 -- 35,397
------- -------- -------- -------- --------
NET INCOME......................................... 86,728 17,833 62,193 (84,985) 81,769
DIVIDENDS ON PREFERRED SECURITIES.................. 4,229 -- -- (4,229) --
------- -------- -------- -------- --------
NET INCOME AVAILABLE FOR COMMON STOCK.............. $82,499 $ 17,833 $62,193 $(80,756) $ 81,769
======= ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES................................. $ 7,207 $257,369 $531,392 $ (5,330) $790,638
------- -------- -------- -------- --------
OPERATING EXPENSES
Cost of gas...................................... 3,771 213,623 298,716 (3,681) 512,429
Operation and maintenance........................ 186 19,044 68,771 (1,649) 86,352
Depreciation, depletion and amortization......... 468 9,937 24,393 -- 34,798
Property and other taxes......................... 561 2,562 18,608 (379) 21,352
------- -------- -------- -------- --------
4,986 245,166 410,488 (5,709) 654,931
------- -------- -------- -------- --------
OPERATING INCOME................................... 2,221 12,203 120,904 379 135,707
------- -------- -------- -------- --------
EQUITY IN EARNINGS OF JOINT VENTURES AND
SUBSIDIARIES..................................... 79,842 3,460 235 (79,494) 4,043
------- -------- -------- -------- --------
OTHER INCOME AND (DEDUCTIONS)
Interest income.................................. 2,400 930 585 (2,370) 1,545
Interest on long-term debt....................... (10) (6,361) (9,768) -- (16,139)
Other interest expense........................... (14) (3,622) (2,835) 2,370 (4,101)
Dividends on preferred securities of
subsidiaries................................... -- -- -- (2,362) (2,362)
Minority interest................................ -- (17) (348) -- (365)
Other............................................ (288) (287) (296) (374) (1,245)
------- -------- -------- -------- --------
2,088 (9,357) (12,662) (2,736) (22,667)
------- -------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES............................................ 84,151 6,306 108,477 (81,851) 117,083
INCOME TAX PROVISION (BENEFIT)..................... 1,100 (1,508) 38,437 -- 38,029
------- -------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS.................. 83,051 7,814 70,040 (81,851) 79,054
DISCONTINUED OPERATIONS, NET OF TAXES.............. -- 1,013 -- -- 1,013
------- -------- -------- -------- --------
NET INCOME......................................... 83,051 8,827 70,040 (81,851) 80,067
DIVIDENDS ON PREFERRED SECURITIES.................. 2,344 -- 18 (2,362) --
------- -------- -------- -------- --------
NET INCOME AVAILABLE FOR COMMON STOCK.............. $80,707 $ 8,827 $70,022 $(79,489) $ 80,067
======= ======== ======== ======== ========
</TABLE>
16
<PAGE> 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCN AND ELIMINATIONS
OTHER AND CONSOLIDATED
SUBSIDIARIES MCNIC MICHCON RECLASSIFICATION TOTALS
------------ -------- ---------- ----------------- ------------
TWELVE MONTHS ENDED MARCH 31, 1997
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES...................................... $ 17,199 $737,226 $1,254,838 $ (13,872) $1,995,391
-------- -------- ---------- --------- ----------
OPERATING EXPENSES
Cost of gas........................................... 9,697 540,034 641,151 (10,188) 1,180,694
Operation and maintenance............................. 653 87,465 299,615 (3,684) 384,049
Depreciation, depletion and amortization.............. 2,024 53,370 99,255 -- 154,649
Property and other taxes.............................. 2,271 10,949 60,948 379 74,547
-------- -------- ---------- --------- ----------
14,645 691,818 1,100,969 (13,493) 1,793,939
-------- -------- ---------- --------- ----------
OPERATING INCOME........................................ 2,554 45,408 153,869 (379) 201,452
-------- -------- ---------- --------- ----------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES... 154,173 25,615 961 (152,564) 28,185
-------- -------- ---------- --------- ----------
OTHER INCOME AND (DEDUCTIONS)
Interest income....................................... 14,623 3,259 4,524 (14,505) 7,901
Interest on long-term debt............................ 265 (27,950) (41,675) -- (69,360)
Other interest expense................................ (1,434) (16,896) (8,068) 14,505 (11,893)
Dividends on preferred securities of subsidiaries..... -- -- -- (14,241) (14,241)
Gains related to DIGP................................. -- 6,384 -- -- 6,384
Minority interest..................................... -- (69) (978) -- (1,047)
Other................................................. 422 2,109 (1,259) 374 1,646
-------- -------- ---------- --------- ----------
13,876 (33,163) (47,456) (13,867) (80,610)
-------- -------- ---------- --------- ----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES... 170,603 37,860 107,374 (166,810) 149,027
INCOME TAX PROVISION (BENEFIT).......................... 1,656 (3,292) 35,379 -- 33,743
-------- -------- ---------- --------- ----------
INCOME FROM CONTINUING OPERATIONS....................... 168,947 41,152 71,995 (166,810) 115,284
-------- -------- ---------- --------- ----------
DISCONTINUED OPERATIONS, NET OF TAXES
Income from operations................................ -- 582 -- -- 582
Gain on sale.......................................... -- 36,176 -- -- 36,176
-------- -------- ---------- --------- ----------
-- 36,758 -- -- 36,758
-------- -------- ---------- --------- ----------
NET INCOME.............................................. 168,947 77,910 71,995 (166,810) 152,042
DIVIDENDS ON PREFERRED SECURITIES....................... 14,241 -- -- (14,241) --
-------- -------- ---------- --------- ----------
NET INCOME AVAILABLE FOR COMMON STOCK................... $154,706 $ 77,910 $ 71,995 $(152,569) $ 152,042
======== ======== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED MARCH 31, 1996
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES...................................... $ 16,393 $565,073 $1,190,393 $ (12,077) $1,759,782
-------- -------- ---------- --------- ----------
OPERATING EXPENSES
Cost of gas........................................... 8,494 437,772 572,541 (8,480) 1,010,327
Operation and maintenance............................. 3,516 55,772 285,866 (3,597) 341,557
Depreciation, depletion and amortization.............. 1,759 29,117 91,370 -- 122,246
Property and other taxes.............................. 1,415 6,794 59,118 (379) 66,948
-------- -------- ---------- --------- ----------
15,184 529,455 1,008,895 (12,456) 1,541,078
-------- -------- ---------- --------- ----------
OPERATING INCOME........................................ 1,209 35,618 181,498 379 218,704
-------- -------- ---------- --------- ----------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES... 117,124 6,100 750 (115,930) 8,044
-------- -------- ---------- --------- ----------
OTHER INCOME AND (DEDUCTIONS)
Interest income....................................... 9,593 3,509 3,630 (9,649) 7,083
Interest on long-term debt............................ (65) (13,050) (37,335) -- (50,450)
Other interest expense................................ (45) (14,582) (6,916) 9,477 (12,066)
Dividends on preferred securities of subsidiaries..... -- -- -- (9,554) (9,554)
Minority interest..................................... -- (1,944) (348) -- (2,292)
Other................................................. 1,195 902 (4,967) (204) (3,074)
-------- -------- ---------- --------- ----------
10,678 (25,165) (45,936) (9,930) (70,353)
-------- -------- ---------- --------- ----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES... 129,011 16,553 136,312 (125,481) 156,395
INCOME TAX PROVISION (BENEFIT).......................... 2,209 (7,635) 50,159 -- 44,733
-------- -------- ---------- --------- ----------
INCOME FROM CONTINUING OPERATIONS....................... 126,802 24,188 86,153 (125,481) 111,662
DISCONTINUED OPERATIONS, NET OF TAXES................... -- 3,571 -- -- 3,571
-------- -------- ---------- --------- ----------
NET INCOME.............................................. 126,802 27,759 86,153 (125,481) 115,233
DIVIDENDS ON PREFERRED SECURITIES....................... 9,375 -- 179 (9,554) --
-------- -------- ---------- --------- ----------
NET INCOME AVAILABLE FOR COMMON STOCK................... $117,427 $ 27,759 $ 85,974 $(115,927) $ 115,233
======== ======== ========== ========= ==========
</TABLE>
17
<PAGE> 20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCN ELIMINATIONS
AND OTHER AND CONSOLIDATED
SUBSIDIARIES MCNIC MICHCON RECLASSIFICATIONS TOTALS
------------ ---------- ---------- ----------------- ------------
MARCH 31, 1997
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents, at cost............ $ 3,413 $ 21,885 $ 15,284 $ 938 $ 41,520
Accounts receivable........................... 5,094 149,665 281,090 (8,874) 426,975
Less -- Allowance for doubtful accounts..... 76 800 24,398 -- 25,274
---------- ---------- ---------- ----------- ----------
Accounts receivable, net...................... 5,018 148,865 256,692 (8,874) 401,701
Accrued unbilled revenue...................... 866 -- 71,507 -- 72,373
Accrued gas cost recovery revenues............ -- -- 21,500 -- 21,500
Gas in inventory.............................. -- 17,192 21,419 -- 38,611
Property taxes assessed applicable to future
periods..................................... 162 1,679 49,300 -- 51,141
Gas receivable................................ -- 20,946 8,593 1 29,540
Other......................................... 3,031 9,780 20,699 (7,852) 25,658
---------- ---------- ---------- ----------- ----------
12,490 220,347 464,994 (15,787) 682,044
---------- ---------- ---------- ----------- ----------
DEFERRED CHARGES AND OTHER ASSETS
Investments in and advances to joint ventures
and subsidiaries............................ 1,154,740 265,712 19,865 (1,144,375) 295,942
Deferred swap losses and receivables.......... -- 60,329 -- -- 60,329
Deferred postretirement benefit costs......... 685 -- 4,099 -- 4,784
Deferred environmental costs.................. 3,000 -- 28,116 -- 31,116
Prepaid benefit costs......................... (3,561) -- 60,228 (1,706) 54,961
Other......................................... 21,571 43,374 52,679 (16,883) 100,741
---------- ---------- ---------- ----------- ----------
1,176,435 369,415 164,987 (1,162,964) 547,873
---------- ---------- ---------- ----------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost.......... 33,310 1,084,133 2,685,456 -- 3,802,899
Less -- Accumulated depreciation and
depletion................................... 11,485 98,497 1,265,095 -- 1,375,077
---------- ---------- ---------- ----------- ----------
21,825 985,636 1,420,361 -- 2,427,822
---------- ---------- ---------- ----------- ----------
$1,210,750 $1,575,398 $2,050,342 $(1,178,751) $3,657,739
========== ========== ========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.............................. $ 11,289 $ 137,266 $ 95,299 $ (24,379) $ 219,475
Notes payable................................. -- 50,406 160,958 (19) 211,345
Current portion of long-term debt and capital
lease obligations........................... 55 31,512 53,286 -- 84,853
Gas inventory equalization.................... -- 887 96,197 -- 97,084
Federal income, property and other taxes
payable..................................... 1,804 2,149 89,578 (4,538) 88,993
Customer deposits............................. 19 -- 12,630 1 12,650
Other......................................... 9,759 19,255 51,894 (3,766) 77,142
---------- ---------- ---------- ----------- ----------
22,926 241,475 559,842 (32,701) 791,542
---------- ---------- ---------- ----------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes............. (2,191) 87,420 75,846 20 161,095
Unamortized investment tax credit............. 324 -- 34,127 -- 34,451
Tax benefits amortizable to customers......... 198 -- 115,897 -- 116,095
Deferred swap gains and payables.............. -- 50,406 -- -- 50,406
Accrued environmental costs................... 3,000 -- 32,000 -- 35,000
Minority interest............................. -- 321 17,738 -- 18,059
Other......................................... 12,594 17,346 41,695 (1,706) 69,929
---------- ---------- ---------- ----------- ----------
13,925 155,493 317,303 (1,686) 485,035
---------- ---------- ---------- ----------- ----------
LONG-TERM DEBT, including capital lease
obligations................................... 365 674,144 549,000 -- 1,223,509
---------- ---------- ---------- ----------- ----------
REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARIES.................................. 305,840 -- -- -- 305,840
---------- ---------- ---------- ----------- ----------
COMMON SHAREHOLDERS' EQUITY
Common Stock.................................. 680 5 10,300 (10,305) 680
Additional paid-in capital.................... 507,191 365,318 230,399 (599,301) 503,607
Retained earnings............................. 382,658 138,963 383,498 (534,758) 370,361
Yield enhancement, contract and issuance
costs....................................... (22,036) -- -- -- (22,036)
Unearned compensation......................... (799) -- -- -- (799)
---------- ---------- ---------- ----------- ----------
867,694 504,286 624,197 (1,144,364) 851,813
---------- ---------- ---------- ----------- ----------
$1,210,750 $1,575,398 $2,050,342 $(1,178,751) $3,657,739
========== ========== ========== =========== ==========
</TABLE>
18
<PAGE> 21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENT OF FINANCIAL POSITION (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCN ELIMINATIONS
AND OTHER AND CONSOLIDATED
SUBSIDIARIES MCNIC MICHCON RECLASSIFICATIONS TOTALS
------------ ---------- ---------- ----------------- ------------
MARCH 31, 1996
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents, at cost.............. $ 25 $ 15,759 $ 9,554 $ -- $ 25,338
Accounts receivable............................. 7,098 191,613 280,734 (11,513) 467,932
Less -- Allowance for doubtful accounts....... 79 626 17,064 -- 17,769
-------- ---------- ---------- --------- ----------
Accounts receivable, net........................ 7,019 190,987 263,670 (11,513) 450,163
Accrued unbilled revenue........................ 819 -- 72,382 -- 73,201
Accrued gas cost recovery revenues.............. -- -- 35,362 -- 35,362
Gas in inventory................................ -- 447 13,665 1 14,113
Property taxes assessed applicable to future
periods....................................... 148 1,777 47,062 -- 48,987
Gas receivable.................................. -- 13,541 12,783 -- 26,324
Other........................................... 1,661 22,665 23,818 (16,485) 31,659
-------- ---------- ---------- --------- ----------
9,672 245,176 478,296 (27,997) 705,147
-------- ---------- ---------- --------- ----------
DEFERRED CHARGES AND OTHER ASSETS
Investments in and advances to joint ventures
and subsidiaries.............................. 846,439 179,250 20,043 (837,764) 207,968
Deferred swap losses and receivables............ -- 47,135 -- -- 47,135
Deferred postretirement benefit costs........... 728 -- 11,582 -- 12,310
Deferred environmental costs.................... 3,000 -- 28,016 -- 31,016
Prepaid benefit costs........................... -- -- 48,896 (5,135) 43,761
Other........................................... 8,529 48,638 47,934 515 105,616
-------- ---------- ---------- --------- ----------
858,696 275,023 156,471 (842,384) 447,806
-------- ---------- ---------- --------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost............ 28,592 718,889 2,500,764 -- 3,248,245
Less -- Accumulated depreciation and
depletion..................................... 10,192 66,444 1,177,584 -- 1,254,220
-------- ---------- ---------- --------- ----------
18,400 652,445 1,323,180 -- 1,994,025
-------- ---------- ---------- --------- ----------
$886,768 $1,172,644 $1,957,947 $(870,381) $3,146,978
======== ========== ========== ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................ $ 4,169 $ 145,428 $ 117,060 $ (10,955) $ 255,702
Notes payable................................... -- 32,000 144,919 -- 176,919
Current portion of long-term debt and capital
lease obligations............................. 55 2,077 3,143 1 5,276
Gas inventory equalization...................... -- 2,183 82,393 -- 84,576
Federal income, property and other taxes
payable....................................... 4,409 3,331 82,048 (14,385) 75,403
Customer deposits............................... 19 38 10,818 -- 10,875
Other........................................... 2,840 11,936 75,365 (2,098) 88,043
-------- ---------- ---------- --------- ----------
11,492 196,993 515,746 (27,437) 696,794
-------- ---------- ---------- --------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes............... (769) 63,386 81,830 -- 144,447
Unamortized investment tax credit............... 353 -- 35,975 -- 36,328
Tax benefits amortizable to customers........... 183 -- 113,968 -- 114,151
Deferred swap gains and payables................ -- 44,475 -- -- 44,475
Accrued postretirement benefit costs............ 2,230 1,234 -- (3,464) --
Accrued environmental costs..................... 3,000 -- 32,000 -- 35,000
Minority interest............................... -- 252 17,805 -- 18,057
Other........................................... 17,747 11,005 56,438 (1,672) 83,518
-------- ---------- ---------- --------- ----------
22,744 120,352 338,016 (5,136) 475,976
-------- ---------- ---------- --------- ----------
LONG-TERM DEBT, including capital lease
obligations..................................... 420 604,562 532,720 1 1,137,703
-------- ---------- ---------- --------- ----------
REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARIES... 96,480 -- -- -- 96,480
-------- ---------- ---------- --------- ----------
COMMON SHAREHOLDERS' EQUITY
Common Stock.................................... 668 5 10,300 (10,305) 668
Additional paid-in capital...................... 463,184 189,679 230,399 (426,307) 456,955
Retained earnings............................... 292,424 61,053 330,766 (401,197) 283,046
Unearned compensation........................... (644) -- -- -- (644)
-------- ---------- ---------- --------- ----------
755,632 250,737 571,465 (837,809) 740,025
-------- ---------- ---------- --------- ----------
$886,768 $1,172,644 $1,957,947 $(870,381) $3,146,978
======== ========== ========== ========= ==========
</TABLE>
19
<PAGE> 22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCN ELIMINATIONS
AND OTHER AND CONSOLIDATED
SUBSIDIARIES MCNIC MICHCON RECLASSIFICATIONS TOTALS
------------ ---------- ---------- ----------------- ------------
DECEMBER 31, 1996
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents, at cost.............. $ 844 $ 19,608 $ 10,010 $ -- $ 30,462
Accounts receivable............................. 19,824 198,777 187,143 (24,661) 381,083
Less -- Allowance for doubtful accounts....... 70 710 17,707 -- 18,487
---------- ---------- ---------- --------- ----------
Accounts receivable, net........................ 19,754 198,067 169,436 (24,661) 362,596
Accrued unbilled revenue........................ 1,132 -- 107,377 -- 108,509
Accrued gas cost recovery revenues.............. -- -- 27,672 -- 27,672
Gas in inventory................................ -- 11,251 67,910 -- 79,161
Property taxes assessed applicable to future
periods....................................... 195 2,179 60,592 -- 62,966
Gas receivable.................................. -- 16,045 2,017 -- 18,062
Other........................................... 1,973 12,270 21,008 (451) 34,800
---------- ---------- ---------- --------- ----------
23,898 259,420 466,022 (25,112) 724,228
---------- ---------- ---------- --------- ----------
DEFERRED CHARGES AND OTHER ASSETS
Investments in and advances to joint ventures
and subsidiaries.............................. 954,479 236,057 19,479 (944,627) 265,388
Deferred swap losses and receivables............ -- 65,051 -- -- 65,051
Deferred postretirement benefit costs........... 696 -- 4,863 -- 5,559
Deferred environmental costs.................... 3,000 -- 28,233 -- 31,233
Prepaid benefit costs........................... -- -- 64,307 (5,059) 59,248
Other........................................... 4,204 45,104 50,206 827 100,341
---------- ---------- ---------- --------- ----------
962,379 346,212 167,088 (948,859) 526,820
---------- ---------- ---------- --------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost............ 31,967 1,017,296 2,668,294 -- 3,717,557
Less -- Accumulated depreciation and
depletion..................................... 10,983 81,158 1,243,060 -- 1,335,201
---------- ---------- ---------- --------- ----------
20,984 936,138 1,425,234 -- 2,382,356
---------- ---------- ---------- --------- ----------
$1,007,261 $1,541,770 $2,058,344 $(973,971) $3,633,404
========== ========== ========== ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................ $ 5,745 $ 205,073 $ 130,725 $ (23,621) $ 317,922
Notes payable................................... -- 71,000 265,126 -- 336,126
Current portion of long-term debt and capital
lease obligations............................. 55 31,460 53,232 -- 84,747
Federal income, property and other taxes
payable....................................... 280 12,578 84,788 -- 97,646
Customer deposits............................... 21 -- 12,860 -- 12,881
Other........................................... 9,315 25,701 63,309 (452) 97,873
---------- ---------- ---------- --------- ----------
15,416 345,812 610,040 (24,073) 947,195
---------- ---------- ---------- --------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes............... (1,625) 74,940 76,523 -- 149,838
Unamortized investment tax credit............... 331 -- 34,588 -- 34,919
Tax benefits amortizable to customers........... 183 -- 116,313 -- 116,496
Deferred swap gains and payables................ -- 48,365 -- -- 48,365
Accrued environmental costs..................... 3,000 -- 32,000 -- 35,000
Minority interest............................... -- 306 17,604 1 17,911
Other........................................... 15,902 18,466 43,954 (5,059) 73,263
---------- ---------- ---------- --------- ----------
17,791 142,077 320,982 (5,058) 475,792
---------- ---------- ---------- --------- ----------
LONG-TERM DEBT, including capital lease
obligations..................................... 365 701,357 550,318 -- 1,252,040
---------- ---------- ---------- --------- ----------
REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARIES... 173,809 -- -- -- 173,809
---------- ---------- ---------- --------- ----------
COMMON SHAREHOLDERS' EQUITY
Common Stock.................................... 673 5 10,300 (10,305) 673
Additional paid-in capital...................... 497,472 231,389 230,399 (465,791) 493,469
Retained earnings............................... 316,661 121,130 336,305 (468,744) 305,352
Yield enhancement, contract and issuance
costs......................................... (14,492) -- -- -- (14,492)
Unearned compensation........................... (434) -- -- -- (434)
---------- ---------- ---------- --------- ----------
799,880 352,524 577,004 (944,840) 784,568
---------- ---------- ---------- --------- ----------
$1,007,261 $1,541,770 $2,058,344 $(973,971) $3,633,404
========== ========== ========== ========= ==========
</TABLE>
20
<PAGE> 23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCN ELIMINATIONS
AND OTHER AND CONSOLIDATED
SUBSIDIARIES MCNIC MICHCON RECLASSIFICATIONS TOTALS
------------ --------- --------- ----------------- ------------
THREE MONTHS ENDED MARCH 31, 1997
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET CASH FLOW FROM OPERATING ACTIVITIES............. $ 26,527 $ 14,989 $ 146,859 $ (18,484) $ 169,891
--------- --------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Notes payable, net................................ -- (18,194) (104,168) (19) (122,381)
Capital contributions received from (distributions
paid to) affiliates, net........................ (172) 133,949 -- (133,777) --
Common stock dividends paid....................... (16,333) -- (15,000) 15,000 (16,333)
Preferred securities dividends paid............... (4,229) -- -- 4,229 --
Issuance of common stock.......................... 5,398 -- -- -- 5,398
Issuance of preferred securities.................. 127,418 -- -- -- 127,418
Issuance of long-term debt........................ -- 149,190 -- -- 149,190
Long-term commercial paper, net................... -- (176,235) -- -- (176,235)
Retirement of long-term debt and preferred
securities...................................... -- (367) (1,297) -- (1,664)
Other............................................. (164) -- -- -- (164)
--------- --------- --------- --------- ---------
Net cash provided from (used for) financing
activities.................................. 111,918 88,343 (120,465) (114,567) (34,771)
--------- --------- --------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures.............................. (1,424) (71,785) (23,702) -- (96,911)
Acquisitions...................................... -- (24,400) -- -- (24,400)
Investment in joint ventures and subsidiaries..... (134,449) (9,485) (78) 133,989 (10,023)
Return of investment in joint ventures............ -- 4,000 -- -- 4,000
Other............................................. (3) 615 2,660 -- 3,272
--------- --------- --------- --------- ---------
Net cash used for investing activities........ (135,876) (101,055) (21,120) 133,989 (124,062)
--------- --------- --------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS........... 2,569 2,277 5,274 938 11,058
CASH AND CASH EQUIVALENTS, JANUARY 1................ 844 19,608 10,010 -- 30,462
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, MARCH 31................. $ 3,413 $ 21,885 $ 15,284 $ 938 $ 41,520
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET CASH FLOW FROM OPERATING ACTIVITIES............. $ 16,019 $ 20,093 $ 94,296 $ (10,214) $ 120,194
--------- --------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Notes payable, net................................ -- (17,000) (51,716) -- (68,716)
Capital contributions received from (distributions
paid to) affiliates, net........................ (830) (524) 1,614 (260) --
Common stock dividends paid....................... (15,446) -- (7,000) 7,000 (15,446)
Preferred securities dividends paid............... (2,344) -- (54) 2,398 --
Issuance of common stock.......................... 4,378 -- -- -- 4,378
Issuance of long-term debt........................ -- 199,729 -- -- 199,729
Long-term commercial paper, net................... -- (59,654) -- -- (59,654)
Retirement of long-term debt and preferred
securities...................................... -- (526) (3,974) 3 (4,497)
--------- --------- --------- --------- ---------
Net cash provided from (used for) financing
activities.................................. (14,242) 122,025 (61,130) 9,141 55,794
--------- --------- --------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures.............................. (956) (59,145) (29,616) -- (89,717)
Acquisitions...................................... -- (78,620) -- -- (78,620)
Investment in joint ventures and subsidiaries..... (1,090) (32) (17) 1,090 (49)
Other............................................. 126 816 (2,448) (17) (1,523)
--------- --------- --------- --------- ---------
Net cash used for investing activities........ (1,920) (136,981) (32,081) 1,073 (169,909)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS....................................... (143) 5,137 1,085 -- 6,079
CASH AND CASH EQUIVALENTS, JANUARY 1................ 168 10,622 8,469 -- 19,259
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, MARCH 31................. $ 25 $ 15,759 $ 9,554 $ -- $ 25,338
========= ========= ========= ========= =========
</TABLE>
21
<PAGE> 24
OTHER INFORMATION
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
MCN held its Annual Meeting of Shareholders on April 22, 1997. As of
February 26, 1997, the record date for determination of shareholders entitled to
vote at the Annual Meeting, there were 67,453,128 shares outstanding and
entitled to vote. Of these shares, 58,005,937, or 85.99%, were present by proxy,
and 9,447,191 shares were not voted.
At the Annual Meeting, shareholders voted:
1. To elect the following Directors to serve for three year terms:
<TABLE>
<CAPTION>
Number of Number of
Shares Shares
Consenting Withholding
Director FOR Consent
-------- ---------------- ----------------
<S> <C> <C>
(Three-Year Terms)
Alfred R. Glancy III.................................... 57,364,137 641,800
Frank M. Hennessey...................................... 57,373,348 632,589
Howard F. Sims.......................................... 57,352,690 653,247
</TABLE>
Stephen E. Ewing, Roger Fridholm, Thomas H. Jeffs II, Dale A. Johnson,
William K. McCrackin, Helen O. Petrauskas and Bill M. Thompson terms of
office continue after the meeting.
2. To approve an Amendment to the Articles of Incorporation to change the name
of the Company to MCN Energy Group Inc., with 57,486,024 shares voted for
the ratification of the amendment, 252,395 shares voted against and
abstentions of 267,518 shares.
3. To approve an Amendment to the MCN Corporation Stock Incentive Plan to
increase the number of shares of MCN Common Stock authorized to be issued
under the plan, with 51,846,708 shares voted for ratification of the
amendment, 5,077,970 shares voted against and abstentions of 1,081,259
shares.
4. To appoint Deloitte & Touche LLP as independent auditors for the year ending
December 31, 1997, with 57,624,148 shares voted for the appointment, 174,484
shares voted against, and abstentions of 207,305 shares.
22
<PAGE> 25
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3-1 Articles of Incorporation of MCN Energy Group Inc.
12-1 Computation of Ratio of Earnings to Fixed Charges for MCN
Energy Group Inc.
12-2 Computation of Ratio of Earnings to Fixed Charges for MCN
Investment Corporation.
27-1 Financial Data Schedule.
99-1 MichCon Investment and Stock Ownership Plan, as amended.
99-2 MCN Energy Group Savings and Stock Ownership Plan, as
amended.
(b) Reports on Form 8-K
MCN filed a report on Form 8-K dated January 14, 1997, under Item 5,
with respect to the announcement that it had begun doing business
under the name MCN Energy Group Inc.
MCN filed an additional report on Form 8-K dated March 19, 1997, under
Item 5, with respect to the offering of its 2,645,000 FELINE PRIDES
pursuant to the registration statement of the Registrant and MCN
Financing III, among others, on Form S-3 (No. 333-21175) filed with
the Securities and Exchange Commission Under the Securities Act of
1933. The following documents were filed as Exhibits thereto:
- Underwriting Agreement dated March 19, 1997 with respect to the
FELINE PRIDES.
- Amended and Restated Declaration of Trust of MCN Financing III,
dated as of March 19, 1997.
- Third Supplemental Indenture, dated as of March 19, 1997,
between MCN and NBD Bank.
- Preferred Securities Guarantee Agreement, dated as of March 19,
1997, between MCN and Wilmington Trust Company.
- Purchase Contract Agreement dated March 25, 1997 between MCN and
The First National Bank of Chicago, as Purchase Contract Agent.
- Pledge Agreement dated March 25, 1997 among MCN, Chase Manhattan
Bank, as Collateral Agent, and The First National Bank of
Chicago, as Purchase Contract Agent.
23
<PAGE> 26
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, thereunto duly authorized.
MCN ENERGY GROUP INC.
Date: May 8, 1997 By: /s/ HAROLD GARDNER
-------------------------------------
Harold Gardner
Vice President, Controller
and Chief Accounting Officer
24
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
3-1 Articles of Incorporation of MCN Energy Group Inc.
12-1 Computation of Ratio of Earnings to Fixed Charges for MCN
Energy Group Inc.
12-2 Computation of Ratio of Earnings to Fixed Charges for MCN
Investment Corporation.
27-1 Financial Data Schedule.
99-1 MichCon Investment and Stock Ownership Plan, as amended.
99-2 MCN Energy Group Savings and Stock Ownership Plan, as
amended.
</TABLE>
<PAGE> 1
EXHIBIT 3-1
STATE OF MICHIGAN
DEPARTMENT OF COMMERCE
CORPORATION AND SECURITIES BUREAU
CORPORATION DIVISION
LANSING, MICHIGAN
MCN CORPORATION
ARTICLES OF INCORPORATION
FILED
AUGUST 12, 1988
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
IDENTIFICATION NUM 381 - 153
<PAGE> 2
ARTICLES OF INCORPORATION
OF
MCN CORPORATION
Pursuant to the provisions of Act 284, Public Acts of 1972, as amended, the
undersigned corporation executes the following Articles:
FIRST. The name of the corporation is MCN Corporation
SECOND. The purpose or purposes for which the Corporation is
organized is to engage in any activity with in the purposes for which
corporations may be organized under the Michigan Business Corporation Act.
THIRD. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 75,000,000 shares, which shall be
divided into two classes as follows:
(a) 25,000,000 shares of Preferred Stock, no par value (Preferred
Stock); and
(b) 50,000,000 shares of Common Stock of the par value of $.01
per share (Common Stock).
The designations, voting powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions of the above classes of stock and other general
provisions relating thereto shall be as follows:
PART I
PREFERRED STOCK
(a) Shares of Preferred Stock may be issued in one or more series
at such time or times and for such consideration or considerations as the Board
of Directors may determine. All shares of any one series shall be of equal
rank and identical in all respects expect that the dates from which dividends
accrue or accumulate with respect thereto may vary.
(b) The Board of Directors is expressly authorized at any time,
and from time to time, to provide for the issuance of shares of Preferred Stock
in one or more series, with such voting powers, full or limited, or without
voting
2
<PAGE> 3
powers, and such designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of Directors,
and as are not stated and expressed in these Articles of Incorporation, or any
amendment thereto, including (but without limiting the generality of the
foregoing) the following:
(i) The distinctive designation and number of shares comprising
such series, which number may (except where otherwise provided
by the Board of Directors in creating such series) be
increased or decreased (but not below the number of shares
then outstanding) from time to time by action of the Board of
Directors.
(ii) The dividend rate or rates on the shares of such series and
the relation which such dividends shall bear to the dividends
payable on any other class of capital stock or on any other
series of Preferred Stock, the terms and conditions upon which
and the periods in respect of which dividends shall be
payable, whether and upon what conditions such dividends shall
be cumulative and, if cumulative, the date or dates from which
dividends shall accumulate.
(iii) Whether the shares of such series shall be redeemable, and, if
redeemable, whether redeemable for cash, property or rights,
including securities of any other corporation, at the option
of either the holder or the Corporation or upon the happening
of a specified event, the limitations and restrictions with
respect to such redemption, the time or times when, the price
or prices or rate or rates at which, the adjustments with
which and the manner in which such shares shall be redeemable,
including the manner of selecting shares of such series for
redemption if less than all shares are to be redeemed.
(iv) The rights to which the holders of shares of such series shall
be entitled, and the preferences, if any, over any other
series (or of any other series over such series), upon the
voluntary or involuntary liquidation, dissolution,
distribution or winding up of the Corporation, which rights
may vary depending on whether such liquidation, dissolution,
distribution or winding up is voluntary or involuntary, and,
if voluntary, may vary at different dates.
3
<PAGE> 4
(v) Whether the shares of such series shall be subject to the
operation of a purchase, retirement or sinking fund and, if
so, whether and upon what conditions such purchase, retirement
or sinking fund shall be cumulative or noncumulative, the
extent to which and the manner in which such fund shall be
applied to the purchase or redemption of the shares of such
series for retirement or to other corporate purposes and the
terms and provisions relative to the operation thereof.
(vi) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or of any other
series of any class of capital stock of the Corporation, and,
if so convertible or exchangeable, the price or prices or the
rate or rates of conversion or exchange and the method, if
any, of adjusting the same, and any other terms and conditions
of such conversion or exchange.
(vii) The voting powers, full and/or limited, if any, of the shares
of such series, and whether and under what conditions the
shares of such series (along or together with the shares of
one or more other series having similar provisions) shall be
entitled to vote separately as a single class, for the
election of one or more additional directors of the
Corporation in case of dividend arrearages, or other specified
events, or upon other matters.
(viii) Whether the issuance of any additional shares of such series,
or of any shares of any other series, shall be subject to
restrictions as to issuance or as to the powers, preferences
or rights of any such other series.
(ix) Any other preferences, privileges and powers and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions of such series, as
the Board of Directors may deem advisable and as shall not be
inconsistent with the provisions of these Articles of
Incorporation.
(c) Unless the except to the extent otherwise required by law or
provided in the resolution or resolutions of the Board of Directors creating
any series of Preferred Stock pursuant to this Part I, the holders of the
shares of Preferred Stock shall have no voting power with respect to any matter
4
<PAGE> 5
whatsoever. In no event shall the Preferred Stock be entitled to more than one
vote in respect to each share of Preferred Stock.
(d) Shares of Preferred Stock redeemed, converted, exchanged,
purchased, retired or surrendered to the Corporation, or which have been issued
and reacquired in any manner, may, upon compliance with any applicable
provisions of the Michigan Business Corporation Act, be given the status of
authorized and unissued shares of Preferred Stock and may be reissued by the
Board of Directors as part of the series of which they were originally a part
or may be reclassified into and reissued as part of a new series or as a part
of any other series, all subject to the protective conditions or restrictions
of any outstanding series of Preferred Stock.
PART II
COMMON STOCK
(a) Except as otherwise required by law or by any amendment to
these Articles of Incorporation, each holder of Common Stock shall have one
vote for each share of Common Stock held by such holder on all matters voted
upon by the shareholders.
(b) Subject to the preferential dividend rights, if any,
applicable to shares of Preferred Stock and subject to applicable requirements,
if any, with respect to the setting aside of sums of purchase, retirement or
sinking funds for Preferred Stock, the holders of Common Stock shall be
entitled to receive, to the extent permitted by law, such dividends as may be
declared from time to time by the Board of Directors.
5
<PAGE> 6
PART III
GENERAL PROVISIONS
No holder of stock of any class of the Corporation shall be entitled
as a matter of right to purchase or subscribe for any part of any unissued
stock of any class, or of any additional stock of any class of capital stock of
the Corporation, or of any bonds, certificates of indebtedness, debentures, or
other securities, whether or not convertible into stock of the Corporation, now
or hereafter authorized, but any such stock or other securities may be issued
and disposed of pursuant to resolution by the Board of Directors to such
persons, firms, corporations or associations and upon such terms and for such
consideration (not less than the par value or stated value thereof) as the
Board of Director in the exercise of its discretion may determine and as may be
permitted by law without action by the shareholders. The Board of Directors
may provide for payment therefor to be received by the Corporation in cash,
personal property, real property (or leases thereof) or services. Any and all
shares of stock so issued for which the consideration so fixed has been paid or
delivered, shall be deemed fully paid and not liable to any further call or
assessment.
FOURTH.
(a) The address of the registered office of the Corporation is 500
Griswold Street, Detroit, Michigan 48226.
(b) The name of the registered agent at the registered office is
Daniel L. Schiffer.
FIFTH. The name and address of the incorporator is as follows;
Name Address
Michigan Consolidated Gas Company 500 Griswold Street
Detroit, Michigan 48226
SIXTH.
(a) The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors. The number of directors of
the Corporation shall be fixed from time to time by resolution adopted by the
affirmative vote of a majority of the entire Board of Directors of the
Corporation, except that the minimum number of directors shall be fixed at not
6
<PAGE> 7
fewer than seven and the maximum number of directors shall be fixed at not more
than ten. The directors shall be divided into three classes, designated as
Class I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board of Directors. At the 1989 annual meeting of shareholders and at each
succeeding annual meeting of shareholders, successors to the class of directors
whose terms of office expire at that annual meeting shall be elected to hold
office for a three-year term, so that the term of office of one class of
directors shall expire in each year.
Any vacancy occurring on the Board of Directors through death,
resignation, retirement, disqualification, removal or other cause, or resulting
from an increase, the number of directors, may be filled by the affirmative
vote of a majority of the then remaining directors, through less than a quorum,
or by the sole remaining director for a term of office continuing only until
the next election of directors by the shareholders.
If the number of directors is changed, any increase or decrease shall
be apportioned among the classes of directors so as to maintain the number of
directors in each class as nearly equal as possible, but in no case will a
decrease in the number of directors shorten the term of any incumbent director.
When the number of directors is increased by the Board of Directors and any
newly created directorships are filled by the Board of Directors, there shall
be no classification of the additional directors until the next election of
directors by the shareholders.
(b) Any director may be removed from office at any time either (i)
by vote of the holders of two-thirds of the shares entitled to vote at an
election of directors, but only for cause, or (ii) by vote of two-thirds of the
other directors, with or without cause.
(c) Notwithstanding the foregoing paragraphs, whenever the holders
of any one or more class or series of Preferred Stock issued by the Corporation
shall have the right, voting separately by class or series, to elect directors
at an annual or special meeting of shareholders, the election, term of office,
filling of vacancies and other features of such directorships shall be governed
by the terms of the Articles of Incorporation applicable thereto. The then
authorized number of directors of the Corporation shall be increased by the
number of additional directors to be elected, and such directors so elected
shall not be divided into classes pursuant to this Article SIXTH unless
expressly provided by such terms.
7
<PAGE> 8
(d) Nominations for election to the Board of Directors of the
Corporation at a meeting of shareholders may be made by the Board of Directors,
on behalf of the Board of Directors by any nominating committee appointed by
the Board of Directors, or by any shareholder of the Corporation entitled to
vote for the election of directors at a meeting. Nominations, other than those
made by or on behalf of the Board of Directors, shall be made by notice in
writing delivered to or mailed, postage prepaid, and received by the Secretary
of the Corporation at least 90 days but no more than 120 days prior to the
anniversary date of the immediately preceding annual meeting of shareholders.
The notice shall set forth (i) the name and address of the shareholder who
intends to make the nomination; (ii) the name, age, business address and, if
known, residence address of each nominee; (iii) the principal occupation or
employment of each nominee; (iv) the number of shares of stock of the
Corporation which are beneficially owned by each nominee and by the nominating
shareholder; (v) any other information concerning the nominee that must be
disclosed of nominees in proxy solicitations pursuant to Regulation 14A of the
Securities Exchange Act of 1934 (or any subsequent provisions replacing such
Regulation); and (vi) the executed consent of each nominee to serve as a
director of the Corporation, if elected. The chairman of the meeting of
shareholders may, if the facts warrant, determine that a nomination was not
made in accordance with the foregoing procedures, and if the chairman should so
determine, the chairman shall so declare to the meeting and the defective
nomination shall be disregarded.
SEVENTH. Any action required to permitted to be taken by any
shareholders of the Corporation must be effected at a duly called annual or
special meeting of such shareholders and may not be effected by any consent in
writing by such shareholders. Except as may be otherwise required by law,
special meetings of shareholders of the Corporation may be called only by the
Board of Directors pursuant to a resolution approved by a majority of the Board
of Directors.
EIGHTH. The Board of Directors shall not approve, adopt or recommend
any proposal to enter into a Business Combination (as hereinafter defined) or
any offer of any person or entity, other than the Corporation, to make a tender
or exchange offer for any capital stock of the Corporation, unless and until
the Board of Directors shall first establish a procedure for evaluating, and
shall have evaluated, the proposal or offer and determine that it would be in
compliance with all applicable laws and in the best interests of the
Corporation and its shareholders. In connection with its evaluation, the Board
of Directors may seek and obtain the advice of independent investment counsel,
may seek and rely upon an opinion of legal counsel and other independent
8
<PAGE> 9
advisers, and may test such compliance with laws in any state or federal court
or before any state or federal administrative agency which may have appropriate
jurisdiction. In connection with its evaluation as to the best interests of
the Corporation and its shareholders, the Board of Directors shall consider all
factors which it deems relevant, including without limitation: (i) the adequacy
and fairness of the consideration to be received by the Corporation and/or its
shareholders considering the future prospects for the Corporation and its
business, historical trading prices of the Corporation capital stock, the price
that might be achieved in a negotiated sale of the Corporation as a whole, and
premiums over trading prices which have been proposed or offered with respect
to the securities of other companies in the past in connection with similar
offers; (ii) the business, financial condition and earnings prospects of the
acquiring person or entity and the competence, experience and integrity of the
acquiring person or entity and its management; and (iii) the potential social
and economic impact of the offer and its consummation upon the Corporation's
customers, the communities in which the Corporation operates or is located and
upon the Corporation's employees, other than its officers.
The term "Business Combination" shall mean any merger or consolidation
of the Corporation with any other person or entity.
NINTH. A director of the Corporation shall not be personally liable
to the Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability for (i) any breach of the
director's duty of loyalty to the Corporation or its shareholders, (ii) acts or
omissions not in good faith or that involve international misconduct or a
knowing violation of law, (iii) a violation of Section 551(1) of the Michigan
Business Corporation Act, or (iv) any transaction from which the director
derived an improper personal benefit. If the Michigan Business Corporation Act
is amended after the date of these Articles of Incorporation to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Michigan Business
Corporation Act, as so amended.
Any repeal or modification of the foregoing paragraph by the
shareholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
TENTH. The Corporation shall have perpetual existence.
9
<PAGE> 10
ELEVENTH. The Corporation reserves the right to amend, alter, change
or repeal any provisions contained in these Articles of Incorporation, in the
manner now or hereafter prescribed by the laws of Michigan, and all rights
conferred herein upon shareholders and directors are granted subject to this
reservation. Notwithstanding the foregoing as well as any other provision
contained in these Articles of Incorporation, any agreement with any national
securities exchange or any provision of law which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote required by any
other provision of these Articles of Incorporation, any agreement with any
national securities exchange or any provision of law, the affirmative vote of
the holders of at least two-thirds of the votes entitled to be cast by the
holders of all the then outstanding shares of the Corporation, voting together
as a single class, shall be required to amend or repeal Articles SIXTH,
SEVENTH, EIGHTH, or this Article ELEVENTH of these Articles of Incorporation or
adopt any provision inconsistent therewith.
The incorporator signs its name this 12th day of August, 1988.
MICHIGAN CONSOLIDATED GAS COMPANY
By: /s/ Alfred R. Glancy III
----------------------------------
Alfred R. Glancy III
Chairman and Chief Executive Officer
10
<PAGE> 11
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
FILED
DECEMBER 28, 1989
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Corporations
(Please read information and instructions on last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
1. The present name of the corporation is: MCN Corporation
2. The corporation identification number (CID) assigned by
the Bureau is: 381 - 153
3. The location of its registered office is:
500 Griswold Detroit, Michigan 48226
4. Article Third of the Articles of Incorporation is hereby
amended to read
add thereto the Certificate of Establishment and Designation of Junior
Participating Preferred Stock, Series A of MCN Corporation in the form
<PAGE> 12
attached hereto as Exhibit A.
<PAGE> 13
5. COMPLETE SECTION (a) IF THE AMENDMENT WAS ADOPTED BY THE UNANIMOUS
CONSENT OF THE INCORPORATOR(S) BEFORE THE FIRST MEETING OF THE BOARD OF
DIRECTORS OR TRUSTEES; OTHERWISE, COMPLETE SECTION (B)
b. [X] The foregoing amendment to the Articles of Incorporation was
duly adopted on the 20th day of December, 1989. The amendment:
(check one of the following)
[X] was duly adopted in accordance with Section 302 of the Act by the
Board of Directors.
Signed this 28th day of December, 1989
By /s/ Stephen E. Ewing
--------------------------------
Stephen E. Ewing, President
<PAGE> 14
Exhibit A
FORM
of
CERTIFICATE OF ESTABLISHMENT AND DESIGNATION
of
JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
of
MCN CORPORATION
(Pursuant to Section 450.1302 of the
Michigan Business Corporation Act)
MCN Corporation, a corporation organized and existing under the Business
Corporation Act of the State of Michigan (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 450.1302 of
the Michigan Business Corporation Act at a meeting duly called and held on
December 20, 1989;
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") by the provisions of the Articles of Incorporation
of the Corporation, the Board of Directors hereby establishes a series of
Preferred Stock, without par value (the "Preferred Stock"), of the Corporation
and hereby states the designation and number of shares, and prescribes the
relative rights and preferences thereof as follows:
Junior Participating Preferred Stock, Series A:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Junior Participating Preferred Stock, Series A" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 250,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
A-1
<PAGE> 15
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants, or the
conversion of any outstanding securities, issued by the Corporation exercisable
for or convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock, par value $.01 per share (the "Common Stock"),
of the Corporation, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash
on the first day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commending on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such even under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
A-2
<PAGE> 16
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided, that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) The Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Preferred Stock
in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to one vote on all matters submitted to a vote of the
stockholders of the Corporation.
A-3
<PAGE> 17
(B) Except as otherwise provided herein, in any other
Certificate of Establishment and Designation establishing a series of
Preferred Stock or any similar stock, or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock
and any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted to a
vote of the stockholders of the Corporation.
(C) Except as otherwise provided herein, or by law, holders of
shares of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of shares of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a party
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock; provided, that the Corporation
may at any time redeem, purchase or otherwise acquire shares of
such junior stock in
A-4
<PAGE> 18
exchange for shares of stock of the Corporation ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences
of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section, purchase or otherwise acquire such shares
at such time and in such manner.
Section 5. Required Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Articles of Incorporation, or in any other Certificate of
Establishment and Designation establishing a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment; provided, that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
A-5
<PAGE> 19
100 times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under the provisio to clause (1) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged for
or changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
A-6
<PAGE> 20
Section 9. Rank. The Series A Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of assets, junior
to all series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single class.
A-7
<PAGE> 21
May 4, 1994
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Corporations
(Please read information and instructions on last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
1. The present name of the corporation is: MCN Corporation
2. The corporation identification number (CID) assigned by
Bureau is: 381-153
3. The location of its registered office is:
500 Griswold Detroit, Michigan 48226
4. Article Third of the Articles of Incorporation is hereby
amended to read
(See attached Exhibit A)
<PAGE> 22
5. COMPLETE SECTION (a) IF THE AMENDMENT WAS ADOPTED BY THE UNANIMOUS
CONSENT OF THE INCORPORATOR(S) BEFORE THE FIRST MEETING OF THE BOARD OF
DIRECTORS OR TRUSTEES; OTHERWISE, COMPLETE SECTION (B)
b. [X] The foregoing amendment to the Articles of Incorporation was
duly adopted on the 28th day of April , 1994. The
amendment: (check one of the following)
[X] was duly adopted in accordance with Section 611(2) of the Act
by the vote of the shareholders if a profit corporation, or by
the vote of the shareholders or members if a nonprofit corporation,
or by the vote of the directors if a nonprofit corporation
organized on a nonstock directorship basis. The necessary votes
were cast in favor of the amendment.
Signed this 2nd day of May, 1994
By /s/ Alfred R. Glancy III
----------------------------------------
Alfred R. Glancy III, Chairman, President and CEO
<PAGE> 23
EXHIBIT A
THIRD. 1. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 125,000,000 shares, which shall be
divided into two classes as follows:
(a) 25,000,000 shares of Preferred Stock, no par value (Preferred
Stock); and
(b) 100,000,000 shares of Common Stock of the par value of $.01
per share (Common Stock).
2. The designations, voting powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions of the above classes of stock and other general
provisions relating thereto shall be as follows:
PART I
PREFERRED STOCK
(a) Shares of Preferred Stock may be issued in one or more series at
such time or times and for such consideration or considerations as the Board of
Directors may determine. All shares of any one series shall be of equal rank
and identical in all respects expect that the dates from which dividends accrue
or accumulate with respect thereto may vary.
(b) The Board of Directors is expressly authorized at any time, and
from time to time, to provide for the issuance of shares of Preferred Stock in
one or more series, with such voting powers, full or limited, or without voting
powers, and such designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of Directors,
and as are not stated and expressed in these Articles of Incorporation, or any
amendment thereto, including (but without limiting the generality of the
foregoing) the following:
(i) The distinctive designation and number of shares comprising such
series, which number may (except where otherwise
provided by the Board of Directors
<PAGE> 24
in creating such series) be increased or decreased (but not
below the number of shares then outstanding) from time to time
by action of the Board of Directors.
(ii) The dividend rate or rates on the shares of such series and the
relation which such dividends shall bear to the dividends
payable on any other class of capital stock or on any other
series of Preferred Stock, the terms and conditions upon which
and the periods in respect of which dividends shall be payable,
whether and upon what conditions such dividends shall be
cumulative and, if cumulative, the date or dates from which
dividends shall accumulate.
(iii) Whether the shares of such series shall be redeemable, and, if
redeemable, whether redeemable for cash, property or rights,
including securities of any other corporation, at the option of
either the holder or the Corporation or upon the happening of a
specified event, the limitations and restrictions with respect
to such redemption, the time or times when, the price or prices
or rate or rates at which, the adjustments with which and the
manner in which such shares shall be redeemable, including the
manner of selecting shares of such series for redemption if less
than all shares are to be redeemed.
(iv) The rights to which the holders of shares of such series shall
be entitled, and the preferences, if any, over any other series
(or of any other series over such series), upon the voluntary or
involuntary liquidation, dissolution, distribution or winding up
of the Corporation, which rights may vary depending on whether
such liquidation, dissolution, distribution or winding up is
voluntary or involuntary, and, if voluntary, may vary at
different dates.
(v) Whether the shares of such series shall be subject to the
operation of a purchase, retirement or sinking fund and, if so,
whether and upon what conditions such purchase, retirement or
sinking
<PAGE> 25
fund shall be cumulative or noncumulative, the extent to which
and the manner in which such fund shall be applied to the
purchase or redemption of the shares of such series for
retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof.
(vi) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or of any other
series of any class of capital stock of the Corporation, and, if
so convertible or exchangeable, the price or prices or the rate
or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of such
conversion or exchange.
(vii) The voting powers, full and/or limited, if any, of the shares of
such series, and whether and under what conditions the shares of
such series (along or together with the shares of one or more
other series having similar provisions) shall be entitled to
vote separately as a single class, for the election of one or
more additional directors of the Corporation in case of dividend
arrearages, or other specified events, or upon other matters.
(viii) Whether the issuance of any additional shares of such series, or
of any shares of any other series, shall be subject to
restrictions as to issuance or as to the powers, preferences or
rights of any such other series.
(ix) Any other preferences, privileges and powers and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions of such series, as
the Board of Directors may deem advisable and as shall not be
inconsistent with the provisions of these Articles of
Incorporation.
(c) Unless the except to the extent otherwise required by law or
provided in the resolution or resolutions of the Board of Directors creating
any series of Preferred Stock pursuant to this Part I, the holders of the
shares of Preferred Stock shall have no
<PAGE> 26
voting power with respect to any matter whatsoever. In no event shall the
Preferred Stock be entitled to more than one vote in respect to each share
of Preferred Stock.
(d) Shares of Preferred Stock redeemed, converted, exchanged, purchased,
retired or surrendered to the Corporation, or which have been issued and
reacquired in any manner, may, upon compliance with any applicable provisions
of the Michigan Business Corporation Act, be given the status of authorized and
unissued shares of Preferred Stock and may be reissued by the Board of
Directors as part of the series of which they were originally a part or may be
reclassified into and reissued as part of a new series or as a part of any
other series, all subject to the protective conditions or restrictions of any
outstanding series of Preferred Stock.
PART II
COMMON STOCK
(a) Except as otherwise required by law or by any amendment to these
Articles of Incorporation, each holder of Common Stock shall have one vote for
each share of Common Stock held by such holder on all matters voted upon by the
shareholders.
(b) Subject to the preferential dividend rights, if any, applicable to
shares of Preferred Stock and subject to applicable requirements, if any, with
respect to the setting aside of sums of purchase, retirement or sinking funds
for Preferred Stock, the holders of Common Stock shall be entitled to receive,
to the extent permitted by law, such dividends as may be declared from time to
time by the Board of Directors.
PART III
GENERAL PROVISIONS
No holder of stock of any class of the Corporation shall be entitled as a
matter of right to purchase or subscribe for any part of any unissued stock of
any class, or of any additional stock of any class of capital stock of the
Corporation, or of any bonds, certificates of indebtedness, debentures, or
other securities, whether or not convertible into stock of the Corporation, now
or hereafter authorized, but any such stock or other securities may be issued
and disposed of pursuant to
<PAGE> 27
resolution by the Board of Directors to such persons, firms, corporations or
associations and upon such terms and for such consideration (not less
than the par value or stated value thereof) as the Board of Director in the
exercise of its discretion may determine and as may be permitted by law without
action by the shareholders. The Board of Directors may provide for payment
therefor to be received by the Corporation in cash, personal property, real
property (or leases thereof) or services. Any and all shares of stock so
issued for which the consideration so fixed has been paid or delivered, shall
be deemed fully paid and not liable to any further call or assessment.
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
FILED
<PAGE> 28
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES AND SECURITIES
BUREAU
Date Received
<TABLE>
<S><C>
FILED
APR 23, 1997
Administrator
MI DEPARTMENT OF CONSUMER & INDUSTRY SERVICES
Name CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
Address
City State Zip Code
EFFECTIVE DATE:
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT CORPORATIONS
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit corporations), or Act 162, Public Acts of 1982
(nonprofit corporations), the undersigned corporation executes the following Certificate:
1. The present name of the corporation is: MCN CORPORATION
2. The identification number assigned by the Bureau is: 381-153
3. The location of the registered office is:
500 Griswold Street Detroit, Michigan 48226
--------------------------------------------------------------------------------------
(Street Address) (City) (Zip Code)
4. Article I of the Articles of Incorporation is hereby
--------- --------
amended to read as follows:
The name of the corporation shall be MCN Energy Group Inc.
The effective date of this Certificate of Amendment to the
Articles of Incorporation shall be April 28, 1997.
</TABLE>
<PAGE> 29
5. COMPLETE SECTION (a) IF THE AMENDMENT WAS ADOPTED BY THE UNANIMOUS
CONSENT OF THE INCORPORATOR(S) BEFORE THE FIRST MEETING OF THE BOARD
OF DIRECTORS OR TRUSTEES; OTHERWISE, COMPLETE SECTION (B). DO NOT
COMPLETE BOTH.
b. [ ] The foregoing amendment to the Articles of Incorporation was duly
adopted on the 22nd day of April, 1997.
[ ] was duly adopted in accordance with Section 611(2) of the Act
by the vote of the shareholders if a profit corporation, or by
the shareholders or members if a nonprofit corporation, or by
the vote of the directors if a nonprofit corporation organized
on a nonstock directorship basis. The necessary votes were
cast in favor of the amendment.
Signed this 22nd day of April, 1997
By /s/ Daniel Schiffer
------ -------------------------------------------------------------
(Only Signature of President, Vice-President, Chairperson, or Vice
Chairperson)
Daniel Schiffer, Senior Vice President, General Counsel and Secretary
---------------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
<PAGE> 1
MCN ENERGY GROUP INC. AND SUBSIDIARIES EXHIBIT 12-1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED
MARCH 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
-------------- ----------------- ------------------
<S> <C> <C> <C>
EARNINGS AS DEFINED (1) (5)
Pre-tax income (2) $135,381 $146,607 $128,997
Fixed charges (3) 105,673 99,944 72,895
-------- -------- --------
Earnings as defined $241,054 $246,551 $201,892
======== ======== ========
FIXED CHARGES AS DEFINED (1) (4) (5)
Interest, expensed $81,253 $77,781 $57,675
Interest, capitalized 15,501 13,235 7,926
Amortization of debt discounts, premium
and expense 2,384 2,217 1,641
Interest implicit in rentals 2,313 2,339 2,325
Preferred securities dividend requirements
of subsidiaries 14,248 12,390 9,699
-------- -------- --------
Fixed charges as defined $115,699 $107,962 $79,266
======== ======== ========
Ratio of Earnings to Fixed Charges 2.08 2.28 2.55
======== ======== ========
</TABLE>
(1) Earnings and fixed charges are defined and computed in accordance with Item
503 of Regulation S-K.
(2) This amount represents the aggregate of (a) the pre-tax income from
continuing operations of MCN and its majority-owned subsidiaries, (b) MCN's
share of pre- tax income of its 50% owned companies, and (c) any income
actually received from less than 50% owned companies.
(3) Fixed charges added to earnings are adjusted to exclude interest capitalized
during the period for nonutility companies and the preferred securities
dividend requirements of MichCon included in fixed charges but not deducted
in the determination of pre-tax income.
(4) Fixed charges represent (a) interest, whether expensed or capitalized, (b)
amortization of debt discount, premium and expense, (c) an estimate of
interest implicit in rentals, and (d) preferred securities dividend
requirements of subsidiaries, increased to reflect the pre-tax earnings
requirement for MichCon.
(5) In June 1996, MCN completed the sale of The Genix Group, its computer
operations subsidiary. For purposes of calculating the Ratio of Earnings to
Fixed Charges, it has been classified as a discontinued operation and
therefore excluded from the ratio for all periods presented.
<PAGE> 1
EXHIBIT 12-2
MCN INVESTMENT CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
March 31, 1997 December 31, 1996 December 31, 1995
-------------- ----------------- -----------------
<S> <C> <C> <C>
EARNINGS AS DEFINED (1) (4)
Pre-tax income (2) $24,515 $21,899 $13,163
Fixed charges (3) 46,141 41,628 24,748
---------- ---------- ----------
Earnings as defined $70,656 $63,527 $37,911
========== ========== ==========
FIXED CHARGES AS DEFINED (1) (4)
Interest, expensed $44,846 $40,523 $24,151
Interest, capitalized 10,019 8,002 5,895
Amortization of debt discounts, premium
and expense 1,127 982 520
Interest implicit in rentals 168 123 77
---------- ---------- ----------
Fixed charges as defined $56,160 $49,630 $30,643
========== ========== ==========
Ratio of Earnings to Fixed Charges 1.26 1.28 1.24
========== ========== ==========
</TABLE>
(1) Earnings and fixed charges are defined and computed in accordance
with Item 503 of Regulation S-K.
(2) This amount represents the aggregate of (a) the pre-tax income from
from continuing operations of MCN Investment and its majority--owned
subsidiaries, (b) MCN Investment's share of pre- tax income of its
50% owned companies, and (c) any income actually received from less
than 50% owned companies.
(3) Fixed charges added to earnings are adjusted to exclude interest
capitalized during the period.
(4) In June 1996, MCN completed the sale of The Genix Group, its
computer operations subsidiary. For purposes of calculating the
Ratio of Earnings to Fixed Charges, it has been classified as a
discontinued operation and therefore excluded from the ratio
for all periods presented.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Income and the Consolidated Statement of Financial
Position and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 41,520
<SECURITIES> 0
<RECEIVABLES> 426,975
<ALLOWANCES> 25,274
<INVENTORY> 38,611
<CURRENT-ASSETS> 682,044
<PP&E> 3,802,899
<DEPRECIATION> 1,375,077
<TOTAL-ASSETS> 3,657,739
<CURRENT-LIABILITIES> 791,542
<BONDS> 1,223,509
305,840
0
<COMMON> 680
<OTHER-SE> 851,133
<TOTAL-LIABILITY-AND-EQUITY> 3,657,739
<SALES> 0
<TOTAL-REVENUES> 788,761
<CGS> 0
<TOTAL-COSTS> 662,895
<OTHER-EXPENSES> (3,021)
<LOSS-PROVISION> 11,059
<INTEREST-EXPENSE> 23,712
<INCOME-PRETAX> 117,166
<INCOME-TAX> 35,397
<INCOME-CONTINUING> 81,769
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,769
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
MICHCON
INVESTMENT AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
<PAGE> 2
MICHCON
INVESTMENT AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Article I. The Plan
--------------------
1.1 Establishment and Amendment of the Plan 1
1.2 Applicability of the Plan 1
1.3 Purpose and Type of Plan 2
Article II. Definitions
------------------------
2.1 Definitions 3
2.2 Construction 14
Article III. Participation and Service
---------------------------------------
3.1 Eligibility Requirements 15
3.2 Eligibility Upon Merger or Reemployment 15
3.3 Collective Bargaining Agency 16
3.4 Applications 16
3.5 Years of Service 17
3.6 Break in Service Year 18
3.7 Hours of Employment 19
3.8 Employment by Related Entities 21
3.9 Leased Employees 21
Article IV. Contributions
--------------------------
4.1 Employee Allotments 23
4.2 Employer Investment Plan Contributions 26
4.3 Employer ESOP Contributions 28
4.4 Additional Employer Contributions 30
4.5 Rollover Contributions 30
4.6 Transfers from the MichCon Savings and
Stock Ownership Plan 33
4.7 Transfers from the MichCon Employee Stock
Ownership Plan 34
4.8 Limitations on Salary Reduction Allotments 35
4.9 Distribution of Excess Deferrals 38
4.10 Distribution or Recharacterization of Excess
Contributions 39
4.11 Statutory (Code Section 415) Limitations on
Allocations to Accounts 41
Article V. Vesting in Accounts
-------------------------------
5.1 Employee Salary Reduction Accounts, Employee
Post-1986 Voluntary Deduction Account, and
Employee Pre-1987 Voluntary Deduction Account 46
</TABLE>
-i-
<PAGE> 3
MICHCON
INVESTMENT AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
TABLE OF CONTENTS
(Continued)
<TABLE>
<S> <C> <C>
5.2 Employer Salary Reduction Account,
Employer Voluntary Deduction Account,
and ESOP Account 46
Article VI. Investment Provisions
----------------------------------
6.1 Investment of Contributions and Allotments 47
6.2 Change of Investment Direction 47
6.3 Transfers Between Investment Funds 48
Article VII. Investment Funds
------------------------------
7.1 Investment Funds 49
7.2 Management of Investment Funds 50
7.3 Voting of MCN Stock 50
7.4 Tender Offers 51
7.5 Named Fiduciary Status 53
7.6 Expenses of Funds 53
7.7 Primark Corporation Stock 53
Article VIII. Accounts and Records of the Plan
-----------------------------------------------
8.1 Company to Maintain Accounts 54
8.2 Plan Accounting 54
8.3 Valuation of Funds 55
8.4 Valuation of Investment Plan Account 55
8.5 Valuation of ESOP Account 55
8.6 Valuation of Plan Account 55
8.7 Company to Furnish Annual Statements of
Value of Plan Accounts 56
8.8 Trust Agreement 56
Article IX. Distributions, Withdrawals, and Loans
--------------------------------------------------
9.1 Distribution Upon Termination of Employment
Entitling Participant to Value of Plan
Account 57
9.2 Distribution Upon Termination of Employment
Under Circumstances Resulting in Forfeiture
of Employer Contributions 57
9.3 Certain Distributions from Participant Accounts 58
9.4 In-Service Withdrawals--General 60
9.5 Withdrawal of Voluntary Deduction Allotments 60
</TABLE>
-ii-
<PAGE> 4
MICHCON
INVESTMENT AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
TABLE OF CONTENTS
(Continued)
<TABLE>
<S> <C> <C>
9.6 Hardship Withdrawal of Salary Reduction
Allotments 61
9.7 Time of Distributions 63
9.8 Distributions of Stock 67
9.9 Distributions from Fixed Income Fund 68
9.10 Loans 71
9.11 Definition of Allotments and Employer
Contributions 75
9.12 Spousal Consent to Payment 75
9.13 Distributions Pursuant to a Qualified
Domestic Relations Order 75
9.14 Direct Rollovers of Eligible Distributions 76
Article X. Administration
--------------------------
10.1 Plan Administration and Interpretation 79
10.2 Notice to Employees 80
10.3 Notices to Employers 80
10.4 Participants' Acceptance of the Provisions
of the Plan 80
10.5 Audit of Plan Records 81
10.6 Claims Procedure 81
10.7 Effect of a Mistake 82
Article XI. Amendment and Termination
--------------------------------------
11.1 Amendment 83
11.2 Withdrawal 83
11.3 Termination 83
11.4 Allocation of Funds Between Employers 84
11.5 Trust to be Applied Exclusively for
Participants and Their Beneficiaries 84
Article XII. Participation by Affiliated Companies
---------------------------------------------------
12.1 Adoption of the Plan 86
12.2 Withdrawal from the Plan 86
12.3 Company as Agent for Employers 86
</TABLE>
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<PAGE> 5
MICHCON
INVESTMENT AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
TABLE OF CONTENTS
(Continued)
<TABLE>
<S> <C> <C>
Article XIII. Special Provisions Relating to the ESOP
------------------------------------------------------
13.1 Establishment of ESOP 87
13.2 ESOP Account 87
13.3 Discrimination Testing 87
13.4 Loans 88
13.5 Diversification 91
13.6 Put Option 91
13.7 Purchase of MCN Stock 92
Article XIV. Miscellaneous
---------------------------
14.1 Beneficiary Designation 93
14.2 Incompetency 94
14.3 Expenses 95
14.4 Nonassignability 95
14.5 Employment Noncontractual 95
14.6 Merger or Consolidation with Another Plan 95
14.7 Continuance by a Successor 96
14.8 Elimination of Certain Provisions 97
</TABLE>
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<PAGE> 6
MICHCON
INVESTMENT AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
Article I. The Plan
1.1 Establishment and Amendment of the Plan. Michigan
Consolidated Gas Company which is also known as MichCon (hereinafter referred
to as the "Company") presently maintains an investment and stock ownership plan
for the benefit of its Eligible Employees and the Eligible Employees of its
participating Affiliated Companies. The plan was last restated effective as of
April 1, 1989, and was amended from time to time thereafter.
The plan as previously restated established the MichCon Employee Stock
Ownership Plan for Union Employees ("ESOP") and incorporated the ESOP into the
Michigan Consolidated Gas Company Union Employee's Investment Plan to form the
MichCon Investment and Stock Ownership Plan.
The plan is hereby further amended and completely restated as set forth herein
effective as of January 1, 1989, except as otherwise provided herein or
required by law, and shall continue to be known as the "MichCon Investment and
Stock Ownership Plan" (the "Plan"). The ESOP provisions of the Plan shall be
effective as of April 1, 1989.
1.2 Applicability of the Plan. Except as otherwise specified
herein or required by law, the provisions of the Plan as amended and restated
herein effective as of January 1, 1989, shall be applicable only with respect
to Eligible Employees of an Employer in current employment on or after January
1, 1989, and their beneficiaries.
Any person who was covered under the Plan as in effect prior to January 1,
1989, and whose employment terminated under the Plan
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<PAGE> 7
prior to January 1, 1989, shall continue to have his rights to receive benefits
determined under the provisions of the Plan in effect when his employment
relationship so terminated.
1.3 Purpose and Type of Plan. The purpose of the Plan is to
provide a convenient way for Participants to save on a regular and long-term
basis for their retirement income needs; to recognize the contribution made to
the Employer's successful operation by its employees and to reward such
contribution for those employees who qualify as participants under the terms of
the Plan; and to facilitate ownership of MCN Stock by participating Eligible
Employees.
The non-ESOP portion of the Plan is intended to qualify as a profit-sharing
plan and the ESOP portion of the Plan is intended to qualify as a stock bonus
and an employee stock ownership plan for purposes of Code sections 401(a), 402,
412, 417, 4975, and related provisions.
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<PAGE> 8
Article II. Definitions
2.1 Definitions. Whenever used in the Plan, the following words
and phrases shall have the respective meanings stated below unless a different
meaning is plainly required by the context.
(a) "Accounting Period" means a period of one calendar month
except that the first accounting period shall commence with
the date on which the Plan first becomes effective with
respect to any Employer and end on the last day of the
calendar month in which such effective date occurs.
(b) "Actual Deferral Percentage" means the ratio (expressed as a
percentage) of the Elective Deferrals of an Employee who is
eligible to participate in the Plan for a Plan Year to the
Compensation of that Employee for such Plan Year.
(c) "Affiliated Company" means--
(1) any corporation other than the Company, i.e., either a
subsidiary corporation or an affiliated or associated
corporation of the Company, which together with the
Company is a member of a "controlled group" of
corporations (as defined in Code section 414(b));
(2) any organization which together with the Company is
under "common control" (as defined in Code section
414(c));
(3) any organization which together with the Company is an
"affiliated service group" (as defined in Code section
414(m)); or
(4) any other entity required to be aggregated with the
Company pursuant to Regulations under Code section
414(o).
(d) "Anniversary Date" means with respect to each Employee, the
anniversary each year of the first day of the first Accounting
Period coincident with or next following the Employee's first
Hour of Employment. If an Employee whose employment was
terminated is reemployed but prior
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<PAGE> 9
to his reemployment he incurs a Break in Service Year or
following his reemployment he incurs a Break in Service Year
before completing a Year of Service, his Anniversary Date
shall be based upon his first Hour of Employment coincident
with or next following his date of reemployment; otherwise,
his Anniversary Date shall not be changed.
(e) "Annual Addition" means the amount allocated to a
Participant's account as such term is defined in section
4.11(a).
(f) "Average Actual Deferral Percentage" means the average
(expressed as a percentage) of the Actual Deferral Percentages
of the Employees in a group who are eligible to participate in
the Plan for a Plan Year.
(g) "Break in Service Year" means a 12-month period described in
section 3.6.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Company" means Michigan Consolidated Gas Company.
(j) "Compensation" means a Participant's pay, determined as
follows:
(1) For all purposes of the Plan, except as otherwise
specified in (2) or (3) below or required by the
context, Compensation means Eligible Compensation.
(2) For purposes of satisfying the limits on contributions
described in section 4.8 (ADP test) and applying the
limits of section 415 of the Code as described in
section 4.11, Compensation includes all of the items
listed below as includible (to the extent applicable)
and excludes all of the items listed below as
excludable (to the extent applicable) on a Plan Year
basis:
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<PAGE> 10
(A) Includible.
(i) The Employee's wages, salaries, fees,
for professional services, and other
amounts received (without regard to
whether or not an amount is paid in
cash) for personal services actually
rendered in the course of employment
with the Employer and any Affiliates
to the extent that the amounts are
includible in gross income including,
but not being limited to, commissions
paid salesmen, compensation for
services on the basis of a percentage
of profits, commissions on insurance
premiums, tips, bonuses, fringe
benefits, and reimbursements or other
expense allowances under a
nonaccountable plan (as described in
Treasury regulation section
1.62-2(c));
(ii) Amounts described in Code sections
104(a)(3), 105(a), and 105(h), but
only to the extent that these amounts
are includible in the Employee's
gross income;
(iii) Amounts paid or reimbursed by the
Employer or any Affiliate for moving
expenses incurred by the Employee,
but only to the extent that at the
time of the payment it is reasonable
to believe that these amounts are not
deductible by the Employee under Code
section 217;
(iv) The value of a nonqualified stock
option granted to an Employee by the
Employer or any Affiliate, but only
to the extent that the value of the
option is
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<PAGE> 11
includible in the Employee's gross
income for the taxable year in which
it is granted; and
(v) The amount includible in an
Employee's gross income upon making
the election described in Code
section 83(b).
Compensation under clause (i) includes
foreign earned income as defined in Code
section 911(b), whether or not excludable
from gross income under Code section 911.
Compensation under clause (i) is to be
determined without regard to the exclusions
from gross income in Code sections 931 and
933.
(B) Excludable.
(i) Contributions made by the Employer or
any Affiliate to a plan of deferred
compensation to the extent that,
before the application of the Code
section 415 limitations to that plan,
the contributions are not includible
in the Employee's gross income for
the taxable year in which they are
contributed;
(ii) Contributions made by the Employer or
any Affiliate on an Employee's behalf
to a simplified employee pension
described in Code section 408(k)
(such contributions are not
considered as compensation for the
taxable year in which contributed);
(iii) Distributions from a plan of deferred
compensation, regardless of whether
such amounts are includible in the
Employee's gross income when
distributed, except that amounts
received by an Employee
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<PAGE> 12
pursuant to an unfunded, nonqualified
plan are permitted to be considered
as Compensation for Code section 415
purposes in the year in which the
amounts are includible in the
Employee's gross income;
(iv) Amounts realized from the exercise of
a nonqualified stock option, or when
restricted stock (or property) held
by an Employee either becomes freely
transferable or is no longer subject
to a substantial risk of forfeiture
within the meaning of Code section 83
and regulations thereunder;
(v) Amounts realized from the sale,
exchange, or other disposition of
stock acquired under a qualified
stock option; and
(vi) Other amounts which receive special
tax benefits, such as premiums for
group-term life insurance (but only
to the extent that the premiums are
not includible in the Employee's
gross income).
(3) For purposes of determining whether an individual is a
Highly Compensated Employee, Compensation means an
Employee's Compensation as defined in paragraph (2) of
this section 2.1(j) but without regard to Code
sections 125, 402(a)(8), and 402(h)(1)(B) (i.e., with
the addition of elective deferrals pursuant to a
cafeteria plan, a cash-or-deferred arrangement, or a
simplified employee pension).
For Plan Years beginning on or after January 1, 1989 and prior
to January 1, 1994, the Compensation of each Employee that may
be taken into account under the Plan, except for purposes of
section 4.11 (Code section 415
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<PAGE> 13
limits), shall not exceed the first $200,000 of an Employee's
Compensation (as adjusted by the Secretary of the Treasury
under Code section 415(d)). For Plan Years beginning on or
after January 1, 1994, the Compensation of each Employee that
may be taken into account under the Plan, except for purposes
of section 4.11, shall not exceed the first $150,000 of an
Employee's Compensation (as adjusted pursuant to Code section
401(a)(17)). For purposes of the preceding two sentences, if
an Employee is a 5-percent owner of the Employer or one of the
ten Highly Compensated Employees paid the greatest
Compensation during the year, then any Compensation paid to
the spouse of such Employee or to any lineal descendants of
such Employee who have not attained age 19 before the close of
the year (and any applicable contribution on behalf of any
such individual) shall be treated as if it were paid to (or on
behalf of) such Employee.
(k) "Compensation Rate" means the amount of an Employee's Eligible
Compensation per pay period determined under uniform rules
established by the Company and before recognition of any
Salary Reduction allotment or cafeteria plan election.
(l) "Disability Retirement Date" means the date a Participant--
(1) becomes eligible to receive benefits under a long-term
disability plan maintained by the Employer, or
(2) is determined by the Company to be totally and
permanently disabled.
In determining whether a Participant is totally and permanently
disabled, the Company may, in its discretion, rely on the
opinion of a physician selected by the Company to assist it in
making such a determination.
(m) "Early Retirement Date" means the first day of any month prior
to a Participant's Normal Retirement Date
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<PAGE> 14
on which he terminates his employment by giving at least 60
days' written notice to the Company of his intention to retire
after he has attained age 55 and the sum of his attained age
and the number of his full Years of Service is at least 70.
(n) "Elective Deferrals" means Salary Reduction allotments under
section 4.1(a) and contributions under other plans maintained
by the Company or an Affiliated Company that constitute
elective deferrals within the meaning of Code section
402(g)(3).
(o) "Eligible Compensation" means the regular basic salary or wage
paid to an Employee by the Employer before any payroll
deduction for taxes or any other purpose, and before any
Salary Reduction allotment or cafeteria plan election, but
excluding bonuses, awards, shift differentials, severance
payments, differential payments made by reason of the
Employee's entry into Military Service, all amounts paid for
work in excess of 40 hours in any one week, all overtime or
other premium paid for work in excess of a maximum number of
hours in any one day, for work on holidays or for any other
reason, payments for so-called fringe benefits such as
Employer contributions to this Plan or any pension or
retirement plan, increased wages or salary resulting from
temporary promotion, upgrading or transfer, of whatever
duration, to a higher paid job or classification, and any
other premium, auxiliary, or special pay of any sort
whatsoever.
For Plan Years beginning on or after January 1, 1989 and prior
to January 1, 1994, the Eligible Compensation of an Employee
for purposes of the Plan shall not exceed $200,000; provided,
however, that such limit shall be adjusted as provided in Code
section 415(d). For Plan Years beginning on or after
January 1, 1994, the Eligible Compensation of each Employee
that may be taken into account under the Plan, except for
purposes
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<PAGE> 15
of section 4.11, shall not exceed the first $150,000 of an
Employee's Compensation (as adjusted pursuant to Code section
401(a)(17)). For purposes of the preceding two sentences, if
an Employee is a 5-percent owner of the Employer or one of the
ten Highly Compensated Employees paid the greatest
Compensation during the year, any Compensation paid to the
spouse of such Employee or to any lineal descendants of such
Employee who have not attained age 19 before the close of the
year (and any applicable contribution on behalf of any such
individual) shall be treated as if it were paid to (or on
behalf of) such Employee.
(p) "Eligible Employee" means an Employee of an Employer whose
terms and conditions of employment are covered by an agreement
with a collective bargaining agent which agreement permits
participation in this Plan.
(q) "Employee" means an individual who is an employee of the
Company or an Affiliated Company.
(r) "Employee Post-1986 Voluntary Deduction Account" means an
Employee's Voluntary Deduction allotments after December 31,
1986, and investment gains and losses therefrom.
(s) "Employee Pre-1987 Voluntary Deduction Account" means an
Employee's Voluntary Deduction allotments before January 1,
1987, and investment gains and losses therefrom.
(t) "Employee Salary Reduction Account" means an Employee's Salary
Reduction allotments, and investment gains and losses
therefrom.
(u) "Employer" means the Company and any Affiliated Company which
has adopted the Plan with the consent of the Company and in
the manner prescribed in section 12.1 and any successor
corporation which shall adopt the Plan pursuant to section
14.7. If any such corporation shall withdraw from
participation in the Plan in accordance with section 12.2, the
term Employer shall not thereafter include such corporation.
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<PAGE> 16
(v) "Employer Salary Reduction Account" means the Employer
contributions to the Salary Reduction Account of an Employee
pursuant to section 4.2, and investment gains and losses
therefrom.
(w) "Employer Voluntary Deduction Account" means the Employer
contributions to the Voluntary Deduction Account of an
Employee pursuant to section 4.2, and investment gains and
losses therefrom.
(x) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(y) "ESOP" means the employee stock ownership plan established
pursuant to section 13.1.
(z) "ESOP Account" means the account established and maintained on
behalf of each Participant in accordance with sections
8.1(c) and (d) and 13.2.
(aa) "Excess Contributions" means the amount described in section
4.10(a).
(bb) "Excess Deferrals" means the portion of Elective Deferrals for
a calendar year, if any, described in section 4.9.
(cc) "Family Member" means an individual described as a family
member in Code section 414(q)(6).
(dd) "Highly Compensated Employee" means, with respect to any Plan
Year, any Employee who at any time during the preceding
Plan Year (or such other period as the Company may elect
pursuant to Treasury regulations)--
(1) received Compensation (as defined in section 2.1(j)(3)
of the Plan) from the Employer and all Affiliates in
excess of $75,000,
(2) received Compensation (as defined in section 2.1(j)(3)
of the Plan) from the Employer and all Affiliates in
excess of $50,000 and was in the top-paid 20 percent
of Employees,
(3) was an officer who received Compensation (as defined
in section 2.1(k)(3) of the Plan) from the
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<PAGE> 17
Employer and all Affiliates in excess of the amount in
effect under Code section 415(b)(1)(A) for the
preceding Plan Year, or
(4) was a 5-percent owner.
Unless the Company makes the "calendar year calculation
election" under Treasury regulations, Highly Compensated
Employee also means, with respect to any Plan Year, any
Employee who, at any time during that Plan Year, met the
descriptions contained in paragraph (1), (2), or (3) and was
among the top-paid 100 Employees or any Employee who was a
5-percent owner.
A Family Member of a Highly Compensated Employee and a former
employee shall be treated as a Highly Compensated Employee to
the extent required by sections 414(q)(6) and (9) of the Code
and the regulations thereunder.
The dollar limits described in paragraphs (1), (2), and (3)
will be adjusted to reflect increases in the cost of living,
in the manner and at the times prescribed by the Secretary of
the Treasury.
(ee) "Hour of Employment" means an hour for which an individual
receives credit pursuant to section 3.7.
(ff) "Investment Plan Account" means the total value of an
Employee's Salary Reduction Account and Voluntary Reduction
Account.
(gg) "MCN Stock" means common stock of MCN Corporation.
(hh) "Military Service" means service--
(1) on active duty, in time of national or local
emergency, in the armed forces of the United States or
of any State thereof,
(2) in the armed forces of the United States or of any
State thereof under any compulsory service law, or
(3) in the armed forces of the United States or any of its
allies in time of war in which the United States is
engaged.
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<PAGE> 18
(ii) "Nonhighly Compensated Employee" means an Employee of the
Employer who is neither a Highly Compensated Employee nor a
Family Member of a Highly Compensated Employee who is a
5-percent owner of the Employer or one of the ten Highly
Compensated Employees paid the greatest Compensation during
the year.
(jj) "Normal Retirement Date" means the Participant's sixty-fifth
birthday, if such birthday falls on the first day of the
month; otherwise, the first day of the month next following
the month in which such birthday occurs.
(kk) "Participant" means an Employee who is participating in the
Plan in accordance with its provisions.
(ll) "Plan" means MichCon Investment and Stock Ownership Plan and
any amendments thereto or restatements thereof from time to
time adopted.
(mm) "Plan Account" means the total value of an Employee's
Investment Plan Account and ESOP Account.
(nn) "Plan Year" means the calendar year.
(oo) "Primark Corporation Stock" means common stock of Primark
Corporation.
(pp) "Regulations" means regulations issued by the Department of
Labor construing Title I of ERISA or by the Internal Revenue
Service construing the Code.
(qq) "Salary Reduction" means an election by a Participant to have
the Compensation Rate that would otherwise be payable reduced
and contributed by the Employer to the Plan as a regular
allotment on behalf of the Participant.
(rr) "Salary Reduction Account" means an Employee's Salary
Reduction allotments, related Employer matching contributions,
and investment gains and losses therefrom.
(ss) "Suspense Account" means the account used to reflect MCN Stock
acquired with loan proceeds pursuant to section 13.4.
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<PAGE> 19
(tt) "Trust" means the Trust created by agreement between the
Employers and the Trustee, as from time to time amended.
(uu) "Trust Agreement" means the agreement between the Employers
and the Trustee referred to in section 8.8.
(vv) "Trustee" means the Trustee hereinafter provided for in
section 8.8 or any successor Trustee.
(ww) "Valuation Date" means the last day of each Accounting Period
on which the New York Stock Exchange shall be open for
business.
(xx) "Vesting Requirement" means the requirement for vesting
described in section 5.2.
(yy) "Voluntary Deduction" means an Employee's payroll deduction
allotments other than Salary Reduction allotments.
(zz) "Voluntary Deduction Account" means an Employee's Voluntary
Deduction allotments, related Employer matching contributions,
and investment gains and losses therefrom.
(aaa) "Years of Service" means year(s) of employment of an Employee
by an Employer or nonparticipating Affiliated Company as such
term is defined in section 3.5.
2.2 Construction. Unless the context clearly requires otherwise--
(a) the masculine pronoun whenever used shall include the
feminine, the singular shall include the plural, and vice
versa, and
(b) headings of Articles and sections herein are included solely
for convenience, and if there is any conflict between such
headings and the text of the Plan, the text shall control.
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<PAGE> 20
Article III. Participation and Service
3.1 Eligibility Requirements.
(a) Each individual who was eligible to participate in the Plan on
December 31, 1988, in accordance with the terms of the Plan in
effect on said date shall continue to be eligible to
participate, subject to the provisions of this Plan. Each
other Employee shall become eligible to participate on the
first day of the first Accounting Period coincident with or
next following the latest to occur of--
(1) the date he is employed as an Eligible Employee,
(2) the date on which he completes at least one year of
eligibility service (as defined in section 3.1(b)), or
(3) the date on which he attains age 21;
provided he is employed as an Eligible Employee on such date.
(b) For purposes of this Article III, a year of eligibility
service shall mean the 12-month period beginning on the date
of an Employee's first Hour of Employment, or the 12-month
period beginning on an Employee's Anniversary Date during
which he completes at least 1,000 Hours of Employment.
3.2 Eligibility Upon Merger or Reemployment. Any Employee who is
a Participant in any plan which is merged into this Plan shall become a
Participant in this Plan immediately upon the effective date of the merger.
Such an Employee shall be eligible to actively participate in this Plan in
accordance with section 3.4.
If a Participant's employment is terminated and he is thereafter reemployed
before incurring a Break in Service Year, he shall be eligible again to
actively participate in the Plan commencing with the first day of the first
Accounting Period coincident with or next following his date of reemployment.
In the event
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<PAGE> 21
such Participant does incur a Break in Service Year, he shall be eligible again
to actively participate in the Plan commencing with the first day of the first
Accounting Period coincident with or immediately preceding the day on which he
is reemployed after he has again satisfied the eligibility requirement of
section 3.1(a).
3.3 Collective Bargaining Agency. Effective January 14, 1991, if
any Employee shall become a Participant in the Plan and shall thereafter cease
to be represented by a collective bargaining agency pursuant to a collective
bargaining agreement between his Employer and the collective bargaining agency
representing such Employee, he shall nevertheless continue to be eligible to
actively participate in the Plan until such time as the terms and conditions of
his employment are no longer governed by such a collective bargaining
agreement.
If such an Employee becomes eligible to participate in the MichCon Savings and
Stock Ownership Plan or any successor plan, his entire Plan Account shall be
transferred to such plan and the Employee shall no longer be eligible to
participate in this Plan. The foregoing sentence shall be applicable as of
January 14, 1991 for all Employees who thereafter become eligible to
participate in the MichCon Savings and Stock Ownership Plan, and as of the date
agreed upon by the Employee if the Employee became eligible to participate in
the MichCon Savings and Stock Ownership Plan prior to January 14, 1991,
irrespective of their date of transfer. Effective as of April 1, 1989, the
Participant's Plan Account shall be fully vested upon such transfer.
3.4 Applications. An Employee who is eligible to participate on
the date the Plan becomes effective with respect to his Employer may become a
Participant commencing with such effective date by filing a written application
with his Employer in the form prescribed by the Company not later than 20 days
after such effective date. Thereafter, an Eligible Employee may become a
Participant by filing a written application with his
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<PAGE> 22
Employer in the form prescribed by the Company at least 20 days prior to the
date upon which his participation is to commence. The Employee's application
shall authorize the Employer to deduct allotments from the Employee's Eligible
Compensation in amounts specified by the Employee pursuant to Article IV, and
to have allotments made as a Salary Reduction pursuant to Article IV. The
application shall evidence the Employee's acceptance of and agreement to all of
the provisions of the Plan.
3.5 Years of Service. An Employee shall be credited for Years of
Service for his period of employment with the Employer and each
nonparticipating Affiliated Company, determined as follows:
(a) An Employee shall receive credit, for purposes of vesting, for
all Years of Service. An Employee shall have one "Year of
Service" for each 12-month period beginning on the date of the
Employee's first Hour of Employment and on each subsequent
Anniversary Date, during which the Employee completes 1,000 or
more Hours of Employment.
(b) Years of Service shall not be interrupted--
(1) by any transfer of employment of an Employee between
Affiliated Companies regardless of whether the
Affiliated Company is an Employer hereunder; or
(2) during such period as an Employee is receiving credit
for Hours of Employment under section 3.7.
(c) If an Employee is reemployed following a Break in Service
Year, he shall be considered a new Employee for purposes of
the Plan, except--
(1) If prior to such Break in Service Year he had a vested
interest in his ESOP Account, Employer Salary
Reduction Account, or Employer Voluntary Deduction
Account, Years of Service he had prior to the Break in
Service Year shall be reinstated after such Employee
completes a Year of Service after such Break in
Service Year.
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<PAGE> 23
(2) If section 3.5(c)(1) is not applicable, and if the
Employee's number of consecutive Break in Service
Years does not equal or exceed the greater of five or
the number of Years of Service he had before incurring
a Break in Service Year, the Years of Service he had
prior to such Break in Service Years shall be
reinstated after such Employee completes a Year of
Service after such Break in Service Years.
(d) Notwithstanding the foregoing provisions, an Employee's Years
of Service shall exclude any Years of Service completed before
an Employee attains age 18.
3.6 Break in Service Year. "Break in Service Year" shall mean a
12-month period beginning on an Employee's Anniversary Date during which the
Employee has not completed more than 500 Hours of Employment (as defined in
section 3.7). Notwithstanding the foregoing, the following periods shall not
be deemed to be Break in Service Years:
(a) If a Participant retires on his Disability Retirement Date,
thereafter ceases to be totally and permanently disabled, and
returns to the employ of an Employer, the period between his
Disability Retirement Date and the date as of which he ceases
to be totally and permanently disabled.
(b) If a Participant commences receiving benefits under a
long-term disability benefit program maintained by an Employer
and thereafter ceases to receive benefits under such program
and returns to the employ of the Employer, the period during
which he was receiving benefits under such program.
If an Employee incurs a Break in Service Year and prior to such Break in
Service Year has not completed five Years of Service, his Years of Service
completed prior to such a Break in Service Year shall be disregarded unless he
completes a Year of Service after such Break in Service Year and before the
total of such Break in Service Year and any ensuing consecutive Break in
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<PAGE> 24
Service Years equals the greater of five or the number of his Years of Service
(as defined in section 3.5 but without excluding Years of Service completed
prior to attaining age 18) prior to such Break in Service Year.
3.7 Hours of Employment. "Hours of Employment" shall mean, for
any individual performing or who has performed services for one or more
Employers or nonparticipating Affiliated Companies, the sum of the following:
(a) All hours for which the individual is directly or indirectly
paid or entitled to payment by an Employer or nonparticipating
Affiliated Company for the performance of duties. These hours
shall be credited to the individual for the computation period
or periods in which the duties are performed.
(b) Except as provided in section 3.7(e) below, all hours for
which the individual is directly or indirectly paid or
entitled to payment by an Employer or nonparticipating
Affiliated Company for reasons (such as vacation, holiday,
sickness, incapacity, layoff, jury duty, leave of absence,
Military Service, or disability) other than for the
performance of duties. These hours shall be credited to the
individual for the computation period or periods in which the
period during which no duties are performed occurs, beginning
with the first unit of time to which the payment relates.
(c) All hours for which back pay, irrespective of mitigation of
damages, has been awarded, agreed to, or paid by an Employer
or nonparticipating Affiliated Company, with no duplication of
credit for hours. These hours shall be credited to the
individual for the computation period or periods to which the
award or agreement pertains rather than the computation period
in which the award, agreement, or payment is made.
(d) Except as provided in section 3.7(e) below, eight Hours of
Employment per day for each working day that an
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individual is absent from work without pay for an approved
leave of absence, voluntary time, sick time, disciplinary
layoff, or Military Service if the individual returns to the
employ of an Employer or nonparticipating Affiliated Company
within 90 days after the end of such period. These hours
shall be credited to the individual for the computation period
or periods in which the period during which no duties are
performed occurs, beginning with the first such period.
(e) Eight Hours of Employment per day for each working day that an
individual is absent from work with or without pay because of
pregnancy of the individual, birth of a child to the
individual, placement of a child with the individual in
connection with the adoption of such child by such individual,
or caring for such child for a period beginning immediately
following such birth or placement. The Company may, in its
discretion, request such information from the individual as
the Company shall deem relevant in order to verify that an
absence is for the reasons described in this subsection (e).
Notwithstanding the foregoing, no more than 501 Hours of
Employment shall be credited under this subsection (e) on
account of any such pregnancy or placement if the individual
does not return to the employ of an Employer or participating
Affiliated Company within 90 days after the end of the period
approved for such absence. Hours credited under this
subsection (e) shall be credited to the individual only in the
year in which the absence begins if the crediting is necessary
to prevent a Break in Service Year for such year; or, in any
other case, in the immediately following year; provided,
however, that if more than 501 hours are credited under this
subsection (e) on account of any
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<PAGE> 26
such pregnancy or placement, the excess over 501 hours shall
be credited to the period or periods to which it relates.
Hours of Employment credited under this section 3.7 shall comply with the rules
set forth in 29 C.F.R. section 2530.200b-2(b) and (c), which rules are hereby
incorporated by reference.
3.8 Employment by Related Entities. If an Employee's employer is
a nonparticipating Affiliated Company, any period in which the Employee is
employed by the nonparticipating Affiliated Company, while such membership or
common control as defined in section 2.1(c) exists, shall be taken into account
for purposes of satisfying the eligibility service requirement set forth in
section 3.1 and measuring such Employee's Years of Service to the same extent
it would have been had such period of employment been employment by an
Employer.
3.9 Leased Employees. A person who is not an Employee of an
Employer or nonparticipating Affiliated Company and who performs services for
an Employer or a nonparticipating Affiliated Company pursuant to an agreement
between the Employer or nonparticipating Affiliated Company and a leasing
organization shall be considered a "leased employee" if such person performed
the services on a substantially full-time basis for a year and the services are
of a type historically performed by employees. A person who is considered a
"leased employee" of an Employer or nonparticipating Affiliated Company shall
not be considered an Employee for purposes of participating in this Plan or
receiving any contribution or benefit under this Plan. A leased employee shall
be excluded from this Plan regardless of whether the leased employee
participates in any plan maintained by the leasing organization. However, if a
leased employee participates in the Plan as a result of subsequent employment
with an Employer, his previous service as a leased employee shall be counted in
calculating his Years of Service. Notwithstanding the preceding provisions of
this section 3.9, a leased employee will be
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<PAGE> 27
included as an Employee for purposes of applying the requirements described in
Code section 414(n)(3) and for purposes of determining the number and identity
of Highly Compensated Employees.
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<PAGE> 28
Article IV. Contributions
4.1 Employee Allotments.
(a) Amount of Allotments. Each Participant may make a regular
allotment to the Plan. Such allotment shall not be less than
1 percent nor more than the amount determined as follows:
(1) A Participant represented by S.E.I.U. Local 80
(Detroit) and P.T. & S. and I.C.W.U. Local 799
(P.T. & S.) may make allotments up to a percentage of
his Compensation Rate, in incremental percentages of 1
percent, determined as follows:
Period Percentage
----------------------- ----------
Prior to April 1, 1992 10%
April 1, 1992 -
August 31, 1993 14%
September 1, 1993 and later 15%
(2) A Participant represented by I.C.W.U. Local 70, 132,
and 799 (Northern) may make allotments up to
a percentage of his Compensation Rate, in incremental
percentages of 1 percent, determined as follows:
Period Percentage
------------------------- ----------
Prior to January 1, 1990 8%
January 1, 1990 -
August 31, 1992 10%
September 1, 1992
and later 14%
Allotments will be effected by Voluntary Deductions, Salary
Reductions, or any combination thereof, as elected by the
Participant. The amount of such Voluntary Deductions or
Salary Reductions shall be transferred to the Trustee after
each pay period; provided, however, that a Participant's
Salary Reduction allotments (A) shall be limited as provided
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in section 4.8 and (B) shall not exceed a percentage of the
Participant's Compensation Rate determined as follows:
(i) In the case of Participants referred to in (1) above--
Period Percentage
----------------------- ----------
Prior to April 1, 1992 6%
April 1, 1992 -
August 31, 1993 8%
September 1, 1993 9%
(ii) In the case of Participants referred to in (2) above--
Period Percentage
--------------------------- ----------
Prior to September 1, 1992 6%
September 1, 1992 and later 8%
Notwithstanding the foregoing, the Company may, in its sole
discretion, (1) reduce the Salary Reduction allotments
permitted by a group of Participants if, in the opinion of the
Company, it is advisable to do so in order to satisfy the
requirements of section 4.8 or 4.11; or (2) reduce the
Voluntary Deduction allotments permitted by a group of
Participants if, in the opinion of the Company, it is
advisable to do so in order to satisfy the requirements of
section 4.11.
(b) Changes in Allotments. The allotment of Voluntary Deductions
and/or Salary Reductions designated by a Participant shall
continue in effect, notwithstanding any change in his
Compensation Rate, until the Participant shall change such
allotment; provided, however, that such allotment shall in no
event be less than 1 percent, nor more than the limits of
section 4.1(a)(1) and (2), in incremental percentages of
1 percent.
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<PAGE> 30
A Participant may change his allotment--
(1) prior to August 1, 1991, as of the first day of any
Accounting Period, or
(2) on or after August 1, 1991, but prior to December 1,
1993, as of the first day of any calendar quarter, or
(3) on or after December 1, 1993, as of the first day of
any month,
by giving written directions to his Employer in the form
prescribed by the Company at least 20 days prior to the
effective date of the change. Prior to August 1, 1991, such
changes may be made only once in each calendar year, except
that any time a Participant's Compensation Rate is changed he
shall have the right to change his allotment as of the first
day of any Accounting Period commencing not more than 60 days
thereafter by giving 20 days' written notice to his Employer
in the form prescribed by the Company.
(c) Voluntary Suspension of Allotments. Any Participant may, by
giving 20 days' written notice to his Employer in the form
prescribed by the Company, suspend his allotment of Voluntary
Deductions and/or Salary Reductions, effective as of the end
of any Accounting Period, either indefinitely or for any
specified period provided that in either case the suspension
shall be for at least 12 full Accounting Periods. In case of
any such suspension of any allotments, the Employer's
contributions on behalf of the Participant shall be
automatically suspended for a like period.
(d) Automatic Suspension of Allotments. A Participant's
allotments of Voluntary Deductions and Salary Reductions and
the Employer's contributions on behalf of the Participant
shall be suspended automatically for any period during which
the Participant is absent without pay under any of the
circumstances described in section 3.7(c), (d), or (e), and
such an absence shall not constitute termination of service
for purposes of
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<PAGE> 31
any of the provisions of Article IX. A Participant may, by
giving 20 days' written notice to his Employer in the form
prescribed by the Company, suspend his allotment of Voluntary
Deductions and/or Salary Reductions for any period during
which he is absent from work under any of the circumstances
described in section 3.7(b) or (c) and receiving Compensation
at a reduced Compensation Rate, in which case the Employer
contributions on behalf of such Participant shall be
automatically suspended for a like period.
4.2 Employer Investment Plan Contributions. Each Employer shall
contribute, to the Salary Reduction Account of each of its participating
Employees, an amount equal to 25 percent of the Salary Reduction allotment of
such Participant; provided, however, that Salary Reduction allotments shall be
disregarded to the extent that they exceed an amount determined by multiplying
the applicable contribution percentage shown in the following schedules by the
Participant's Compensation Rate:
(a) Effective for periods prior to April 1, 1989 for Participants
represented by S.E.I.U. Local 80 (Detroit and P.T. & S.) and
I.C.W.U. Local 799 (P.T. & S.):
Contribution
Years of Service Percentage
---------------------- ------------
1 through 5 2%
More than 5 through 10 3%
More than 10 4%
(b) Effective for periods prior to January 1, 1990, for
Participants represented by I.C.W.U. Locals 70, 132, and 799
(Northern):
Contribution
Years of Service Percentage
---------------------- ------------
1 through 5 2%
More than 5 through 14 3%
More than 14 4%
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<PAGE> 32
(c) Effective April 1, 1989 for Participants referred to in (a)
and January 1, 1990 for Participants referred to in (b):
Contribution
Years of Service Percentage
----------------------- ------------
1 through 5 2%
More than 5 through 10 3%
More than 10 through 14 4%
More than 14 5%
(d) Effective September 1, 1993 for all Participants:
Contribution
Years of Service Percentage
----------------------- ------------
1 through 5 2%
More than 5 through 10 3%
More than 10 through 14 4%
More than 14 through 25 5%
More than 25 6%
In addition, in cases where the Participant's Salary Reduction allotment is
less than the percentage of his Compensation Rate allowed in the above schedule
for his Years of Service, the Employer shall contribute to the Voluntary
Deduction Account of such participating Employee an amount equal to 25 percent
of the smaller of (1) the Participant's Voluntary Deduction allotment, or (2)
an amount equal to (A) the applicable contribution percentage, per the above
schedule, times the Participant's Compensation Rate, minus (B) the
Participant's Salary Reduction allotment. The maximum Employer matching
contributions on behalf of any Participant shall not be increased until such
Participant has filed a new election form with the Company.
Notwithstanding the foregoing, until January 1, 1990, the Employer
contributions on behalf of the Participants represented by I.C.W.U. Locals 70,
132, and 799 (Northern) shall be determined by substituting "100 percent" for
"25 percent" in each place that it appears in this section 4.2.
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<PAGE> 33
The Employer contributions pursuant to this section 4.2 (including the amount
of any Salary Reduction allotments made by Participants) shall be made only
from the current profits or retained earnings of the Employer. The current
profits and accumulated retained earnings of the Employer shall be determined
in accordance with generally accepted accounting principles and practices and
shall be the amounts reflected in the Employer's certified financial
statements.
4.3 Employer ESOP Contributions.
(a) Basic ESOP Contribution. Subject to subsection (d) of this
section, effective on and after April 1, 1989, each Employer
shall contribute to the ESOP Account of each of its
participating Employees each pay period an amount equal to the
difference, if any, between (1) and (2) below:
(1) 75 percent of the sum of the Salary Reduction and
Voluntary Deduction allotments of such Participant for
such pay period; provided, however, that Salary
Reduction and Voluntary Deduction allotments shall be
disregarded to the extent that they exceed, in the
aggregate, an amount determined by multiplying the
applicable contribution percentage in the schedules
set forth in section 4.2 by such Participant
Compensation Rate.
(2) The value of the shares of MCN Stock allocated to the
ESOP Account of such Participant pursuant to section
13.4(d) for such pay period. The value of shares
allocated under section 13.4(d) shall be the market
value thereof as of the last day of the pay period for
which the shares are allocated, with the market value
to be determined by the Company in a nondiscriminatory
manner.
(b) Contribution of Principal, Interest, or Other Payments. Each
Employer also shall contribute to the ESOP its proportionate
share of any additional amount necessary
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<PAGE> 34
to make principal, interest, or other payments required by the
terms of any loan made to the ESOP in accordance with section
13.4. Each Employer's proportionate share shall be equal to
the proportion that its contributions under section 4.3(a)
bears to the total contributions under section 4.3(a).
Effective November 1, 1989, each Employer also may make
additional contributions to make principal, interest, or other
payments in accordance with the terms of any loan made to the
ESOP in accordance with section 13.4.
(c) Dividend-Related Contributions. Effective November 1, 1989,
each Employer also shall contribute to the ESOP Account of
each of its participating Employees such amounts as may be
necessary to acquire for the ESOP Account of such Participant
shares of MCN Stock having a fair market value equal to the
amount of any dividends on shares of MCN Stock allocated to
the ESOP Account of such Participant that were used to repay
an ESOP loan in accordance with section 13.4(c). Such
contributions shall be made on, or as soon as practicable
after, each date on which dividends on allocated shares of MCN
Stock are used to repay a loan. In no event shall the shares
of MCN Stock acquired with contributions under this subsection
(c) be allocated to the ESOP Account of such Participant later
than the last day of the Plan Year during which (but for the
use of the dividend to repay the loan) the dividend giving
rise to such contribution would have been allocated to the
ESOP Account of such Participant.
(d) Exception. Notwithstanding any other provision hereof, no
contributions shall be made prior to January 1, 1990 to the
ESOP Account of any Participant represented by I.C.W.U. Locals
70, 132, and 799 (Northern).
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<PAGE> 35
4.4 Additional Employer Contributions. Effective January 14,
1991, if a Participant receiving payments (based upon 40 or more hours per
week) under the terms of any Workers' Compensation law does not have sufficient
compensation to make Salary Reduction or Voluntary Deduction allotments in an
amount equal to the amount of the Participant's allotments as in effect during
the Participant's last period of active service, then the Participant's
Employer shall contribute on behalf of the Participant such additional amount
as would have been contributed by the Employer under sections 4.2 and 4.3 on
behalf of such Participant had the Participant's allotments been continued at
the rate in effect during the Participant's last period of active service.
Additional contributions under this section 4.4 shall be treated for accounting
purposes as if made under section 4.2 or 4.3, as applicable.
4.5 Rollover Contributions.
(a) From Qualified Plan. If an Employee receives, either before
or after becoming an Employee--
(1) prior to January 1, 1993, a qualified total
distribution (within the meaning of Code section
402(a)(5)(E)) or,
(2) effective January 1, 1993, an eligible rollover
distribution (within the meaning of Code section
402(c)(4))
from an employees' trust described in Code section 401(a)
which is exempt from tax under Code section 501(a) or from a
qualified annuity plan described in Code section 403(a) (other
than an employees' trust or an annuity plan under which the
Employee was an Employee within the meaning of Code section
401(c)(1) at the time contributions were made on his behalf
under such trust or annuity plan), then such Employee may
transfer and deliver to the Company, to be credited to his
Employee Salary Reduction Account as if it were a Salary
Reduction allotment, an amount which does not exceed the
amount of such qualified total distribution
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<PAGE> 36
or eligible rollover distribution (including any proceeds from
the sale of any property received as a part of such qualified
total distribution or eligible rollover distribution) less, in
the case of a qualified total distribution, the amount
considered contributed to such trust or annuity plan by the
Employee.
(b) From Individual Retirement Account or Annuity. If--
(1) an Employee receives, either before or after becoming
an Employee, a distribution or distributions from an
individual retirement account or individual retirement
annuity (within the meaning of Code section 408) or
from a retirement bond (within the meaning of Code
section 409);
(2) no amount in such account, no part of the value of
such annuity, or no part of the value of the proceeds
of such bond is attributable to any source other
than--
(A) prior to January 1, 1993, a qualified total
distribution (within the meaning of Code
section 402(a)(5)(E)), or
(B) effective January 1, 1993, an eligible
rollover distribution (within the meaning of
Code section 402(c)(4))
from an employees' trust described in Code section
401(a) which is exempt from tax under Code section
501(a) or annuity plan described in Code section
403(a) (other than an employees' trust or an annuity
plan under which the Employee was an Employee within
the meaning of Code section 401(c) at the time
contributions were made on his behalf under such trust
or annuity plan) and any earnings on such a qualified
total distribution or eligible rollover distribution;
and
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<PAGE> 37
(3) for rollovers prior to January 1, 1993, the amount
received represents the entire amount in such account,
the entire value of such annuity or the entire value
of such bond,
then such Employee may transfer and deliver to the Company, to
be credited to his Salary Reduction Account as if it were a
Salary Reduction allotment, such distribution or
distributions.
(c) Timing and Substantiation. Any transfer and delivery pursuant
to this section 4.5 shall be delivered by the Employee to the
Company and by the Company to the Trustee on or before the
sixtieth day after the day on which the Employee receives the
distribution or on or before such later date as may be
prescribed by law. Any such transfer and delivery must be
accompanied by--
(1) a statement of the Employee that to the best of his
knowledge the amount so transferred meets the
conditions specified in this section 4.5, and
(2) a copy of such documents as may have been received by
the Employee advising him of the amount and the
character of such distribution.
Notwithstanding the foregoing, the Company shall not accept a
rollover contribution if, in its judgment, such acceptance
would cause the Plan to violate any provision of the Code or
Regulations.
(d) Deemed Allotment for Certain Purposes. A rollover
contribution pursuant to this section 4.5 shall be deemed to
be an allotment of a Participant for purposes of the value of
a Participant's fund account as provided in section 8.2 and in
determining the amount distributable to a Participant, the
provisions of Article IX that are applicable to Salary
Reduction allotments will be used, pursuant to section 9.1,
but not for purposes of determining the amount of the
contribution to be made on behalf of a Participant by his
Employer pursuant to section 4.2, 4.3, or 4.4 or calculating
the Annual Addition of such Participant.
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<PAGE> 38
(e) Deemed Participation for Certain Purposes. If the amount of
rollover contribution is made by an Employee prior to his
becoming a Participant, such Employee shall, until such time
as he becomes a Participant, be deemed to be a Participant for
all purposes of the Plan except for purposes of any
determination of when he becomes a Participant pursuant to
section 3.1 and the making of allotments pursuant to section
4.1(a).
4.6 Transfers from the MichCon Savings and Stock Ownership Plan.
Effective January 14, 1991, if an Employee who previously had participated in
the MichCon Savings and Stock Ownership Plan (the "Savings Plan") becomes a
Participant in the Plan and the Participant's plan account in the Savings Plan
is transferred to the Plan in accordance with section 3.3 of the Savings Plan,
the Plan shall accept such transfer. Amounts transferred shall be 100 percent
vested at all times and shall be treated for all purposes in the same manner as
they were treated under the Savings Plan; that is:
(a) Amounts attributable to Employer salary reduction allotments
under the Savings Plan shall be allocated to the Participant's
Employee Salary Reduction Account;
(b) Amounts attributable to voluntary deduction allotments under
the Savings Plan shall be allocated to the Participant's
Employee Voluntary Deduction Account;
(c) Amounts attributable to Employer Savings Plan contributions
shall be allocated to the Participant's Employer Salary
Reduction Account or Employer Voluntary Deduction Account, as
the case may be; and
(d) Amounts transferred from the ESOP Account of the Participant
in the Savings Plan shall be allocated to the Participant's
ESOP Account.
Notwithstanding the foregoing, amounts transferred shall not be used for
purposes of determining the amount of the contribution to be made on behalf of
a Participant by the Employer pursuant to section 4.2, 4.3, or 4.4, or
calculating the Actual Deferral Percentage or Annual Addition of the
Participant.
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<PAGE> 39
4.7 Transfers from the MichCon Employee Stock Ownership Plan.
(a) In General. The Company has previously maintained the MichCon
Employee Stock Ownership Plan (the "Tax Credit ESOP"), which
was a plan separate and distinct from the MichCon Employee
Stock Ownership Plan for Union Employees which constitutes a
part of the Plan. The Company terminated the Tax Credit ESOP
and, upon such termination, a portion of the assets of the Tax
Credit ESOP were transferred to this Plan. The purpose of
this section 4.7, which is effective as of January_25, 1991,
is to set forth specific provisions applicable to the assets
so transferred. In the event of any conflict between any
other provision of the Plan and this section 4.7 the terms of
this section 4.7 shall govern with respect to amounts
transferred from the Tax Credit ESOP, adjusted for earnings
and losses thereon.
(b) Allocation to ESOP Account. All amounts transferred from the
Tax Credit ESOP attributable to Plan Years 1975 through 1982
on behalf of any Participant or former Participant who has an
account balance in this Plan shall be allocated to the ESOP
Account of such Participant or former Participant. The
amounts transferred to the ESOP Account of a Participant or
former Participant, adjusted for any earnings or losses
thereon, shall, subject to the special rules set forth in this
section 4.7, be treated in the same manner as other assets of
the ESOP Accounts for all purposes of this Plan, including,
but not limited to, distributions, loans, investments, and
diversification of investments. The amounts transferred shall
not be deemed to constitute an Employee Allotment or an
Employer Contribution for discrimination testing or any other
purpose.
(c) Allocation to MCN Salary Reduction Account. All amounts
transferred from the Tax Credit ESOP
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<PAGE> 40
attributable to Plan Years 1983 through 1986 on behalf of any
Participant or former Participant who has an account balance
in this Plan shall be allocated to the Salary Reduction
Account of such Participant or former Participant. The
amounts transferred to the Salary Reduction Account of a
Participant or former Participant, adjusted for any earnings
or losses thereon, shall, subject to the special rules set
forth in this section 4.7, be treated in the same manner as
other assets of the Salary Reduction Accounts for all purposes
of this Plan, including, but not limited to, distributions,
loans, investments, and diversification of investments. The
amounts transferred shall not be deemed to constitute an
Employee Allotment or an Employer Contribution for
discrimination testing or any other purpose.
(d) Vesting. All amounts transferred from the Tax Credit ESOP on
behalf of any Participant or former Participant, adjusted for
any earnings or losses thereon, shall at all times be fully
vested and nonforfeitable.
4.8 Limitations on Salary Reduction Allotments.
(a) Dollar Limitation. In no event shall any Employer make Salary
Reduction allotments for any calendar year, with respect to
any Participant in excess of $7,627 (for 1989) (as adjusted by
the Secretary of the Treasury to reflect increases in the cost
of living). This limit shall be applied by aggregating all
plans and arrangements maintained by the Company and all
Affiliated Companies that provide for elective deferrals (as
defined in Code section 402(g)).
(b) ADP Test. Effective for Plan Years beginning on or after
January 1, 1992, in addition to the limitations set forth
elsewhere in this Plan, one of the following tests must be
satisfied for the Plan Year:
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<PAGE> 41
(1) The Average Actual Deferral Percentage for Highly
Compensated Employees who are eligible to participate
for the Plan Year shall not exceed the Average Actual
Deferral Percentage for Nonhighly Compensated
Employees who are eligible to participate for the Plan
Year multiplied by 1.25; or
(2) The Average Actual Deferral Percentage for Highly
Compensated Employees who are eligible to participate
for the Plan Year shall not exceed the Average Actual
Deferral Percentage for Nonhighly Compensated
Employees who are eligible to participate for the Plan
Year multiplied by two, provided that the Average
Actual Deferral Percentage for such Highly Compensated
Employees does not exceed the Average Actual Deferral
Percentage for such Nonhighly Compensated Employees by
more than two percentage points.
(c) Determination of Actual Deferral Percentages. For purposes of
the Actual Deferral Percentage test described in this section
4.8--
(1) An Elective Deferral will be taken into account for a
Plan Year only if it relates to Compensation that
either would have been received by the Eligible
Employee in the Plan Year (but for the deferral
election) or is attributable to services performed by
the Eligible Employee in the Plan Year and would have
been received by the Eligible Employee within 2_1/2
months after the close of the Plan Year (but for the
deferral election);
(2) An Elective Deferral will be taken into account for a
Plan Year only if it is allocated to the Eligible
Employee as of a date within that Plan Year. For this
purpose, an Elective Deferral is considered allocated
as of a date within a Plan Year if the allocation is
not contingent on
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<PAGE> 42
participation or performance of services after such
date and the Elective Deferral is actually paid to the
Trust no later than 12 months after the Plan Year to
which the contribution relates;
(3) The Actual Deferral Percentage for an Employee who is
eligible to participate shall be computed by treating
any Excess Deferral (as defined in section 4.9) as an
Elective Deferral, except to the extent provided by
Regulations;
(4) The Actual Deferral Percentage for any Employee who is
a participant under two or more section 401(k) plans
or arrangements that are maintained by the Company or
an Affiliated Company shall be determined as if all
such Elective Deferrals were made under a single
arrangement; provided, however, that no Elective
Deferrals under an employee stock ownership plan (as
defined in Code section 4975(e)(7)) shall be taken
into account for purposes of this section 4.8;
(5) In the event that two or more plans which include
cash-or-deferred arrangements are considered as one
plan for purposes of Code section 401(a)(4) or 410(b),
the cash-or-deferred arrangements included in such
plans shall be treated as one arrangement for purposes
of this section 4.8;
(6) For purposes of determining the Actual Deferral
Percentage of an Employee who is a 5-percent owner of
the Company or one of the ten Highly Compensated
Employees paid the most Compensation during the year,
the Elective Deferrals and Compensation of such
Employee shall include the Elective Deferrals and
Compensation of Family Members, and such Family
Members shall be disregarded in determining the Actual
Deferral Percentage for Employees who are Nonhighly
Compensated Employees; and
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<PAGE> 43
(7) The determination and treatment of the Elective
Deferrals and Actual Deferral Percentage of any
Employee shall satisfy such other requirements as may
be prescribed by the Secretary of Treasury.
4.9 Distribution of Excess Deferrals. "Excess Deferrals" means
excess deferrals as defined under Code section 402(g). Notwithstanding any
other provision of the Plan, the Excess Deferral, if any, of each Employee with
respect to a calendar year plus any income and minus any loss allocable thereto
shall be distributed no later than April 15 of the following calendar year to
each Employee who claims an Excess Deferral for the preceding calendar year.
Excess Deferrals shall be treated as Annual Additions under the Plan.
The Employee's claim shall be in writing; shall be submitted to the Company no
later than March 1; shall specify the Employee's Excess Deferral for the
preceding calendar year; and shall be accompanied by the Employee's written
statement that if such amount is not distributed, such Excess Deferral, when
added to amounts deferred under other plans or arrangements described in Code
section 401(k), 408(k), or 403(b), exceeds the limit imposed on the Employee by
Code section 402(g) for the year in which the deferral occurred.
Notwithstanding the preceding paragraph, the Employer may notify the Plan on
behalf of the individual of Excess Deferrals to the extent that the individual
has Excess Deferrals for the calendar year calculated by taking into account
only elective deferrals under this Plan and other plans of the Company and any
Affiliated Company.
The Excess Deferral distributed to an Employee with respect to a calendar year
shall be adjusted for any income or loss thereon for such calendar year and for
the period between the end of such calendar year and the date of distribution.
The income or loss allocable to such calendar year shall be determined by
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multiplying the income or loss for such calendar year allocable to the
Employee's Salary Reduction Account by a fraction, the numerator of which is
the Excess Deferral of the Employee for such calendar year and the denominator
of which is the Employee's Salary Reduction Account balance on the last day of
such calendar year. The income or loss allocable to the period between the end
of such calendar year and the date of distribution shall be equal to 10 percent
of the income or loss allocable to the Excess Deferral for the preceding
calendar year multiplied by the number of calendar months that have elapsed
from the end of the preceding calendar year to the date of distribution. A
distribution occurring on or before the fifteenth day of the month shall be
treated as having been made on the last day of the preceding month and a
distribution occurring after such fifteenth day shall be treated as having been
made on the first day of the following month.
In the event that an Employee's Salary Reduction allotments are distributed to
such Employee under this section 4.9, any Employer contributions attributable
thereto plus any income and minus any loss allocable thereto shall be
forfeited.
4.10 Distribution or Recharacterization of Excess Contributions.
(a) Determination of Excess Contributions. "Excess Contributions"
means, with respect to any Plan Year, the excess of--
(1) the aggregate amount of Elective Deferrals actually
paid over to the Trust on behalf of Highly Compensated
Employees for such Plan Year, over
(2) the maximum amount of such Elective Deferrals
permitted under the limitations of section 4.8(b),
determined by reducing Elective Deferrals as follows:
(A) First, the Actual Deferral Percentage (as
defined in section 2.1(b)) of the Highly
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Compensated Employee with the highest Actual
Deferral Percentage is reduced to the extent
necessary to satisfy the test described in
section 4.8(b) or to cause such percentage to
equal the Actual Deferral Percentage of the
Highly Compensated Employee with the next
highest Actual Deferral Percentage.
(B) Second, this process is repeated until the
test described in section 4.8(b) is satisfied.
Excess Contributions shall be treated as Annual Additions
under the Plan.
For purposes of this section 4.10, to the extent permitted by
the Code, the Excess Contributions shall be reduced by the
amount of any Excess Deferrals included in such Excess
Contributions and distributed to the Employee pursuant to
section 4.9.
(b) Distribution or Recharacterization. Notwithstanding any other
provision of the Plan, either--
(1) Excess Contributions with respect to a calendar year
plus any income and minus any loss allocable thereto
shall be distributed no later than the last day of the
following calendar year to Employees on whose behalf
such Excess Contributions were made for the preceding
calendar year; or
(2) at the election of the Employee and to the extent
permitted by the Code, the Excess Contributions shall
be treated as distributed to the Employee and then
contributed by the Employee to the Plan as a Voluntary
Deduction allotment.
(c) Adjustment for Income and Loss. The Excess Contributions to
be distributed to an Employee with respect to a calendar year
shall be adjusted for any income or loss thereon for such
calendar year and for the period between the end of such
calendar year and
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the date of distribution. The income or loss allocable to
such calendar year shall be determined by multiplying the
income or loss for such calendar year allocable to the
Employee's Salary Reduction Account by a fraction, the
numerator of which is the Excess Contributions for such
calendar year and the denominator of which is the Employee's
Salary Reduction Account balance on the last day of such
calendar year. The income or loss allocable to the period
between the end of such calendar year and the date of
distribution shall be equal to 10 percent of the income or
loss allocable to the Excess Contributions for the preceding
calendar year multiplied by the number of calendar months that
have elapsed from the end of the preceding calendar year to
the date of distribution. A distribution occurring on or
before the fifteenth day of the month shall be treated as
having been made on the last day of the preceding month and a
distribution occurring after such fifteenth day shall be
treated as having been made on the first day of the following
month.
In the event that an Employee's Salary Reduction allotments
are distributed to such Employee under this section 4.10, any
Employer contributions attributable thereto plus any income
and minus any loss allocable thereto shall be forfeited.
4.11 Statutory (Code Section 415) Limitations on Allocations to
Accounts. Notwithstanding any other provision of the Plan, contributions under
the Plan shall be subject to the limitations set forth in Code section 415,
which are incorporated herein by reference. For purposes of applying such
limitations to contributions under the Plan, the rules set forth in this
section 4.11 shall be applicable.
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(a) Annual Addition. The term "Annual Addition" means the amount
allocated to a Participant's account during any calendar year
that constitutes--
(1) Employer contributions;
(2) Employee contributions;
(3) forfeitures; and
(4) amounts described in Code sections 415(l)(1) and
419A(d)(2).
The compensation limitation referred to in Code section
415(c)(1)(B) shall not apply to--
(A) any contribution for medical benefits (within the
meaning of Code section 419A(f)(2)) after separation
from service which is otherwise treated as an Annual
Addition, or
(B) any amount otherwise treated as an Annual Addition
under Code section 415(l)(1). The Annual Addition for any
calendar year before 1987 shall not be recomputed to treat all
Employee contributions as an Annual Addition.
(b) Combined-Plan Limits. In the case of an individual who was a
Participant in the Plan on December 31, 1986, an amount shall
be subtracted from the numerator of the defined contribution
fraction (not exceeding such numerator) as prescribed by the
Secretary of Treasury so that the sum of the defined benefit
plan fraction and defined contribution plan fraction does not
exceed 1.0 as of such date.
Code section 415 shall be applied in such manner as to
maximize the permissible contributions and benefits thereunder
and, in determining the permissible amount of contributions
under the Plan, any grandfathering provisions heretofore or
hereafter adopted pursuant to Code section 415 shall be
applicable. For purposes of applying the limitations set
forth in Code section 415(e), the Michigan Consolidated Gas
Company
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Retirement Plan For Employees Covered By Collective Bargaining
Agreement shall be the primary plan and any required
reductions shall be made in the Annual Additions to this Plan.
(c) Reduction of Annual Additions.
(1) If the limitations of Code section 415 would be
exceeded as a result of a reasonable error in
estimating a Participant's compensation or on account
of such other limited facts and circumstances as the
Commissioner of Internal Revenue finds justify the
application of the rules hereinafter set forth, the
Annual Additions to the Participant's account which
exceed the applicable limitation shall be returned to
the Participant to the extent of all or any portion of
any Voluntary Deduction allotments which were made by
him pursuant to Article IV. Any net earnings and
gains allocable to such allotments for the period
between the date of such allotment and the date
returned shall also be repaid to the Participant but
such return of net earnings and gains will not be
deemed a further reduction of any excess Annual
Additions.
(2) If the Participant made no Voluntary Deduction
allotments or if, after returning all or part of such
allotments in accordance with the previous paragraph,
his Annual Additions still exceed the limitations of
Code section 415, then such excess shall be returned
to the Participant to the extent of all or any portion
of any Salary Reduction allotments made on behalf of
such Participant, together with any net earnings and
gains on such allotments as hereinabove described.
(3) If, after returning all or any portion of Voluntary
Deduction and Salary Reduction allotments of a
Participant in accordance with the preceding
paragraphs, his Annual Additions still
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exceed the limitations of Code section 415, such
portion of the Employer contributions under section
4.2 made on behalf of the Participant as must be
removed to meet the limitations shall be allocated and
reallocated to other Participants' Investment Plan
Accounts as contributions by the Employer.
(4) If, after reallocating all or any portion of Employer
contributions under section 4.2, a Participant's
Annual Additions still exceed the limitation of Code
section 415, such portion of the Employer
contributions under section 4.3(a) made on behalf of
the Participant and shares of MCN Stock allocated to
his ESOP Account under section 13.4(d) as must be
removed to meet the limitations shall be allocated and
reallocated to other Participant's ESOP Accounts as
contributions by the Employer.
(5) If, as a result of the allocation of forfeitures, a
reasonable error in estimating a Participant's
Compensation, or under other limited facts and
circumstances which the Commissioner of the Internal
Revenue Service finds justify the availability of the
following rules, any amount cannot be allocated during
the Plan Year in accordance with the foregoing
procedure without exceeding the applicable limitations
for one or more Participants, any remaining amount
shall be held unallocated in a special suspense
account to be allocated to Participants in the
succeeding Plan Year or Plan Years; provided, however,
that (A) no Employer contributions and no Voluntary
Deduction allotments shall be made in such succeeding
Plan Year or Plan Years until such special suspense
account is exhausted by allocations and reallocations;
(B) no investment gains (or losses) or other income
shall be
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allocated to the special suspense account; and (C) the
amounts in the special suspense account shall be
allocated as soon as possible without violating the
limitations of this section 4.11.
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Article V. Vesting in Accounts
5.1 Employee Salary Reduction Accounts, Employee Post-1986
Voluntary Deduction Account, and Employee Pre-1987 Voluntary Deduction Account.
The Employee Salary Reduction Account, the Employee Post-1986 Voluntary
Deduction Account, and the Employee Pre-1987 Voluntary Deduction Account of
each Participant shall be fully vested and nonforfeitable at all times.
5.2 Employer Salary Reduction Account, Employer Voluntary
Deduction Account, and ESOP Account.
(a) In General. A Participant shall have a vested and
nonforfeitable interest in his Employer Salary Reduction
Account, Employer Voluntary Reduction Account, and ESOP
Account after he has completed at least five Years of Service.
Prior to that time he shall have no vested interest in such
accounts.
(b) Accelerated Vesting. Notwithstanding section 5.2(a) above, a
Participant shall be fully vested and have a nonforfeitable
interest in his entire Employer Salary Reduction Account,
Employer Voluntary Deduction Account, and ESOP Account if--
(1) while still an Employee, he attains age 65;
(2) while still an Employee, he dies or suffers a total
and permanent disability as defined in section 2.1(l);
or
(3) while he is an Employee, contributions to the Plan are
completely discontinued or the Plan is terminated, or
the Plan is partially terminated and such Participant
is affected by such partial termination.
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Article VI. Investment Provisions
6.1 Investment of Contributions and Allotments. Employer
contributions under sections 4.2, 4.3, and 4.4 and Employee allotments shall be
invested in accordance with the following provisions:
(a) The Employer contributions made pursuant to section 4.3(a) and
(c) shall be invested in the MCN Stock fund, which fund is
described in Article VII.
(b) Each Participant shall, by written direction to the Company in
the form prescribed by the Company, direct that the Employer
contributions made pursuant to section 4.2 and Employee
allotments, including those made as a Salary Reduction, be
invested in such funds offered by the Trustee as are selected
by the Company.
Employee allotments, including those made as a Salary Reduction, and the
portion of Employer contributions referenced in section 6.1(b) above, need not
be invested in the same fund. A Participant shall direct the manner in which
the total of such allotments and such Employer contributions referenced in
section 6.1(b) above shall be divided, equally or otherwise, among the funds.
With respect to any Employee who is a Participant on April 1, 1989 and who has
not filed a new election form to direct Employer contributions in accordance
with this section 6.1, Employer contributions under section 4.3(a) and (c)
shall automatically be directed to the MCN Stock fund and Employer
contributions under section 4.2 shall automatically be directed to the Fixed
Income fund.
6.2 Change of Investment Direction. Any investment direction
given by a Participant under section 6.1 shall be deemed to be a continuing
direction until changed by the Participant. A Participant may change any such
direction in accordance with such procedures as the Company may from time to
time provide and apply in a nondiscriminatory manner.
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6.3 Transfers Between Investment Funds. A Participant may direct
that all or any part of the value of his interest in any investment fund be
transferred to one or more of the other funds except that a Participant may not
transfer any amount from the MCN Stock fund to the extent that the balance
remaining in such fund immediately after the transfer would be less than the
value of his ESOP Account. Notwithstanding the foregoing, no transfers may be
made to the Primark Corporation Stock fund by a Participant.
A transfer of all or any part of the value of a Participant's interest in the
Fixed Income fund may from time to time be restricted by the terms of
agreements which govern the investment of assets in such fund, in which event
the Company shall give notice of such restrictions to the Participants.
Prior to September 1, 1991, transfers between funds shall be effected only as
of the first day of any Accounting Period upon written directions to the
Company in the form prescribed by the Company given at least 20 days prior to
the effective date of such transfer. Prior to September 1, 1991, if a
Participant shall direct the transfer of all or any part of the value of his
interest in a fund, the Participant shall not be allowed to direct transfers to
such fund for a period of one year from the date of such transfer.
Prior to April 30, 1991, the procedures set forth above were equally applicable
to the Primark Corporation Stock fund. After that date, such fund ceased to
exist.
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Article VII. Investment Funds
7.1 Investment Funds. The Trustee shall establish, operate, and
maintain the following funds exclusively for the collective investment and
reinvestment of monies directed by the Company to be invested in such funds on
behalf of Participants:
(a) MCN Stock Fund. A MCN Stock fund which shall be invested
solely in the common stock of MCN Corporation.
(b) Fixed Income Fund. A Fixed Income fund which shall be
invested, except as hereinafter provided, in accounts or,
effective as of December 18, 1992, in marketable fixed income
securities or accounts maintained by financial institutions
which provide for fixed or variable rates of interest for
specified periods of time. The terms of such agreements and
the selection of such institutions shall be determined by the
Company. Investment advisors for marketable fixed income
securities may use fixed income futures and options to reduce
the effect of market volatility.
(c) Primark Corporation Stock Fund. Until April 30, 1991, a
Primark Corporation Stock Fund to be invested in accordance
with the terms of this paragraph (e). Until April 12, 1991,
the assets of the fund were and are to be invested solely in
Primark Corporation Stock. As soon as practicable after April
12, 1991, the shares of Primark Corporation Stock in the fund
shall be sold and the proceeds of such sales shall be invested
solely in any short-term fixed income fund described in
section 8.1. As of May 1, 1991 (or, if the sale of all shares
of Primark Corporation Stock is not completed by April 30,
1991, then June 1, 1991), the assets of the fund shall be
transferred to the MCN Stock Fund and the Primark Corporation
Stock Fund shall cease to exist. Each Participant shall be
entitled to direct the transfer of all or any portion of the
amounts so
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transferred to the MCN Stock Fund on his or her behalf to any
other fund or funds in accordance with, and subject to the
limitations of section 7.3.
(d) Other Funds. Such other funds offered by the Trustee as the
Company may select.
Notwithstanding the foregoing, the Trustee or the investment manager, as the
case may be, shall invest such portion of the assets of the funds as the
Company may deem necessary or appropriate to facilitate the administration of
such funds in any short-term fixed income fund as may be established under any
common, commingled, or collective trust for employee benefit plans established
and maintained by the Trustee.
7.2 Management of Investment Funds. Except as otherwise provided
in this Article VII, each fund shall be under the exclusive management and
control of the Trustee; the ownership of the assets and investments of the
funds shall be in the Trustee as such; and the Trustee shall have in respect of
any and all assets of the funds the same powers as if it were absolute owner
thereof.
7.3 Voting of MCN Stock.
(a) Instructions from Participants. The Trustee shall vote, in
person or by proxy, shares of MCN Stock held by the Trustee in
the MCN Stock fund in accordance with instructions obtained
from Participants.
Each Participant shall be entitled to give voting instructions
with respect to the number of shares of such respective stock
which bears the same ratio to the total number of shares held
by the Trustee on the record date as the number of shares
allocated to the respective stock fund account of such
Participant as of the Valuation Date preceding such record
date bears to the total number of shares allocated to the
respective stock fund accounts of all Participants as of such
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Valuation Date, excluding shares allocated to the accounts of
persons whose accounts have been distributed prior to such
record date.
Written notice of any meeting of stockholders of MCN
Corporation and a request for voting instructions shall be
given by the Company or the Trustee, at such time and in such
manner as the Company shall determine, to each Participant
entitled to give instructions for the voting of stock at such
meeting.
Shares with respect to which no voting instructions are
received from Participants and unallocated shares of the ESOP
shall be voted by the Trustee in the same proportion as shares
for which voting instructions are received from Participants.
The Trustee shall combine and vote fractional shares to the
extent possible to reflect the voting instructions of
Participants.
(b) Confidentiality. The instructions received by the Trustee
from Participants shall be held by the Trustee in strict
confidence and shall not be divulged or released to any
person, including officers or employees of the Company or any
Affiliated Company.
7.4 Tender Offers.
(a) Rights of Participants. Notwithstanding any other provisions
of this instrument, in the event an offer is made generally to
the shareholders of MCN Corporation to transfer all or a
portion of the common stock of MCN Corporation in return for
valuable consideration including, but not limited to, offers
regulated by section 14(D) of the Securities Exchange Act of
1934, as amended, each Participant owning a beneficial
interest in the MCN Stock fund shall have the sole and
exclusive right to decide if the common stock representing his
interest in such fund shall be tendered. Each Participant
shall have the right, to
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the extent the terms of the tender offer so permit, to direct
the withdrawal of such shares from tender. A Participant
shall not be limited as to the number of instructions to
tender or withdraw from tender which he can give; provided,
however, the Participant shall not have the right to give
instructions to tender or withdraw from tender after a
reasonable time established by the Trustee pursuant to section
7.4(c) below.
(b) Duties of the Company. Within a reasonable time after the
commencement of a tender offer, the Company shall provide to
each Participant having an ownership interest in the MCN Stock
fund--
(1) the offer to purchase as distributed by the offeror to
the shareholders of MCN Corporation,
(2) a statement of the shares representing his interest in
the MCN Stock fund as of the most recent information
available from the Company, and
(3) directions as to the means by which a Participant can
give confidential instructions to the Trustee with
respect to the tender. The Company shall establish
and pay for a means such as, but not limited to,
Datagram by which a Participant can expeditiously
deliver to the Trustee instructions with respect to
the tender.
(c) Duties of the Trustee. The Trustee shall follow the
instructions of the Participants with respect to the tender
offer. The Trustee shall not tender shares for which no
instructions are received. Unallocated shares of MCN Stock of
the ESOP shall be tendered or exchanged by the Trustee in the
same proportion as the allocated shares for which the Trustee
has received written direction are tendered or exchanged,
subject to the terms of any loan or pledge agreement covering
such shares. On the basis of its ability to comply with the
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terms of the offer, the Trustee shall establish a reasonable
time after which it shall not accept the instructions of
Participants.
(d) Confidentiality. The instructions received by the Trustee
from Participants shall be held by the Trustee in strict
confidence and shall not be divulged or released to any
person, including officers or employees of the Company or any
Affiliated Company.
7.5 Named Fiduciary Status. For purposes of sections 7.3 and 7.4,
each Participant is hereby designated a "named fiduciary" within the meaning of
ERISA section 403(a)(1) with respect to shares of MCN Stock as to which he is
entitled to make voting or tender offer decisions.
7.6 Expenses of Funds. Brokerage commissions, transfer taxes, and
other charges and expenses in connection with the purchase and sale of
securities for a fund shall be charged to the fund. Any income and other taxes
payable with respect to a fund shall likewise be charged to the fund.
7.7 Primark Corporation Stock. The provisions of sections 7.3,
7.4, and 7.5 pertaining to MCN Stock shall also be applicable to Primark
Corporation Stock during the period of its existence.
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Article VIII. Accounts and Records of the Plan
8.1 Company to Maintain Accounts. The Company shall maintain, or
cause to be maintained, for each Participant--
(a) an Investment Plan Account attributable to Voluntary Deduction
allotments and related Employer contributions under section
4.2, and
(b) a separate account attributable to Salary Reduction allotments
and related Employer contributions under section 4.2,
each of which shall be composed, to the extent required by the investment
directions of the particular Participant, of a MCN Stock fund account, a Fixed
Income fund account, and an account for each other applicable fund in which his
allotments and related contributions are invested.
The Company also shall maintain, or cause to be maintained, for each
Participant--
(c) an ESOP Account attributable to Employer contributions under
section 4.3(a) and (c), and
(d) shares of MCN Stock allocated to the Participant pursuant to
section 13.4(d),
each of which shall be composed of a MCN Stock fund account and, to the extent
diversification elections are made by the Participant under section 13.5, such
other accounts as the Company or its delegate deems necessary or appropriate in
giving effect to the diversification requirements of section 13.5.
The Company shall maintain, or cause to be maintained, all necessary records.
8.2 Plan Accounting. The interests of each Participant in the
funds shall be his proportionate share of the value of such funds as of any
Valuation Date. The Participant's proportionate share may be determined under
any accounting method selected by the Company that allocates fairly, in the
opinion of the
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Company, the investment gains and losses by or on behalf of each Participant to
the fund and that complies with the Code requirements of the Code and the
Regulations thereunder. The value of Participants' fund accounts shall be
redetermined as of each Valuation Date.
8.3 Valuation of Funds. The value of a fund as of any Valuation
Date shall be the market value of all assets (including any uninvested cash)
held by the fund as determined by the Trustee reduced by the amount of any
accrued liabilities of the fund on such Valuation Date. The Trustee's
determination of market value shall be binding and conclusive upon all parties.
8.4 Valuation of Investment Plan Account. The value of a
Participant's Investment Plan Account as of any Valuation Date shall be the sum
of the values of his MCN Stock fund account, Fixed Income fund account, and any
other of his fund accounts attributable to Salary Reductions, Voluntary
Deductions, and Employer Contributions under section 4.2.
8.5 Valuation of ESOP Account. The value of a Participant's ESOP
Account as of any Valuation Date shall be the sum of--
(a) the value of his MCN Stock fund account attributable to
Employer contributions on his behalf under section 4.3(a) and
(c) and shares of MCN Stock allocated to his ESOP Account
under section 13.4(d); and
(b) the sum of the values of his Fixed Income fund account and any
other of his fund accounts attributable to diversification
elections under section 13.5.
8.6 Valuation of Plan Account. The value of a Participant's Plan
Account as of any Valuation Date shall be the sum of the values of his MCN
Stock fund account, Fixed Income fund account, and any other investment fund
accounts maintained on his behalf under the Plan.
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8.7 Company to Furnish Annual Statements of Value of Plan
Accounts. The Company shall, not less frequently than annually, distribute to
each Participant in the Plan a statement setting forth the Plan Account of such
Participant. Such statement shall be deemed to have been accepted as correct
unless written notice of objections thereto is received by the Company or the
Employer within 30 days after the distribution of such statement to the
Participant.
8.8 Trust Agreement. A Trust has been established to fund
benefits under the Plan. The Employers may, without further reference to or
action by any Employee or Participant, from time to time enter into further
agreements with the Trustee and make such amendments to such Trust Agreement or
such further agreements as they may deem necessary or desirable to carry out
the Plan, and may take such other steps and execute such other instruments as
the Employers may deem necessary or desirable to put the Plan into effect or to
carry it out.
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Article IX. Distributions, Withdrawals, and Loans
9.1 Distribution Upon Termination of Employment Entitling
Participant to Value of Plan Account. Upon termination of a Participant's
employment with his Employer--
(a) due to retirement on his Normal Retirement Date, his Early
Retirement Date, or his Disability Retirement Date,
(b) by the death of the Participant,
(c) because of total and permanent disability or legally
established mental incompetency of the Participant not
qualifying the Participant for retirement pursuant to section
2.1(l), or
(d) under any circumstances after the Participant has satisfied
the Vesting Requirement,
the Company shall, subject to the provisions of section 9.7, direct the Trustee
to distribute to the Participant, or, in a proper case his designated
beneficiary or legal representative, the value of the Participant's Plan
Account as of the Valuation Date coincident with or next following the date of
termination of employment.
Notwithstanding the foregoing, the value of a Participant's Plan Account shall
become nonforfeitable as of the date on which the Participant attains his
sixty-fifth birthday, provided he is an Employee on that date.
9.2 Distribution Upon Termination of Employment Under
Circumstances Resulting in Forfeiture of Employer Contributions. Upon
termination of a Participant's employment under circumstances other than those
described in sections 9.1 and 9.7(c)(2), the Company shall, subject to the
provisions of section 9.7, direct the Trustee to distribute to the Participant
an amount equal to the value of the Participant's Employee Pre-1987 Voluntary
Deduction Account, Employee Post-1986 Voluntary Deduction Account, and Employee
Salary Reduction Account each of which shall be fully vested and nonforfeitable
at all times. The
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Participant's Employer Voluntary Deduction Account, Employer Salary Reduction
Account, and ESOP Account shall be forfeited and applied in reduction of the
next succeeding contribution which the Participant's Employer would otherwise
contribute to the Trust; provided, however, if such Participant is reemployed
prior to his incurring five consecutive Break in Service Years, then as of the
Valuation Date coincident with or next following his date of reemployment, the
Participant's Employer shall contribute on behalf of such Participant an amount
equal to the amount that was forfeited upon his termination of employment, and
such contribution shall be credited to the same accounts from which it was
forfeited, in the same amounts, except amounts that would otherwise be credited
to the Primark Corporation Stock fund shall be credited to the MCN Stock fund.
Such contributions shall not be taken into account in determining under section
4.11 the Annual Additions to such Participant's Savings Plan Account.
9.3 Certain Distributions from Participant Accounts.
(a) In General. Any Participant may, upon 20 days' written notice
to the Company in the form prescribed by the Company,
terminate his participation in the Plan as of any Valuation
Date. Upon such termination, the Company shall direct the
Trustee to distribute to the Participant an amount equal to
the value of the Participant's Employee Pre-1987 Voluntary
Deduction Account and Employee Post-1986 Voluntary Deduction
Account. Such a Participant shall continue to be considered a
Participant for all purposes of the Plan except for purposes
of Article IV (Contributions), but shall be ineligible to
again elect to make allotments under the Plan for a period of
12 full Accounting Periods from the date of termination of his
participation.
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(b) Withdrawals After Age 59 1/2.
(1) Prior to January 25, 1991, upon 20 days' written
notice to the Company in the form prescribed by the
Company, any Participant who has satisfied the Vesting
Requirement and attained age 59 1/2 may terminate his
participation in the Plan as of any Valuation Date.
Upon such termination, the Company shall direct the
Trustee to distribute to the Participant the value of
his Plan Account as of such Valuation Date and such
Participant shall be ineligible to again elect to make
allotments under the Plan for a period of 12 full
Accounting Periods from the date of termination of
participation.
(2) Effective January 25, 1991, upon 20 days' written
notice to the Company in the form prescribed by the
Company, any Participant who has attained age 59 1/2
may make an election, not more frequently than--
(A) prior to December 1, 1993, once in any
12-month period, or
(B) on or after December 1, 1993, once every
calendar year,
to withdraw all or any portion of the vested amount of
his Plan Account as of any Valuation Date. Upon such
withdrawal, the Company shall direct the Trustee to
distribute to the Participant as of such Valuation
Date the amount the Participant has elected to
withdraw.
(c) Limited Withdrawal in the Event of Hardship. Effective
January 25, 1991, if a Participant incurs a financial hardship
as defined in section 9.6, he may limit the amount of a
distribution from his Voluntary Deduction Account under
section 9.3(a) to the amount necessary to satisfy the hardship
and to pay any taxes resulting from such distribution.
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9.4 In-Service Withdrawals--General. At its discretion, the
Company may adopt rules limiting the number of withdrawals that may be made in
any Plan Year and prescribe a minimum amount that may be withdrawn. All
requests for a withdrawal shall be submitted in a form prescribed by the
Company. A Participant may not rescind a request for withdrawal which has been
submitted to the Company unless the Company consents. A withdrawal shall be
distributed as soon as reasonably practicable after the withdrawal request is
received.
9.5 Withdrawal of Voluntary Deduction Allotments. Any Participant
who shall have actively participated in the Plan for 24 or more calendar months
(for purposes of this section 9.5 active participation means the Participant
shall have made allotments to the Plan in each month in which compensation was
available), may, upon 20 days' written notice to the Company, withdraw as of
any Valuation Date an amount not in excess of 100 percent of his Voluntary
Deduction allotments under the Plan; provided, however, that the amount
withdrawn shall in no event exceed the sum of the values of his Employee
Pre-1987 Voluntary Deduction Account and Employee Post-1986 Voluntary Deduction
Account invested in the MCN Stock fund, the Fixed Income fund, and any other
investment funds under the Plan as of such Valuation Date. Successive
withdrawals may be made at intervals of not less than two full years provided
that the total amount withdrawn may never exceed the limitations prescribed in
the preceding sentence.
Withdrawals under this section 9.5 shall be from the MCN Stock fund, the Fixed
Income fund, or such other investment funds offered by the Trustee as the
Company shall make available for purposes of this section. If the Participant
has an account in more than one fund, he shall specify in his written direction
to the Company the amount to be withdrawn from each fund. The allotments in
all funds in the Employee Pre-1987 Voluntary Deduction Account must be
withdrawn before a withdrawal is permitted from a fund in the Employee
Post-1986 Voluntary
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Deduction Account. The amount of an in-service withdrawal from a specific fund
in a Voluntary Deduction Account shall not exceed the Employee's allotments in
such fund prior to the withdrawal.
9.6 Hardship Withdrawal of Salary Reduction Allotments. A
Participant may request, upon 20 days' written notice to the Company, a
withdrawal from his Salary Reduction Account if the withdrawal is necessary to
satisfy an immediate and heavy financial need of a Participant as defined
below. The amount of such withdrawal shall be limited to the Participant's
Salary Reduction allotments or the total value of the Participant's Employee
Salary Reduction Account as of the latest Valuation Date for which information
is available, whichever is smaller. Withdrawals under this section 9.6 shall
be from the MCN Stock fund, the Fixed Income fund, or such other investment
funds under the Plan as the Participant specifies in his written request for a
hardship withdrawal.
The determination of whether or not a distribution is necessary to satisfy an
immediate and heavy financial need and the amount required to be distributed to
meet the need shall be made by the Company. All determinations regarding
financial need shall be made in accordance with written procedures established
by the Company and applied in a uniform and nondiscriminatory manner. Such
written procedures shall specify the requirements for requesting and receiving
distributions on account of financial need, including the forms that must be
submitted and to whom the forms are to be submitted. All determinations
regarding financial need must comply with applicable Regulations under the
Code.
For purposes of this section 9.6, a financial hardship withdrawal shall be
limited to the amount required to meet the need created by one of the following
situations:
(a) Expenses for medical care described in Code section 213(d)
previously incurred by the Participant, his
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spouse, or any dependents of the Participant or necessary for
these persons to obtain medical care described in Code section
213(d).
(b) Costs directly related to the purchase (excluding mortgage
payments) of the principal residence for the Participant.
(c) Payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant, his
spouse, children, or dependents (as defined in Code section
152).
(d) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage on the
Participant's principal residence.
A distribution will be deemed necessary to satisfy an immediate and heavy
financial need of a Participant only if both of the following conditions are
met:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant.
Effective January 1, 1993, this amount may be increased by the
lesser of the amount withheld from the distribution under Code
section 3405(c), as enacted by section 522(b) of the
Unemployment Compensation Amendments of 1992, Public Law No.
102-318, Stat. 290 or remaining Salary Reduction allotments or
total value of the Salary Reduction Account, if less, after
subtracting the amount of the immediate and heavy financial
need.
(2) The Participant has obtained all distributions, other than
hardship distributions, and all loans available under this
Plan and all other plans maintained by the Employer.
If a Participant receives a hardship distribution, (A) the Participant shall
not be entitled to make Salary Reduction allotments or Voluntary Deduction
allotments for a period of one year after the hardship distribution, and (B)
the Participant may not make Salary Reduction allotments for the Participant's
taxable year immediately following the taxable year of the
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hardship distribution in excess of the amount specified in Code section 402(g)
for such taxable year less the amount of the Participant's Salary Reduction
allotments for the taxable year of the hardship distribution.
9.7 Time of Distributions.
(a) In General. Except as hereinafter provided and subject to the
provisions of section 9.9, distributions made pursuant to
section 9.1 or 9.7(c)(2) shall be made by the Trustee at the
direction of the Company on such date as the Company shall
determine after consultation with the Participant or his
beneficiary, but in no event later than March 1 of the
calendar year following termination of the Participant's
employment.
Except as hereinafter provided, all other distributions or
withdrawals under this Article IX shall be paid as soon as
reasonably practicable by the Trustee at the direction of the
Company after the applicable Valuation Date. Notwithstanding
any other provision of the Plan--
(1) if the vested portion of a Participant's Plan Account
exceeds $3,500, no distribution shall be made to such
Participant pursuant to section 9.1, 9.2, 9.7(c)(2),
or 9.9 prior to the date the Participant attains the
age of 65 without written consent of the Participant;
and
(2) if a distribution to a Participant is deferred
pursuant to (1), the amount that would otherwise have
been distributed to such Participant shall be
invested--
(A) prior to August 1, 1991, in the Fixed Income
fund, and
(B) on and after August 1, 1991, in the Fixed
Income fund or any other investment fund
under the Plan, as the Participant shall
direct,
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except that the ESOP Account of such Participant shall
continue to be invested in the MCN Stock fund, subject
to the diversification rules set forth in section
13.5.
As soon as practicable after the date of adoption of the
Second Amendment to the Plan, the Company shall direct the
Trustee to transfer from the Fixed Income fund to the MCN
Stock fund, on behalf of each former Participant who
terminated employment on or after April 1, 1989 and prior to
the date of adoption of the Second Amendment, and whose
distribution has been deferred, an amount equal to the sum of
(A) the amount required to purchase the number of shares of
MCN Stock credited to his or her ESOP Account immediately
prior to his or her termination of employment, plus (B) the
amount of dividends that would have been credited thereon from
April 1, 1989 to the date of such transfer. Such amount shall
be credited to the ESOP Account of such former Participant.
A former Participant whose distribution has been deferred
pursuant to (1) above will not thereafter be eligible for
withdrawals under section 9.3 or 9.5 or loans under section
9.10 but shall continue to have the voting and tender offer
rights described sections 7.3 and 7.4 and to be treated as a
Participant for purposes of Article VIII.
A former Participant whose distribution has been deferred may
initiate a distribution upon 30 days' prior written notice to
the Company and shall receive an amount equal to the vested
portion of his Plan Account as of the Valuation Date next
following the expiration of such 30-day period, with such
amount to be distributed in a lump sum cash payment except
that--
(i) amounts invested in the MCN Stock fund shall be
distributed in accordance with section 9.8,
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(ii) effective as of August 1, 1991, such former
Participant may upon 30 days' prior notice to the
Company receive a partial distribution rather than a
total distribution, of the vested portion of his
Account, but not more frequently than once in any
calendar year (prior to December 1, 1993, not more
frequently than once in any 12-month period), and
(iii) to the extent that such distribution comes from the
Fixed Income fund account, such distribution shall be
subject to the provisions of section 9.9.
Notwithstanding any other provision of this Plan, if a
Participant attains age 70 1/2 and still has a balance
allocated to his or her Plan Account, a distribution shall be
made under section 9.1 as if the Participant had terminated
employment in the month in which the Participant attains age
70 1/2. Such distribution shall in no event be later than
April 1 of the calendar year following the year in which the
Participant attains age 70 1/2. Distributions to such
Participant shall be made annually thereafter no later than
April 1 of each year and shall be equal to at least the
minimum amount required to be distributed by Code section
401(a)(9). For purposes of this paragraph, the life
expectancy of the Participant and the Participant's spouse
shall be redetermined annually.
(b) Suspension of Participation. If a Participant shall, prior to
termination of his employment, cease to meet the eligibility
requirements of the Plan, his allotments and Employer
contributions on his behalf shall be suspended during the
period of his ineligibility. Subject to section 3.1,
distribution of such Participant's Plan Account shall be
deferred until termination of his employment with the Company
and any Affiliated Company. If the provisions of section 3.3
relating to the transfer of a Participant's Plan Account to
the MichCon Savings and Stock Ownership Plan or its successor
are not applicable--
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(1) with respect to Participants who cease to meet the
eligibility requirements of the Plan prior to
January 1, 1987, the Company shall direct the Trustee
to distribute the value of the Participant's Plan
Account in accordance with section 9.1 whether or not
such termination of employment shall be under the
circumstances set forth in said section 9.1; and
(2) with respect to Participants who cease to meet the
eligibility requirements of the Plan subsequent to
December 31, 1986, such distribution shall be in
accordance with section 9.1 or 9.3, whichever is
applicable.
(c) Transfer of Employment.
(1) A transfer of employment from an Employer to an
Affiliated Company shall not be considered a
termination of employment.
(2) If a Participant shall be transferred to the employ of
an Affiliated Company which has not elected to
participate in the Plan, distribution of such
Participant's Plan Account shall be deferred until the
date on which he is no longer in the employ of the
Company or any Affiliated Company, whereupon the
Company shall direct the Trustee to distribute the
value of the Participant's Plan Account in the manner
prescribed in section 9.1, subject to the provisions
of section 9.7, whether or not termination of
employment shall be under circumstances set forth in
said section 9.1.
(d) Special Rules Relating to Distributions in the Event of Death.
In the event that a Participant dies before a distribution of
his Plan Account, the Company shall direct the Trustee to
distribute the entire value of his Plan Account to his
beneficiary no later than March 1 of the calendar year
following the Participant's death, as provided in section 9.1.
In
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the event of the death of the Participant after the
distribution of his Plan Account has begun, any remaining
balance in his Plan Account at the time of death will be
distributed at least as rapidly as under the method of
distribution in effect at the date of the Participant's death.
9.8 Distributions of Stock. In the case of distributions under
section 9.1, 9.2, 9.3(b), 9.7(a), or 9.7(c)(2), the value of the Participant's
MCN Stock and/or Primark Corporation Stock fund account(s), if any, shall be
paid in full shares of stock except that cash shall be distributed in lieu of
fractional shares; provided, however, that a Participant entitled to such a
distribution may elect to receive cash in lieu of MCN Stock and/or Primark
Corporation Stock. Except in the case of an election to receive cash in lieu
of MCN Stock and/or Primark Corporation Stock--
(a) prior to August 1, 1991, the number of shares to be
distributed from such account shall be the quotient of the
value of such account as of the applicable Valuation Date
divided by the value assigned by the Trustee to a share of MCN
Stock or Primark Corporation stock for purposes of valuing the
fund as of such Valuation Date; and
(b) on and after August 1, 1991, the total number of shares
allocated to such account shall be distributed from such
account.
Any remaining value of such account and, subject to the provisions of section
9.9, the value of the Participant's accounts in other funds shall be
distributed in cash. Any transfer taxes payable with respect to the
distribution of shares of stock shall be charged to the respective MCN Stock or
Primark Corporation Stock fund. Distributions pursuant to section 9.3(a) and
withdrawals under sections 9.5 and 9.6 shall be paid entirely in cash.
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9.9 Distributions from Fixed Income Fund.
(a) Normal Form. Notwithstanding any provision of the Plan, other
than the final paragraph of section 9.7(a), if a distribution
is to be made under section 9.1(a) or (c) and the Participant
has a Fixed Income fund account and at least one Hour of
Employment prior to May 31, 1988, then unless the Participant
or legal representative shall make an election in the manner
prescribed in section 9.9(b), the value of such account
(exclusive of the portion thereof attributable to
diversification elections under section 13.5) shall be
distributed by the purchase of a single premium annuity
contract providing for monthly payments during the
Participant's lifetime and, if the Participant is married on
the date payment of his benefit commences and his spouse shall
survive him, for monthly payments during the remainder of such
spouse's lifetime, each such payment to such spouse being
equal to one-half of the monthly payment received by the
Participant, commencing no later than March 1 of the calendar
year following the calendar year of the Participant's
termination of employment, and delivery of such contract to
the Participant within a reasonable time after the
Participant's termination of employment.
If a distribution is to be made under section 9.1(b) because
of a Participant's death and the Participant had a Fixed
Income fund account at the time of his death and at least one
Hour of Employment prior to May 31, 1988, then unless the
Participant had made or the Participant's spouse or
beneficiary, as the case may be, makes an election at the time
and in the manner prescribed in section 9.9(b), the value of
the Participant's Fixed Income fund account (exclusive of the
portion thereof attributable to diversification elections
under section 13.5) shall be distributed by purchase of a
single premium annuity contract providing
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for monthly payments to the Participant's spouse, or, if the
Participant was not married on the day of his death, to his
beneficiary during such person's lifetime, commencing no later
than March 1 of the calendar year following the calendar year
of the Participant's death and delivery of such contract to
such person within a reasonable time after the date of
Participant's death.
(b) Election to Reject Normal Form. Subject to the provisions of
this section 9.9(b), each Participant entitled to a
distribution under section 9.9(a) (or legal representative on
behalf of such a Participant) may, at any time during the
90-day period ending on the annuity starting date, elect to
have the value of the Participant's Fixed Income fund account
(exclusive of the portion thereof attributable to
diversification elections under section 13.5) distributed by
one or more of the methods set forth in section 9.9(c).
Within 30 days after a Participant provides written notice to
the Company of his intention to retire on his Early Retirement
Date, Normal Retirement Date, or Disability Retirement Date,
or within 30 days after the Company receives notice of a
Participant's death, or within five business days after
determining, pursuant to section 2.1(l), that a Participant is
totally and permanently disabled, or within five business days
after receiving notice of the legally established mental
incompetency of the Participant, if the Participant has a
Fixed Income fund account at such time, the Company shall
deliver to such Participant or his legal representative, by
mail or by personal delivery, written notice in nontechnical
language explaining the terms and conditions of the annuity
provided in section 9.9(a).
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The notice shall explain the Participant's or legal
representative's right to elect an optional form of
distribution and that such election may be revoked by the
Participant or legal representative at any time prior to the
annuity starting date or, if a lump sum payment is elected,
prior to the first day on which all events have occurred which
entitle the Participant or legal representative to the lump
sum payment.
The notice shall explain that a married Participant may elect
a distribution pursuant to section 9.9(c) only if the spouse
consents in writing to such election. Such written consent
shall acknowledge consent to the designated beneficiary and
the optional form of distribution, neither of which may be
changed thereafter without again obtaining written spousal
consent (or the consent of the spouse expressly permits
changes by the Participant without further consent by the
spouse). Such written consent shall acknowledge the effect of
such election and shall be witnessed by a notary public or by
a representative of the Company who is designated to act in
such capacity by the Company.
If the Participant establishes to the satisfaction of the
Company that such written consent cannot be obtained because
his spouse cannot be located, the requirement of such written
consent shall be waived. Any election, change, or revocation
under this section 9.9(b) shall be effective when written
notice is delivered to the Company in a form approved by the
Company for this purpose, provided such election, change, or
revocation is delivered prior to the annuity starting date or,
if a lump sum payment is elected, prior to the first day on
which all events have occurred which entitle the Participant
or legal representative to the lump sum payment. The notice
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shall explain that an effective revocation shall result in the
benefit being provided as an annuity described in section
9.9(a).
(c) Optional Forms. In addition to the form described in section
9.9(a), distribution of the value of a Participant's Fixed
Income fund account (exclusive of the portion thereof
attributable to diversification elections under section 13.5)
may be made either--
(1) in a lump sum payment no later than March 1 of the
calendar year following the calendar year of the
Participant's termination of employment or death; or
(2) by purchase of any form of single premium annuity
contract that satisfies Code section 401(a)(9) as may
from time to time be offered by the legal reserve life
insurance companies with which the Trustee has
agreements governing the investment of assets in the
Fixed Income fund and delivery of such contract to the
Participant or distributee within a reasonable time
after the Participant's termination of employment or
death. Within five business days after the Company
receives an election pursuant to this provision, the
Company shall provide the same written notice provided
under section 9.9(b). An election pursuant to this
provision shall be subject to the provisions of
section 9.9(b).
9.10 Loans. The Trustee is hereby authorized to establish a loan
program in accordance with this section 9.10. Upon application of a party in
interest (as defined in ERISA section 3(14)) who is a Participant or
beneficiary under the Plan, the
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Company shall direct the Trustee to make a cash loan to such Participant or
beneficiary, secured by 50 percent of the nonforfeitable value of the
Participant's Employee and Employer Salary Reduction and ESOP Accounts
determined as of the date the loan is made. The loan program shall be
administered by the Company subject to the following conditions and such other
conditions that are consistent with Labor Regulation section 2550.408b-1 and
are from time to time set forth in a written document, delivered to
Participants and beneficiaries who are parties in interest (which document may
but need not be the Summary Plan Description), which provisions shall
constitute a part of the Plan and are hereby incorporated by reference:
(a) Effective October 18, 1989, the term of a loan shall not
extend beyond the earlier of four years or the date upon which
the Participant or beneficiary ceases to be a party in
interest; provided, however, that the four years shall be
changed to eight years where the proceeds of the loan are used
by the Participant or beneficiary to acquire the Participant's
principal residence.
(b) Effective October 18, 1989, a loan shall bear interest at a
reasonable rate which shall be based upon the prevailing
interest rate charged by persons in the business of lending
money on similar commercial loans under comparable
circumstances at the time that such loan is granted, as
determined by the Company and uniformly applied.
(c) Effective October 18, 1989, the amount of a loan (when added
to the balance of other outstanding loans) shall not exceed
the lesser of--
(1) $50,000 reduced by the excess (if any) of--
(A) the highest outstanding balance of loans from
the Plan during the one-year period ending on
the day before the date on which such loan
was made, over
(B) the outstanding balance of loans outstanding
on the date such loan was made, or
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(2) 50 percent of the nonforfeitable value of the
Participant's Employee and Employer Salary Reduction
and ESOP Accounts under the Plan which the Participant
would have been entitled to receive if the
Participant's employment had terminated on the date
such loan was made.
In no case shall a Participant be entitled to a loan under
this Plan if the amount of the proposed loan is less than
$500.
(d) A loan shall be evidenced by a promissory note.
(e) Payments of principal and interest shall be made by
approximately equal payments not less frequently than monthly
on a basis that would permit the loan to be fully amortized
over its term. Effective October 18, 1989, loan payments
shall be made by payroll deductions for Participants in active
pay status.
(f) Appropriate disclosure shall be made pursuant to the Truth in
Lending Act to the extent applicable.
(g) Amounts of principal and interest received on a loan shall be
credited to the Participant's account and the outstanding loan
balance shall be considered an investment of the assets of the
account. Payment of principal and interest shall be credited
to the investment funds in the same proportion as the amount
distributed from the funds from which the loan was granted to
the Participant, except amounts that would otherwise be
credited to the Primark Corporation Stock fund shall be
credited to the MCN Stock fund.
(h) The frequency of loans and the minimum amount for a loan shall
be determined through uniform rules prescribed by the Company
and at the sole discretion of the Company.
(i) All applications for a loan shall be submitted to the Company
on a form prescribed by the Company. Distribution shall be
made as soon as reasonably practicable after the application
of the loan is received.
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(j) If a Participant borrows from an account which is invested in
more than one fund, he shall instruct the Company as to the
funds from which the loan is to be applied; provided, however,
that no borrowing shall be applied from the MCN Stock fund
unless and until the Participant's ability to borrow from each
of the other funds has been exhausted.
(k) A married Participant may not borrow any amount from the Plan
unless his spouse executes a written consent as hereinafter
provided. Such consent must be executed during the 90-day
period ending on the date on which the loan is made and shall
specifically provide that the spouse consents both to the loan
and to the use of the Participant's Salary Reduction and ESOP
Accounts as security for the loan. The consent shall
acknowledge the effect of the use of the Participant's
accounts as security for the loan and shall be witnessed by a
notary public or a representative of the Company who is
designated to act in such capacity by the Company.
(l) In the event a Participant defaults on a loan, the entire
outstanding balance of and accrued interest on the loan shall
be due and payable. The Trustee and/or Company may pursue
collection on such defaulted loan by any means generally
available to a creditor where a promissory note is in default,
or if the entire amount due is not paid by such Participant
following the default, the amount of such loan default shall
be charged against the "secured portion" of the Participant's
Plan Account and treated as a distribution with respect to
such Participant; provided, however, that such a charge
against a Participant's Plan Account shall not occur with
respect to funds in his Employee Salary Reduction Account at a
time so as to cause a violation of Code section
401(k)(2)(B)(i).
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9.11 Definition of Allotments and Employer Contributions. For the
purposes of this Article IX, a Participant's allotments shall include only
those allotments made either as a Voluntary Deduction or a Salary Reduction
which have not been previously withdrawn or distributed.
If a Participant has previously had a portion of his Plan Account forfeited
under section 9.2, the Employer contributions, exclusive of those made as a
Salary Reduction to the Plan on his behalf, shall include only such Employer
contributions made subsequent to such forfeiture.
9.12 Spousal Consent to Payment. Subject to section 9.7(a), the
spouse of a married Participant or former Participant shall be required to
consent in writing to any in-service withdrawal, loan, or distribution under
the Plan to the Participant or former Participant; provided, however, for
distributions on account of termination of employment, this sentence shall be
effective as of January 1, 1993. The spouse's consent shall be in such form as
the Company may prescribe.
9.13 Distributions Pursuant to a Qualified Domestic Relations
Order. Upon receipt of a domestic relations order, the Company will notify the
involved Participant and any alternate payee that the order has been received
and explain the Plan's procedures for determining whether the order is a
qualified domestic relations order as defined in Code section 414(p). After
determining that the order is a qualified domestic relations order, the Company
shall direct the Trustee to distribute or segregate the Participant's Account
as provided in the qualified domestic relations order. If required by the
qualified domestic relations order, the Trustee shall make distribution prior
to the time that the Participant, whose account is subject to distribution,
could have received a distribution.
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In a case of a dispute regarding the validity of a domestic relations order or
the amounts or identities of parties to be paid thereunder, the Company may
segregate the portion of the Participant's account in question, and may bring
an action in a court of competent jurisdiction to determine the proper amount
and/or recipient of benefits, or may submit such segregated amount to a court
of competent jurisdiction (through an interpleader action or otherwise) until
resolution of the matter.
Further, if the Company receives notice that a domestic relations order is
forthcoming, the Company may suspend payments from the Participant's Account or
may follow the procedures described in the preceding sentence, until resolution
of the matter.
9.14 Direct Rollovers of Eligible Distributions.
(a) General. This section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a
distributee's election under this section, a distributee may
elect, at the time and in the manner prescribed by the
Company, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
(b) Definitions.
(1) Eligible rollover distribution. An eligible rollover
distribution is any distribution of all or any portion
of the balance to the credit of the distributee,
except that an eligible rollover distribution does not
include: any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a
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specified period of ten years or more; any
distribution to the extent such distribution is
required under Code section 401(a)(9); and the portion
of any distribution that is not includible in gross
income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities).
(2) Eligible retirement plan. An eligible retirement plan
is an individual retirement account described in Code
section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust
described in Code section 401(a), that accepts the
distributee's eligible rollover distribution.
However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or
individual retirement annuity.
(3) Distributee. A distributee includes an Employee or
former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's
or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic
relations order, as defined in Code section 414(p),
are distributees with regard to the interest of the
spouse or former spouse.
(4) Direct rollover. A direct rollover is a payment by
the Plan to the eligible retirement plan specified by
the distributee.
(c) Waiver of 30-Day Notice Period. If a distribution is one to
which Code sections 401(a)(ll) and 417 do not apply, such
distribution may commence less than 30 days after the notice
required under section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(1) the Company clearly informs the Participant that the
Participant has a right to a period of at
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least 30 days after receiving the notice to consider
the decision of whether or not to elect a distribution
(and, if applicable, a particular distribution
option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
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Article X. Administration
10.1 Plan Administration and Interpretation.
(a) The Company shall be responsible for the administration of the
Plan. The Company shall have all such powers as may be
necessary to carry out the provisions of the Plan and may from
time to time establish rules and procedures for the
administration of the Plan and the transaction of the Plan's
business.
(b) The Company shall have the exclusive right to make any finding
of fact necessary or appropriate for any purpose under the
Plan. The Company shall have the maximum discretion permitted
by law to interpret and construe the terms of the Plan and to
resolve all issues arising under the Plan including, but not
limited to the authority to--
(1) construe disputed or doubtful terms of the Plan;
(2) determine the eligibility of an individual to
participate in the Plan;
(3) determine the amount, if any, of benefits to which any
Participant, former Participant, beneficiary, or other
person may be entitled under the Plan;
(4) determine the timing and manner of payment of
benefits; and
(5) resolve all other issues arising under the Plan.
To the extent permitted by law, all findings of fact,
determinations, interpretations, and decisions of the Company
shall be conclusive and binding upon all persons having or
claiming to have any interest or right under the Plan.
The Employers shall, from time to time, on request of the
Company, furnish to the Company such data and information as
the Company shall require in the performance of its duties.
(c) The Company shall each month collect Employee allotments and
Employer contributions from each
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Employer and shall deliver the amounts collected to the
Trustee, together with instructions concerning the portions of
such total amount to be invested in each fund.
(d) The Company shall direct the Trustee to make payments of
amounts to be distributed or withdrawn from the Trust under
Article IX and to make any transfers from one fund to another
directed by Participants under section 6.3.
10.2 Notice to Employees. All notices, reports, and statements
given, made, delivered, or transmitted to a Participant shall be deemed to have
been duly given, made, or transmitted when mailed with postage prepaid and
addressed to the Participant at the address last appearing on the books of the
Employer. A Participant may record any change of his address from time to time
by written notice filed with the Employer.
10.3 Notices to Employers. Written directions, notices, and other
communications from Participants to the Employers shall be mailed by first
class mail with postage prepaid or delivered to such location as shall be
specified upon the forms prescribed by the Company for the giving of such
directions, notices, and other communications, and shall be deemed to have been
received by the addressee when received at such location. Any other notice to
the Employers shall be addressed--
(a) If intended for the Company:
MichCon Investment and Stock Ownership Plan
c/o Michigan Consolidated Gas Company
500 Griswold Street
Detroit, Michigan 48226
(b) If intended for any other Employer, at its principal place of
business.
10.4 Participants' Acceptance of the Provisions of the Plan. Each
Participant at the time of becoming a Participant in the
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Plan and as a condition of participation shall sign an instrument evidencing
the fact that he accepts and agrees to all provisions of the Plan.
10.5 Audit of Plan Records. The records of the Company and the
records of the Employers in respect of the Plan shall be examined annually by a
firm of independent public accountants appointed by the Company. Such
accountants shall, on the basis of such examination, make such reports to the
Company and to the Employers as they may request. The audited records of the
Company and the Employers shall be conclusive in respect of all matters
involved in the administration of the Plan.
10.6 Claims Procedure. If any Participant or distributee believes
he is entitled to benefits in an amount greater than those which he is
receiving or has received, he may file a claim with the Secretary of the
Company. Such a claim shall be in writing and state the nature of the claim,
the facts supporting the claim, the amount claimed, and the address of the
claimant.
The Secretary of the Company shall review the claim and, within a reasonable
period of time after receipt of the claim, give written notice by registered or
certified mail to the claimant of his decision with respect to the claim. Such
notice shall be written in a manner calculated to be understood by the claimant
and, if the claim is wholly or partially denied, set forth the specific reasons
for the denial, specific references to the pertinent Plan provisions on which
the denial is based, a description of any additional material or information
necessary for the claimant to perfect the claim, and an explanation of why such
material or information is necessary, and an explanation of the claim review
procedure under the Plan.
The Secretary shall also advise the claimant that he or his duly authorized
representative may request a review by the Company of the denial by filing with
the Company, within 65 days after notice of the denial has been received by the
claimant, a
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written request for such review. The claimant shall be informed that he may
have reasonable access to pertinent documents and submit comments in writing to
the Company within the same 65-day period. If a request is so filed, review of
the denial shall be made by the Company and the claimant shall be given written
notice of the Company's final decision. Such notice shall be provided within
60 days after receipt of such request. Such notice shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based and shall be written in a manner
calculated to be understood by the claimant.
10.7 Effect of a Mistake. In the event of a mistake or
misstatement as to the eligibility, participation, or service of any
Participant, or the amount of payments made or to be made to a Participant or
beneficiary, the Company shall, if possible, adjust the Plan's records and
cause to be withheld or accelerated or otherwise make adjustment of such
amounts of payments as will in its sole judgment result in the Participant or
beneficiary receiving the proper amount of payments under the Plan.
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Article XI. Amendment and Termination
11.1 Amendment. The Company may at any time and from time to time
amend or modify the Plan by written instrument duly adopted by the Board of
Directors of the Company. Any such amendment or modification shall become
effective on such date as the Company shall determine, may apply to
Participants in the Plan at the time thereof as well as future Participants,
but may not reduce the Plan Account of any Participant as of the date of
adoption of such amendment or modification.
11.2 Withdrawal. If an Employer shall withdraw from the Plan under
section 12.2, or if an Employer shall adopt an amendment to the Plan which
shall render impracticable the continued administration of the Plan as a joint
plan of the several Employers, the Company shall determine the portions of the
various funds held by the Trustee which are applicable to the Participants of
such Employer and shall direct the Trustee to segregate such portions in a
separate trust. Such separate trust shall thereafter be held and administered
as a part of the separate plan of such Employer. After such portions of the
funds have been segregated in a separate trust, no such Participant or any
distributee with respect to such Participant shall have any right to any
benefit under the Plan or any claim against the Trust.
11.3 Termination. Any Employer may at any time terminate its
participation in the Plan by resolution of its Board of Directors without
obtaining the consent of or giving notice to any Participant or collective
bargaining representative. In the event of any such termination, the Company
shall determine the portions of the various funds held by the Trustee which are
applicable to the Participants of such Employer and shall direct the Trustee to
distribute such portions to such Participants ratably in proportion to the
values of their respective fund accounts; provided, however, amounts
attributable to a Participant's Elective Deferrals shall not be distributed on
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account of such termination if the Employer, after such termination, maintains
a defined contribution plan (other than an employee stock ownership plan or a
simplified employee pension). The portions of the MCN Stock fund and the
Primark Corporation Stock fund so distributed shall be distributed in kind
except that cash shall be distributed in lieu of fractional shares. The
portions of the Fixed Income fund and other investment funds so distributed
shall be distributed in cash or in kind, or partly in cash and partly in kind,
as determined by the Company.
Upon termination or partial termination of the Plan by any Employer or upon the
complete discontinuance of contributions by any Employer, the benefits under
the Plan of all affected Participants employed or formerly employed by such
Employer shall become nonforfeitable.
11.4 Allocation of Funds Between Employers. The portion of a fund
applicable to Participants of a particular Employer shall be an amount which
bears the same ratio to the value of the fund which the aggregate value of the
fund accounts of Participants employed by such Employer bears to the total
value of the fund accounts of all Participants.
11.5 Trust to be Applied Exclusively for Participants and Their
Beneficiaries. Subject to section 13.3, any provision of the Plan to the
contrary notwithstanding, it shall be impossible for any part of the Trust to
be used for or diverted to any purpose not for the exclusive benefit of
Participants and their beneficiaries either by operation or termination of the
Plan, by power of amendment, or by other means.
Notwithstanding the preceding paragraph, if a contribution is made to the Trust
by an Employer by a mistake of fact, then such contribution shall be returned
to such Employer within one year after the payment of the contribution; and if
any part or all of a contribution is disallowed as a deduction under Code
section 404, then to the extent such contribution is disallowed as a
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deduction it shall be returned to such Employer within one year after the
disallowance. All Employer contributions are conditioned upon their
deductibility under Code section 404.
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Article XII. Participation by Affiliated Companies
12.1 Adoption of the Plan. Any Affiliated Company may become a
participating Employer under the Plan by (a) taking such corporate action as
shall be necessary to adopt the Plan, and (b) executing and delivering such
instruments and taking such other action as may be necessary or desirable to
put the Plan into effect with respect to such Affiliated Company.
The Plan shall become effective with respect to each particular Affiliated
Company which becomes a participating Employer after January 1, 1993, as of a
date to be determined by the Board of Directors of such Employer after
complying with all legal requirements pertaining to the participation of such
Employer in the Plan.
12.2 Withdrawal from the Plan. Any Employer may withdraw from
participation in the Plan at any time by filing with the Company a duly
certified copy of a resolution of its Board of Directors to that effect and
giving notice of its intended withdrawal to the Company, the other Employers,
and the Trustee at least 30 days prior to the effective date of withdrawal.
12.3 Company as Agent for Employers. Each Employer named under
section 2.1(u), other than the Company, hereby appoints, and each other
corporation which shall become an Employer pursuant to section 12.1 or 13.7 by
so doing shall be deemed to have appointed the Company its agent to exercise on
its behalf all of the powers and authorities hereby conferred upon the
Employers by the terms of the Plan, including, but not by way of limitation,
the power to amend, restate, and terminate the Plan. The authority of the
Company to act as agent shall continue unless and until the portion of the
Trust fund held for the benefit of Employees of the particular Employer and
their beneficiaries is set aside in a separate trust as provided in section
11.2.
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Article XIII. Special Provisions Relating to the ESOP
13.1 Establishment of ESOP. The MichCon Employee Stock Ownership
Plan for Union Employees was originally established effective as of April 1,
1989. Each Employer shall make contributions to the ESOP in accordance with
section 4.3 hereof and the assets of the ESOP shall be invested at all times
primarily in MCN Stock. The Company from time to time may direct the Trustee
to incur debt in accordance with section 13.4 hereof to finance the acquisition
of MCN Stock.
13.2 ESOP Account. The Company shall establish an ESOP Account in
the name of each Participant to which there shall be credited or charged--
(a) the Employer contributions under section 4.3(a) and (c) hereof
made on behalf of such Participant;
(b) the shares allocated to the Participant pursuant to section
13.4(d) hereof; and
(c) the investment gains and losses on such amounts.
A Participant's ESOP Account shall be invested only in the MCN Stock fund,
except to the extent that monies diversified under section 13.5 may, at the
Participant's election, be directed to the Equities fund, the Senior Securities
fund, or the Fixed Income fund.
13.3 Discrimination Testing. For purposes of the limitations on
Salary Reduction allotments set forth in section 4.8 and the limitations on
Voluntary Deduction allotments and Employer contributions set forth in section
4.11, the ESOP and non-ESOP portions of the Plan shall be tested separately.
For purposes of such testing--
(a) the ESOP portion of the Plan shall mean Employer contributions
under section 4.3(a) made on behalf of the Participant and the
shares allocated to a Participant's ESOP Account pursuant to
section 13.4(d); and
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(b) the non-ESOP portion of the Plan shall mean all Elective
Deferrals, Voluntary Deductions and Employer contributions
under section 4.2.
13.4 Loans.
(a) Stock Acquired with Exempt Loan. The Company may direct the
Trustee to incur a loan on behalf of the ESOP in a manner and
under conditions which will cause the loan to qualify as an
"exempt loan" within the meaning of Code section 4975(d)(3).
A loan shall be used primarily for the benefit of Participants
and their beneficiaries. The proceeds of each such loan shall
be used, within a reasonable time after the loan is obtained,
only to purchase MCN Stock, to repay the loan, or to repay any
prior loan.
Any such loan shall provide for a reasonable rate of interest
and an ascertainable period of maturity, and shall be without
recourse against the Plan. Any such loan shall be secured
solely by shares of MCN Stock acquired with the proceeds of
the loan and shares of MCN Stock that were used as collateral
on a prior loan which was repaid with the proceeds of the
current loan.
MCN Stock acquired with the proceeds of a loan, including
shares pledged as collateral, shall be placed in a Suspense
Account and released in accordance with subsection (b) below
as the loan is repaid as if all shares in the Suspense Account
were pledged. MCN Stock released from the Suspense Account
shall be allocated in the manner described in subsection (d)
below.
No person entitled to payment under a loan made pursuant to
this section 13.4 shall have recourse against any assets of
the Plan other than the MCN Stock used as collateral for the
loan, Employer contributions
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under section 4.3 that are available to meet obligations under
the loan, and earnings attributable to such collateral and the
investment of such contributions. Employer contributions
under section 4.3(b) made with respect to any Plan Year during
which the loan remains unpaid, and earnings on such
contributions, shall be deemed available to meet obligations
under the loan, unless otherwise provided by the Employer at
the time such contributions are made.
(b) Release of Pledged Shares. Any pledge of MCN Stock as
collateral under this section 13.4 shall provide for the
release of shares so pledged upon the payment of any portion
of the principal of the loan. Shares so pledged shall be
released in the proportion that the principal paid on the loan
bears to the total principal amount of the loan, as provided
in Treasury Regulation 54.4975-7(b)(8)(ii). The number of
shares of MCN Stock that shall be released with each principal
payment on the loan shall be equal to the number of shares of
MCN Stock held as collateral on the loan immediately prior to
the release multiplied by a fraction the numerator of which is
the amount of principal of the loan repaid on such date and
the denominator of which is the sum of the numerator plus the
remaining outstanding principal amount of the loan after
giving effect to the repayment of principal of the loan on
such date. Each loan under this section 13.4 shall comply
with the requirements of Treasury Regulation
54.4975-7(b)(8)(ii). If such a loan provides for monthly
principal payments, shares of MCN Stock shall be released
monthly.
(c) Repayment of Loan. Payments of principal and interest on any
loan under this section 13.4 shall be made by the Trustee at
the direction of the Company solely from--
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(1) the proceeds of such loan, if any portion of such
proceeds are used for such purpose within a reasonable
period of time after the loan is obtained as provided
in section 13.4(a) above;
(2) Employer contributions under section 4.3(b) available
to meet obligations under the loan;
(3) earnings from the investment of such contributions;
(4) earnings attributable to MCN Stock acquired with the
proceeds of such loan, whether allocated or
unallocated;
(5) the earnings on other allocated shares of MCN Stock
held by the ESOP if the Internal Revenue Service, by
private letter ruling, advises the Company that the
use of such earnings to repay the loan will be
deductible under Code section 404(k)(2)(C) and will
not violate the requirements of Code section 4975; and
(6) the proceeds of a subsequent loan made to repay the
loan.
The contributions and earnings available to pay a loan must be
accounted for separately by the Company until all loans under
this section 13.4 have been paid. If dividends on MCN Stock
allocated to the ESOP Account of any Participant are used to
repay any loan, shares of MCN Stock with a fair market value
not less than the amount of such dividends shall be allocated
in accordance with section 4.3(c) to the ESOP Account of such
Participant prior to the end of the Plan Year during which
(but for the use of the dividends to repay the loan) such
dividend would have been allocated to the ESOP Account of such
Participant.
(d) Allocation of Released Shares. Subject to the limitations in
section 4.11 on Annual Additions to a Participant's accounts,
shares of MCN Stock released from a Suspense Account described
in section 13.4(a) shall be allocated immediately to the ESOP
Accounts of
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each Participant in the proportion that the contribution that
would be required to be made on behalf of such Participant
under section 4.3(a)(1) for the applicable period if no shares
were allocated under section 4.3(a)(2) during such period
bears to the total of all Employer contributions that would be
required under section 4.3(a)(1) hereof for the applicable
period if no shares were allocated under section 4.3(a)(2)
during such period.
13.5 Diversification. Any Participant or any former Participant
whose distribution has been deferred pursuant to section 9.7(a), who, in either
case, has completed at least ten years of participation in the Plan, and who
has attained the age of 55 is a "Qualified Participant". Any Qualified
Participant shall have the right to make an election to direct the investment
of a portion of his ESOP Account. Such a Participant may elect within 90 days
after the close of each Plan Year in the six plan-year period beginning with
the first Plan Year in which the individual becomes a Qualified Participant to
diversify 25 percent of his ESOP Account, less any amount to which a prior
election applies. In the case of the last year to which an election applies,
50 percent shall be substituted for 25 percent.
The portion of a Qualified Participant's ESOP Account which is eligible for
diversification may be invested in the Fixed Income fund and/or any other
investment funds under the Plan, in any combination thereof.
13.6 Put Option. If MCN Stock becomes not readily tradable on an
established market, then any Participant who is otherwise entitled to a
distribution of his ESOP Account, shall have the right (hereinafter referred to
as "Put Option") to require that his Employer repurchase any MCN Stock
allocated to his ESOP Account under a fair valuation formula. The Put Option
shall be exercisable only by written notice to the Participant's Employer
during the 60-day period immediately following the date of
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distribution and if the Put Option is not exercised within such 60-day period,
then it can be exercised for an additional period of 60 days in the following
Plan Year. The period during which the Put Option is exercisable shall not
include any time when a Participant is unable to exercise it because his
Employer is prohibited from honoring it by applicable federal or state law.
This Put Option shall be nonterminable within the meaning of Treasury
Regulation 54.4975-(11)(a)(ii).
The amount paid for MCN Stock under the Put Option shall be paid in
substantially equal periodic payments (not less frequently than annually) over
a period beginning not later than 30 days after the exercise of the Put Option
and not exceeding five years. There shall be adequate security provided and
reasonable interest paid on the unpaid balance due under this section 13.6.
13.7 Purchase of MCN Stock. The ESOP may acquire shares of MCN
Stock on a national securities exchange, from the Company or any Affiliated
Company or otherwise; provided, however, that if any shares of MCN Stock are
purchased from the Company or any Affiliated Company, the price shall not
exceed an amount which constitutes adequate consideration (as defined in ERISA
section 3(18) and any Regulations thereunder) and such purchase shall satisfy
all other requirements of ERISA and the Code applicable to such purchases.
Except as provided in section 13.6 or as otherwise required by applicable law,
no shares of MCN Stock acquired by the ESOP shall be subject to a put, call, or
other option, or buy-sell or similar arrangement while held by and when
distributed from the Plan, whether or not any part of the Plan is then an ESOP.
The protection afforded to Participants in the preceding sentence is
nonterminable within the meaning of Treasury Regulation section
54.4975-(1)(a)(ii).
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Article XIV. Miscellaneous
14.1 Beneficiary Designation. Subject to the provisions of section
9.9 and this section 14.1, each Participant shall have the right to designate a
beneficiary or beneficiaries to receive any distribution to be made under
section 9.1 upon the death of such Participant, or, in the case of a
Participant who dies subsequent to termination of his employment but prior to
the distribution of the entire amount to which he is entitled under the Plan,
any undistributed balance to which such Participant would have been entitled.
In the event of the death of a Participant whose spouse survives him, the
beneficiary of the Participant shall be his surviving spouse unless such spouse
has consented in writing to the designation of another beneficiary or
beneficiaries. Any such written consent shall acknowledge the effect of such
election and shall be witnessed by a notary public or by a representative of
the Company who is designated to act in such capacity by the Company. In the
event a Participant dies without a surviving spouse, or, in the event the
surviving spouse of a Participant has executed the written consent hereinabove
described, any distributions to be made under section 9.1 upon the death of the
Participant shall be made to his designated beneficiary or beneficiaries. If
the Participant establishes to the satisfaction of the Company or its
designated representative that such written consent cannot be obtained because
his spouse cannot be located, the requirement of such written consent shall be
waived.
If no beneficiary has been named by a Participant who dies without a surviving
spouse or if the beneficiary designated by such a Participant or by a
Participant whose surviving spouse has executed the written consent hereinabove
described has predeceased the Participant or such designated beneficiary has
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died prior to complete disbursement of the Participant's Plan Account, the
value of his account, or the undistributed portion thereof, shall be paid by
the Trustee at the direction of the Company--
(a) to the surviving spouse of such deceased Participant, if any;
(b) if there shall be no surviving spouse, to the surviving
children of such deceased Participant, if any, in equal
shares;
(c) if there shall be no surviving spouse or surviving children,
to the executors or administrators of the estate of such
deceased Participant; or
(d) if no executor or administrator shall have been appointed for
the estate of such deceased Participant, to the person or
persons who would be entitled to the personal estate of such
deceased Participant under the laws of his state of domicile
if he had died leaving no will.
In the event that a Participant and his spouse die under circumstances such
that it is not clear whether the spouse survived the Participant, the
Participant shall be presumed to have survived the spouse.
14.2 Incompetency. Any distribution under this Plan which is
payable to a beneficiary who is a minor or to a Participant or beneficiary who,
in the opinion of the Company, is unable to manage his affairs by reason of
illness or mental incompetency, may be made to or for the benefit of any such
Participant or beneficiary in such of the following ways as the Company shall
direct:
(a) Directly to any such minor beneficiary, if, in the opinion of
the Company, he is able to manage his affairs;
(b) To the legal representative of any such Participant or
beneficiary; or
(c) To some near relative of any such Participant or beneficiary
to be used for the latter's benefit.
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14.3 Expenses. Except as otherwise provided in the Plan, all costs
and expenses incurred in administering the Plan, including the expenses of the
Company, the fees and expenses of the Trustee, the fees of its counsel, and
other administrative expenses, shall be borne by the Employers in such
proportions as the Company shall determine to be equitable and proper having
regard to the nature of the particular expense.
14.4 Nonassignability. Except as may be required to comply with a
qualified domestic relations order (as defined in Code section 414(p)), it is a
condition of the Plan, and all rights of each Participant shall be subject
thereto, that no right or interest of any Participant in the Plan or in a Plan
Account shall be assignable or transferable in whole or in part, either
directly or by operation of law or otherwise, including, but not by way of
limitation, execution, levy, garnishment, attachment, pledge, or bankruptcy but
excluding devolution by death or mental incompetency, and no right or interest
of any Participant in the Plan or in his Plan Account shall be liable for, or
subject to, any obligation or liability of such Participant.
14.5 Employment Noncontractual. The Plan confers no right upon any
Employee to continue in employment.
14.6 Merger or Consolidation with Another Plan. A merger or
consolidation with, or transfer of assets or liabilities to, any other plan
shall not be effected unless the terms of such merger, consolidation, or
transfer are such that each Participant, distributee, beneficiary, or other
person entitled to receive benefits from the Plan would, if the Plan then
terminated, receive a benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit such person would have
been entitled to receive immediately before the merger, consolidation, or
transfer if the Plan had then terminated.
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If any other plan shall be merged into and become a part of this Plan, each
Participant or the person entitled to receive a benefit under such other plan
shall be entitled to receive a benefit under this Plan which is equal to the
benefit such person would have been entitled to receive had such other plan
terminated immediately before the merger.
14.7 Continuance by a Successor. In the event that any Employer
corporation shall be reorganized by way of merger, consolidation, transfer of
assets, or otherwise, so that another Affiliated Company shall succeed to all
or a portion of such Employer's business, such successor corporation, with the
consent of each other participating Employer, may be substituted for such
Employer under the Plan by adopting the Plan and becoming a party to the Trust
Agreement. Employee allotments and Employer contributions shall be
automatically suspended from the effective date of any such reorganization
until the date upon which the substitution of such successor corporation for
the Employer under the Plan becomes effective. If, within 90 days from the
effective date of any such reorganization, such successor corporation shall not
have become a party to the Plan, or, if the Employer shall adopt a plan of
complete liquidation other than in connection with a reorganization, the Plan
shall be automatically terminated with respect to Employees of such Employer as
of the close of business on the ninetieth day following the effective date of
such reorganization or as of the close of business on the date of adoption of
such plan of complete liquidation, as the case may be, and the Trustee shall
distribute the portion of the Trust applicable to Participants of such Employer
in the manner provided in section 11.3.
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14.8 Elimination of Certain Provisions. Effective--
(a) as of May 1, 1991, all references to Primark Corporation Stock
and the Primark Corporation Stock fund shall be deleted from
the Plan; and
(b) as of January 1, 1993, all provisions that ceased to apply on
any date prior to January 1, 1993 shall be deleted from the
Plan.
* * * * * * * * * *
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IN WITNESS WHEREOF, Michigan Consolidated Gas Company has caused its
corporate name to be hereunto affixed by its duly authorized officers as of the
29th day of December, 1993.
MICHIGAN CONSOLIDATED GAS COMPANY
ATTEST:
By /s/ Carol McCallion
-------------------
By /s/ Douglas A. Green
--------------------
(Corporate Seal)
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FIRST AMENDMENT TO THE
1989 AMENDMENT AND RESTATEMENT OF THE
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
WHEREAS, Michigan Consolidated Gas Company (the "Company") has
previously established the MichCon Investment and Stock Ownership Plan
(the "Plan"), which was most recently amended and restated effective
January 1, 1989;
WHEREAS, FURTHER, pursuant to Section 11.1 of the Plan, the Company has
reserved the right to amend the Plan from time to time;
WHEREAS, FURTHER, in connection with the process by which the Company is
seeking a favorable determination letter from the Internal Revenue
Service regarding the 1989 Amendment and Restatement of the Plan, the
Internal Revenue Service has requested that certain provisions of the
Plan be amended, effective January 1, 1989.
NOW, THEREFORE, the Plan is hereby amended as follows, effective January
1, 1989:
1. The following shall be added at the end of Section 2.1(j):
If as a result of the application of such rules, the
adjusted $200,000/$150,000 limitation is exceeded, then
the limitation shall be prorated among the affected
individuals in proportion to each such individual's
compensation as determined under this Section prior to
the application of the limitation.
2. Section 2.1(o) shall be amended by the addition of the following
at the end thereto:
If as a result of the application of such rules, the
adjusted $200,000/$150,000 limitation is exceeded, then
the limitation shall be prorated among the affected
individuals in proportion to each such individual's
compensation as determined under this Section prior to
the application of the limitation.
3. Section 3.2 shall be amended in its entirety as follows:
Section 3.2 Eligibility Upon Merger or Reemployment.
Any Employee who is a Participant in any plan which is
merged into this Plan shall become a Participant in this
Plan immediately upon the effective date of the merger.
Such an Employee shall be eligible to actively
participate in this Plan in accordance with Section 3.4.
<PAGE> 105
If a Participant's employment is terminated and he is
thereafter reemployed before incurring a Break in
Service Year, he shall be eligible again to actively
participate in the Plan as of the date of his
reemployment. In the event such Participant does incur
a Break in Service Year, he shall be eligible again to
actively participate in this Plan retroactive to his
date of reemployment after he has again satisfied the
eligibility requirement of Section 3.1(a).
4. Section 4.11(a)(4) shall be amended in its entirety to read as
follows:
(4) Amounts described in Code Sections 415(l)(2) and
419(A)(d)(3).
5. Section 4.11(a)(B) shall be amended in its entirety to read as
follows:
(B) Any amount otherwise treated as an Annual
Addition under Code Section 415(l)(2).
6. Section 8.3 shall be amended through the addition of the
following:
To the extent any Employer securities held by the Plan
are not readily tradable on an established securities
market, valuation of such securities shall be made by an
independent appraiser who meets requirements similar to
the requirements of the regulations prescribed under
Code Section 170(a)(1).
7. Section 9.7(a)(1) of the Plan shall be amended in its entirety
to read as follows:
(1) If the vested portion of a Participant's Plan
Account has ever exceeded $3,500, no distribution shall
be made to such Participant pursuant to Section 9.1,
9.2, 9.7(c)(2), or 9.9 prior to the date the Participant
attains the age of sixty-five (65) without written
consent of the Participant; and
8. Section 9.7 of the Plan shall be amended through the addition of
a new subsection (e) thereto, which shall read as follows:
(e) Distribution hereunder must begin not later than the
sixtieth (60th) day after the close of the Plan Year in
which occurs the latest of (a) the Participant's
termination of employment, (b) the Participant's
attainment of age sixty-five (65), or (c) the tenth
(10th) anniversary of the date the Participant first
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<PAGE> 106
became a Participant, unless (1) the Participant elects
a later date by submitting to the Company a written
statement signed by the Participant which describes the
benefit and the date on which payment of such benefit
shall commence, so long as such election does not
violate the incidental benefit rule prescribed by the
Code; or (2) if the amount of the payment required to
commence on the date determined hereinabove cannot be
ascertained by such date, or if it is not possible to
make such payment on such date because the Company has
been unable to locate the Participant after making
reasonable efforts to do so, a payment retroactive to
such date may be made no later than sixty (60) days
after the earliest date on which the amount of such
payment can be ascertained under the Plan or the date on
which the Participant is located, whichever is
applicable. For purposes of this subsection, the
failure of a Participant to consent to a distribution
shall be deemed an election to defer commencement of
payment of any benefit sufficient to satisfy this
section.
9. Section 9.8 of the Plan shall be amended through the addition of
the following language at the end thereof:
The distribution requirements of Code Section 409(o)
shall be met by the Plan, to the extent applicable.
10. Section 9.9(A) of the Plan shall be amended in its entirety to
read as follows:
(a) Normal Form. Notwithstanding any provision of the
Plan, other than the final paragraph of section 9.7(a),
if a distribution is to be made under section 9.1(a) or
(c) and the Participant has a Fixed Income fund account
and at least one Hour of Employment prior to May 31,
1988, then unless the Participant or legal
representative shall make an election in the manner
prescribed in section 9.9(b), the value of such account
(exclusive of the portion thereof attributable to
diversification elections under section 13.5) shall be
distributed by the purchase of an immediately payable
single premium annuity contract providing for monthly
payments during the Participant's lifetime and, if the
Participant is married on the date payment of his
benefit commences and his spouse shall survive him, for
monthly payments during the remainder of such spouse's
lifetime, each such payment to such spouse being equal
to one-half of the monthly payment received by the
Participant, commencing no later than March 1 of the
calendar year following the calendar year of the
-3-
<PAGE> 107
Participant's termination of employment, and delivery of
such contract to the Participant within a reasonable
time after the Participant's termination of employment.
If a distribution is to be made under section 9.1(b)
because of a Participant's death and the Participant had
a Fixed Income fund account at the time of his death and
at least one Hour of Employment prior to May 31, 1988,
then unless the Participant had made or the
Participant's spouse or beneficiary, as the case may be,
makes an election at the time and in the manner
prescribed in section 9.9(b), the value of the
Participant's Fixed Income fund account (exclusive of
the portion thereof attributable to diversification
elections under section 13.5) shall be distributed by
purchase of an immediately payable single premium
annuity contract providing for monthly payments to the
Participant's spouse, or, if the Participant was not
married on the day of his death, to his beneficiary
during such person's lifetime, commencing no later than
March 1 of the calendar year following the calendar year
of the Participant's death and delivery of such contract
to such person within a reasonable time after the date
of Participant's death.
11. The second paragraph of Section 9.9(B) shall be amended through
the addition of the following at the end thereof:
In all cases, such notice shall be provided no less than
thirty (30) days and no more than ninety (90) days prior
to the annuity starting date.
12. A new section 9.15 shall be added to the Plan which shall read
as follows:
Notwithstanding anything herein to the contrary, a
Participant's Salary Reduction contributions shall not
be distributed prior to the Employee's retirement,
death, disability, termination of employment, or
hardship, except that a distribution of such amounts may
be made, in accordance with Code Section 401(k)(10), upon
(a) termination of the Plan without establishment of
another defined contribution plan other than an employee
stock ownership plan (as defined in Code Section 4975(e)
or 409) or a simplified employee pension plan (as
defined in Code Section 408(k));
(b) the disposition by MCN Corporation or the Company to
an unrelated corporation of substantially all
-4-
<PAGE> 108
of the assets (as defined in Code Section 409(e)(2))
used in the trade or business if the Company continues
to maintain the Plan after the disposition, but only
with respect to employees who continue employment with
the corporation acquiring such assets; or
(c) the disposition by MCN Corporation or the Company to
an unrelated entity of its interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) if the
Company continues to maintain the Plan, but only with
respect to employees who continue employment with such
subsidiary.
13. Other than as provided herein, the Plan shall remain unchanged.
IN WITNESS WHEREOF, this Amendment has been executed as of this _____
day of __________, 1994.
MICHIGAN CONSOLIDATED GAS COMPANY
By /s/ SUSAN K. MCNISH
---------------------------------------
Its GENERAL COUNSEL & SECRETARY
-------------------------------------
-5-
<PAGE> 109
SECOND AMENDMENT TO THE
1989 AMENDMENT AND RESTATEMENT OF THE
INVESTMENT AND STOCK OWNERSHIP PLAN
WHEREAS, Michigan Consolidated Gas Company (the "Company") has
previously established the MichCon Investment and Stock Ownership Plan (the
"Plan"), which was most recently restated effective January1, 1989;
WHEREAS, FURTHER, pursuant to Section 11.1 of the Plan, the Company has
reserved the right to amend the Plan from time to time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective
January1, 1995, except as otherwise provided below:
1. The first paragraph of Section 2.1(o) is amended in its
entirety as follows:
(o) "Eligible Compensation" means the regular basic salary
or wage paid to an Employee by the Employer before any payroll
deduction for taxes or any other purpose, and before any Salary
Reduction allotment or cafeteria plan election, but excluding merit,
incentive and other similar payments made in the form of a lump sum,
bonuses, awards, shift differentials, severance payments, differential
payments made by reason of the Employee's entry into Military Service,
all amounts paid for work in excess of 40 hours in any one week, all
overtime or other premium paid for work in excess of a maximum number
of hours in any one day, for work on holidays or for any other reason,
payments for so-called fringe benefits such as Employer contributions
to this Plan or any pension or retirement plan, increased wages or
salary resulting from temporary promotion, upgrading or transfer, of
whatever duration, to a higher paid job or classification, and any
other premium, auxiliary, or special pay of any sort whatsoever.
2. Section 3.7 is amended by adding the following at the end
thereof:
Notwithstanding anything herein to the contrary, Hours of
Employment shall be credited hereunder at all times in compliance with
the requirements of the Family and Medical Leave Act.
3. Section 4.1(a) is amended in its entirety as follows, effective
March 1, 1995:
(a) Amount of Allotments. Each Participant may make a
regular allotment to the Plan. Such allotment shall not be less than
1 percent nor more than the amount determined as follows:
1
<PAGE> 110
(1) A Participant represented by S.E.I.U. Local 80
(Detroit), P.T.& S. and I.C.W.U. Local 799 (P.T.& S.) and, prior to
March 1, 1995, I.C.W.U. Local 70, may make allotments up to a percentage
of his Compensation Rate, in incremental percentages of 1 percent,
determined as follows:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
Prior to April 1, 1992 10%
April 1, 1992 - August 31, 1993 14%
September 1, 1993 - February 28, 1995 15%
March 1, 1995 and later
(for Highly Compensated Employees) 15%
March 1, 1995 and later
(for Nonhighly Compensated Employees) 20%
</TABLE>
(2) A Participant represented by I.C.W.U. Local 132 and 799
(Northern) and, on and after March1, 1995, I.C.W.U. Local 70, may make
allotments up to a percentage of his Compensation Rate, in incremental
percentages of 1 percent, determined as follows:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
Prior to January 1, 1990 8%
January 1, 1990 - August 31, 1992 10%
September 1, 1992 - August 31, 1995
(except for I.C.W.U. Local 70) 14%
March 1, 1995 - August 31, 1995
(for I.C.W.U. Local 70) 15%
September 1, 1995 and later
(for Highly Compensated Employees) 15%
September 1, 1995 and later
(for Nonhighly Compensated Employees) 20%
</TABLE>
Allotments will be effected by Voluntary Deductions, Salary
Reductions, or any combination thereof, as elected by the Participant.
The amount of such Voluntary
2
<PAGE> 111
Deductions or Salary Reductions shall be transferred to the Trustee after each
pay period; provided, however, that a Participant's Salary Reduction allotments
(A) shall be limited as provided in section 4.8 and (B) shall not exceed a
percentage of the Participant's Compensation Rate determined as follows:
(i) In the case of Participants referred to in (1) above --
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
Prior to April 1, 1992 6%
April 1, 1992 - August 31, 1993 8%
September 1, 1993 9%
</TABLE>
(ii) In the case of Participants referred to in (2) above --
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
Prior to September 1, 1992 6%
September 1, 1992 - June 30, 1995 8%
(February 28, 1995 for I.C.W.U. Local 70)
July 1, 1995 (March 1, 1995 for
I.C.W.U. Local 70) and later 9%
</TABLE>
Notwithstanding the foregoing, the Company may, in its sole discretion, (1)
reduce the Salary Reduction allotments permitted by a group of Participants if,
in the opinion of the Company, it is advisable to do so in order to satisfy the
requirements of section 4.8 or 4.11; or (2) reduce the Voluntary Deduction
allotments permitted by a group of Participants if, in the opinion of the
Company, it is advisable to do so in order to satisfy the requirements of
section 4.11.
4. Subsection (d) of Section 4.2 is amended in its entirety,
effective September1, 1993:
(d) Effective September 1, 1993 through December 31, 1994
for all Participants:
3
<PAGE> 112
<TABLE>
<CAPTION>
Contribution
Years of Service Percentage
---------------- ------------
<S> <C>
1 through 3 2%
More than 3 through 7 3%
More than 7 through 10 4%
More than 10 through 25 5%
More than 25 6%
</TABLE>
5. Section 4.2 is amended by adding new subsections (e), (f) and (g),
which shall read as follows:
(e) Effective January 1, 1995 for all Participants:
<TABLE>
<CAPTION>
Contribution
Years of Service Percentage
---------------- ------------
<S> <C>
1 through 3 2%
More than 3 through 6 3%
More than 6 through 10 4%
More than 10 through 25 5%
More than 25 6%
</TABLE>
(f) Effective July 1, 1995 for all Participants except
Participants described in subsection (g) below:
<TABLE>
<CAPTION>
Contribution
Years of Service Percentage
---------------- ------------
<S> <C>
1 through 3 2%
More than 3 through 6 3%
More than 6 through 10 4%
More than 10 through 23 5%
More than 23 6%
</TABLE>
(g) For all Participants who became Eligible Employees on or after
July1, 1995, who are utility employees represented by I.C.W.U. Local 799
(Northern):
4
<PAGE> 113
<TABLE>
<CAPTION>
Contribution
Years of Service Percentage
---------------- ------------
<S> <C>
0 through 4 0%
More than 4 through 6 3%
More than 6 through 10 4%
More than 10 through 23 5%
More than 23 6%
</TABLE>
6. A new subsection (e) is added to Section 4.3, which shall read as
follows:
(e) Longevity Contributions. Effective (1) April1, 1995 (with
respect to Participants represented by S.E.I.U. Local 80 (Detroit and P.T. &
S.) and I.C.W.U. Local 799 (P.T. & S.)) or (2) September 1, 1995 (with respect
to Participants represented by I.C.W.U. Locals 70, 132 and 799 (Northern)),
within a reasonable time after such initial date and each April1 of each Plan
Year thereafter (in each case, the "Measurement Date"), each Employer shall
contribute to the ESOP Account of each of its participating Employees on active
payroll as of the Measurement Date who has at least 30 Years of Service as of
such Measurement Date, twenty-five (25) shares of MCN stock (or an equivalent
value determined by the Company in a nondiscriminatory manner, which may be
used to purchase MCN stock).
7. The second paragraph of subsection 4.11(b) is amended in its entirety
as follows:
Code section 415 shall be applied in such manner as to maximize the
permissible contributions and benefits thereunder and, in determining the
permissible amount of contributions under the Plan, any grandfathering
provisions heretofore or hereafter adopted pursuant to Code section 415 shall
be applicable. For purposes of applying the limitations set forth in Code
section 415(e), this Plan shall be the primary plan and any required reductions
shall be made from the Michigan Consolidated Gas Company Retirement Plan for
Employees Covered by Collective Bargaining Agreements (or other applicable
defined benefit plan of the Employer).
8. Subsection 6.1(a) is amended in its entirety as follows:
(a) The Employer contributions made pursuant to section 4.3(a),
(c), and (e) shall be invested in the MCN Stock Fund (through each
Participant's ESOP Account), which fund is described in Article VII.
5
<PAGE> 114
9. The last paragraph of Section 6.1 is amended in its entirety as
follows:
Employee allotments, including those made as a Salary Reduction, and
the portion of Employer contributions referenced in section 6.1(b) above, need
not be invested in the same fund. A Participant shall direct the manner in
which the total of such allotments and such Employer contributions referenced
in section 6.1(b) above shall be divided, equally or otherwise, among the
funds. With respect to any Employee who is a Participant on April1, 1989 and
who has not filed a new election form to direct Employer contributions in
accordance with this section 6.1, Employer contributions under section 4.3(a),
(c) and (e) shall automatically be directed to the MCN Stock Fund (through each
Participant's ESOP Account) and Employer contributions under section 4.2 shall
automatically be directed to the Fixed Income Fund.
10. Subsection 8.1(c) is amended in its entirety as follows:
(c) an ESOP Account attributable to Employer contributions under
section 4.3(a), (c) and (e), and
11. Subsection 8.5(a) is amended in its entirety as follows:
(a) the value of his MCN Stock fund account attributable to
Employer contributions on his behalf under section 4.3(a), (c) and (e) and
shares of MCN Stock allocated to his ESOP Account under section 13.4(d); and
12. Section 9.7(a)(ii) is amended in its entirety as follows:
(ii) such former Participant may upon 30 days' prior notice to the
Company receive a partial distribution rather than a total distribution, of the
vested portion of his Account, but not more frequently than (1) once in any
calendar year (for the period ending June 30, 1995 for any Participant
represented by I.C.W.U. Locals 70, 132 and 799 (Northern) (1) three times in
any calendar year (during the period beginning January1, 1995 and ending
June30, 1995 for any Participant represented by S.E.I.U. Local 80 (Detroit and
P.T. & S.) and I.C.W.U. Local 799 (P.T. & S.))) or (2) four times per year
(effective July1, 1995 for all Participants), and
13. Section 13.2(a) is amended in its entirety as follows:
(a) the Employer contributions under section 4.3(a), (c) and (e)
hereof made on behalf of such Participant;
14. Other than as provided herein, the Plan shall remain unchanged.
6
<PAGE> 115
IN WITNESS WHEREOF, this Amendment has been executed as of this day of
December, 1995.
MICHIGAN CONSOLIDATED GAS COMPANY
By /s/ SUSAN K. MCNISH
------------------------------------
Its SECRETARY AND GENERAL COUNSEL
---------------------------------
7
<PAGE> 116
THIRD AMENDMENT TO THE
1989 AMENDMENT AND RESTATEMENT OF THE
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
WHEREAS, Michigan Consolidated Gas Company (the "Company") has
previously established the MichCon Investment and Stock Ownership Plan (the
"Plan"), which was most recently restated effective January 1, 1989;
WHEREAS, FURTHER, pursuant to Section 11.1 of the Plan, the Company has
reserved the right to amend the Plan from time to time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective
January 1, 1996 except as otherwise provided below:
1. Section 2.1(ww) shall be amended in its entirety as follows:
"Valuation Date" means each business day on which the New York Stock
Exchange shall be open for business.
2. Section 4.5(a) shall be clarified by adding the following at the end
thereof, effective January 1, 1995:
Former Employees who are Participants and who receive an eligible
rollover distribution from another plan sponsored by an
Employer may make rollover contributions in accordance with
this section.
3. Section 9.10(g) shall be amended in its entirety as follows:
(g) Amounts of principal and interest received on a loan shall be
credited to the Participant's account and the outstanding loan balance
shall be considered an investment of the assets of the account.
Payment of principal and interest related to loans made from a
Participant's ESOP Account shall be credited to such Participant's ESOP
Account. Payment of principal and interest related to loans made from
a Participant's Investment Plan Account shall be credited to the
Participant's Investment Plan Account and shall be invested in the
investment funds in the same proportions as the investment election
then in effect by the Participant under Article VI.
1
<PAGE> 117
4. A new Section 14.9 shall be added to the Plan, effective October 12,
1996, which shall read as follows:
14.9 USERRA Rights. Notwithstanding any provision of the Plan to the
contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with
Code Section 414(u), to the extent applicable. Loan repayments will be
suspended under this Plan as permitted under Code Section 414(u).
5. A new Article XV shall be added to the Plan, effective as of January 1,
1996 provided that a favorable private letter ruling in connection with this
addition is received from the Internal Revenue Service on or before January 31,
1997, and which is otherwise effective on the January 1 of the year in which
such favorable private letter ruling is received, which such Article XV shall
read as follows:
Article XV. Redesignation of ESOP
This Article XV designates that part of the non-ESOP portion of the
Plan which is invested in the MCN Stock Fund becomes part of the ESOP
portion of the Plan. This Article XV also sets forth certain
provisions regarding the operation of the ESOP portion of the Plan,
such provisions to supersede any contrary provisions of the Plan.
Except as specifically provided in this Article XV, the provisions of
this Article XV, including the redesignation of the ESOP portion
of the Plan described herein, shall not affect any beneficiary
designations or any other applicable agreements, elections, or consents
that Participants, spouses, or beneficiaries validly executed under the
terms of the Plan before the execution date of the Plan amendment which
first adopts this Article XV, and such designations, agreements,
elections and consents shall continue to apply in the same manner as
they did prior to such amendment.
The ESOP, as set forth in this Article XV, is intended to meet with
requirements of an employee stock ownership plan, as defined in Section
4975(e)(7) of the Code and the accompanying regulations, and Section
407(d)(6) of ERISA. As provided below, the ESOP is designed to invest
primarily in qualifying employer securities of MCN Corporation.
15.1 REDESIGNATION OF ESOP PORTION OF PLAN. Effective as of January 1,
1996, the ESOP portion of the Plan shall consist of the ESOP Account
of each Participant plus the remaining part of each Participant's Plan
Account that is invested in the MCN Stock Fund. The put option
provisions of Section 13.6 shall apply to the entire ESOP portion of
the Plan. However, only a Participant's ESOP Account shall be subject
to the restrictions described in the first sentence of Section 6.3.
2
<PAGE> 118
15.2 ALLOCATION OF INVESTMENT PLAN ACCOUNT BALANCES TO ESOP PORTION OF
PLAN. On and after January 1, 1996, all amounts contributed,
transferred or designated as allocable to the Investment Plan Account
of any Participant shall be treated as part of the ESOP portion of the
Plan to the extent the Participant has directed the investment of such
amounts in the MCN Stock Fund in accordance with Article VI of the
Plan.
15.3 DISTRIBUTION OF DIVIDENDS ON MCN STOCK. At the direction of the
Company exercised in its sole discretion, the Trustee will, after
dividends are paid on MCN Stock held in the Trust, but in no event
later than 90 days following the end of the Plan Year in which such
dividends are paid (to the extent such dividends are not used to make
payment on an exempt loan as provided for in section 13.4(c) of the
Plan), either (i) distribute to Participants such portion of the
dividends attributable to the interests in MCN Stock held in their Plan
Accounts (or, if so determined by the Company, their ESOP Accounts) as
described below or, (ii) arrange to have such dividends distributed
directly to Participants by the Employer, or (iii) arrange to have such
dividends distributed to Participants by a dividend disbursement agent
selected by the Company, which may be the Employer's payroll
department. In its sole discretion, the Company may direct the Trustee
to have such dividends distributed only to Participants who elect to
receive such dividend distributions in accordance with procedures
established by the Company (which such procedures may apply to all
Participants, solely to Participants described in (a) below, or solely
to Participants not described in (a) below). Further, in its sole
discretion, the Company may establish procedures that would permit
Participants to elect to have dividends distributed to them in a single
sum rather than over periods that might otherwise be determined by the
Company to correspond with Employer payroll practices.
The distribution of dividends on MCN Stock held in a
Participant's Plan Account (or, if so determined by the Company, a
Participant's ESOP Account ) shall be in the following amounts:
a. Participants who have terminated employment with
the Employers and all other nonemployees with Plan
Account balances (such as QDRO alternate payees and
beneficiaries of deceased Participants) shall receive
distributions of all of the dividends paid on the MCN
Stock held in their Plan Accounts (or, if so determined
by the Company, their ESOP Accounts), provided,
however, that the aggregate amount of such
distributions to each such Participant or other
individual shall not exceed $3,500 in any Plan Year
(unless the Company, in its sole discretion, uniformly
permits such Participants to elect to receive such
distributions without limitation).
3
<PAGE> 119
b. Participants who are employees who
participate in the MCN Supplemental Savings Plan
shall receive distributions of all of the dividends
paid on the MCN Stock held in their Plan Accounts
(or, if so determined by the Company, their ESOP
Accounts).
c. Each other Participant not described in (a)
or (b) above shall receive distributions equal to
the amount of Additional Allotments that he or she
would be permitted to make under Section 15.4
below, subject to the limitations of Section 15.5
below, unless such Participant affirmatively elects
to receive a distribution of 100% of the dividends
paid on the MCN Stock held in his or her Plan
Account (or, if so determined by the Company, his
or her ESOP Account).
For purposes of this Section 15.3, the ESOP portions of both
the MichCon Savings and Stock Ownership Plan and the MichCon Investment
and Stock Ownership Plan shall be considered in the aggregate for
each Participant and the payment of dividend amounts on MCN Stock held
in the Plan Accounts (or, if so determined by the Company, the ESOP
Accounts) under both plans shall not exceed the limitations on
distributions of dividends set forth in subsections (a) and (c) above.
In this regard, the limitations under subsections (a) and (c) shall be
allocated among the two plans for a Participant by multiplying such
limitation by a percentage derived by dividing the total of ESOP
portion under each plan by the total ESOP portions under both plans
(or, if so determined by the Company, by dividing the total ESOP
Account under each plan by the total ESOP Account under both plans).
15.4 ADDITIONAL ALLOTMENTS. All active Employee-Participants will be
deemed to have elected to make additional Salary Reduction allotments
similar to those elected under Section 4.1 ("Additional Allotments")
for each calendar year unless they affirmatively elect (under
procedures established by the Company) not to make such allotments at
least 15 days prior to the scheduled commencement of any distributions
under Section 15.3 above (the "Election Date"). The amount of
Additional Allotments deemed to be elected under this Section 15.4
shall be equal to the amount of ESOP dividends distributed to the
Participant under Section 15.3 above, but subject to applicable legal
limitations, including but not limited to the restrictions of Code
Sections 402(g) and 415. Such restrictions shall be applied in the
manner determined by the Company in its sole discretion . The amount
of Additional Allotments shall be calculated by the Company utilizing
uniform methodologies and assumptions established by the Company in its
sole discretion.
4
<PAGE> 120
15.5 PROVISIONS FOR FURTHER REDUCTION OF ADDITIONAL ALLOTMENTS. A
Participant's Additional Allotments shall be further reduced as
necessary below the level described in Section 15.4 above so as to
limit Additional Allotments to an amount equal to or not exceeding:
a. The lesser of (i) the residual of a
Participant's gross wages less all deductions
other than Additional Allotments or (ii) the
maximum further reduction permitted under
applicable law.
b. Zero, in the event that the Participant
does not make allotments pursuant to Section 4.1
of the Plan at the time of any distribution of
dividends pursuant to Section 15.3 above.
c. Zero, in the event that the Participant's
Plan Account is invested in less than one share
of MCN Stock immediately prior to the distribution
of dividends.
15.6 EMPLOYER CONTRIBUTIONS. Additional Allotments shall not be subject
to the limitations on Salary Reduction and Voluntary Deduction
allotments described in Section 4.1. In addition, Additional
Allotments shall not be treated as Salary Reduction or Voluntary
Deduction allotments under Section 4.1 for the purposes of determining
Employer contributions under 4.2 and 4.3 of the Plan, and shall be
disregarded for these purposes.
IN WITNESS WHEREOF, this Amendment has been executed as of this 23rd
day of December, 1996.
MICHIGAN CONSOLIDATED GAS COMPANY
By /s/ Susan K. McNish
--------------------------------------
Its V.P., General Counsel & Secretary
-----------------------------------
5
<PAGE> 1
EXHIBIT 99.2
MICHCON
SAVINGS AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
<PAGE> 2
MICHCON
SAVINGS AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
TABLE OF CONTENTS
Article I. The Plan
1.1 Establishment and Amendment of the Plan 1
1.2 Applicability of the Plan 1
1.3 Purpose and Type of Plan 2
Article II. Definitions
2.1 Definitions 3
2.2 Construction 15
Article III. Participation and Service
3.1 Eligibility Requirements 16
3.2 Eligibility Upon Merger or Reemployment 16
3.3 Collective Bargaining Agency 17
3.4 Applications 17
3.5 Years of Service 18
3.6 Break in Service Year 19
3.7 Hours of Employment 20
3.8 Employment by Related Entities 22
3.9 Leased Employees 22
Article IV. Contributions
4.1 Employee Allotments 24
4.2 Employer Savings Plan Contributions 27
4.3 Employer ESOP Contributions 28
4.4 Additional Employer Contributions 29
4.5 Rollover Contributions 30
4.6 Transfers from the MichCon Investment and
Stock Ownership Plan 33
4.7 Transfers from the MichCon Employee Stock
Ownership Plan 34
4.8 Limitations on Salary Reduction Allotments 35
4.9 Distribution of Excess Deferrals 38
4.10 Distribution or Recharacterization of Excess
Contributions 39
4.11 Limitations on Voluntary Deduction Allotments
and Employer Contributions 42
4.12 Disposition of Excess Aggregate Contributions 44
4.13 Statutory (Code Section 415) Limitations on
Allocations to Accounts 48
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<PAGE> 3
MICHCON
SAVINGS AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
TABLE OF CONTENTS
(Continued)
Article V. Vesting in Accounts
5.1 Employee Salary Reduction Accounts,
Employee Post-1986 Voluntary Deduction
Account, and Employee Pre-1987 Voluntary
Deduction Account 53
5.2 Employer Salary Reduction Account,
Employer Voluntary Deduction Account,
and ESOP Account 53
Article VI. Investment Provisions
6.1 Investment of Contributions and Allotments 54
6.2 Change of Investment Direction 54
6.3 Transfers Between Investment Funds 54
Article VII. Investment Funds
7.1 Investment Funds 56
7.2 Management of Investment Funds 57
7.3 Voting of MCN Stock 57
7.4 Tender Offers 58
7.5 Named Fiduciary Status 60
7.6 Expenses of Funds 60
7.7 Primark Corporation Stock 60
Article VIII. Accounts and Records of the Plan
8.1 Committee to Maintain Accounts 61
8.2 Plan Accounting 61
8.3 Valuation of Funds 62
8.4 Valuation of Savings Plan Account 62
8.5 Valuation of ESOP Account 62
8.6 Valuation of Plan Account 62
8.7 Committee to Furnish Annual Statements of
Value of Plan Accounts 63
8.8 Trust Agreement 63
Article IX. Distributions, Withdrawals, and
Loans
9.1 Distribution Upon Termination of
Employment Entitling Participant
to Value of Plan Account 64
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<PAGE> 4
MICHCON
SAVINGS AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
TABLE OF CONTENTS
(Continued)
9.2 Distribution Upon Termination of
Employment Under Circumstances
Resulting in Forfeiture of Employer
Contributions 64
9.3 Certain Distributions from Participant
Accounts 65
9.4 In-Service Withdrawals--General 67
9.5 Withdrawal of Voluntary Deduction Allotments 67
9.6 Hardship Withdrawal of Salary Reduction
Allotments 68
9.7 Time of Distributions 70
9.8 Distributions of Stock 74
9.9 Distributions from Fixed Income Fund 75
9.10 Loans 78
9.11 Definition of Allotments and Employer
Contributions 82
9.12 Spousal Consent to Payment 82
9.13 Distributions Pursuant to a Qualified
Domestic Relations Order 82
9.14 Direct Rollovers of Eligible Distributions 83
Article X. Administration
10.1 The Savings and Stock Ownership Plan Committee 86
10.2 Notice to Employees 89
10.3 Notices to Employers or Committee 89
10.4 Participants' Acceptance of the Provisions
of the Plan 90
10.5 Audit of Plan Records 90
10.6 Claims Procedure 90
10.7 Effect of a Mistake 91
Article XI. Amendment and Termination
11.1 Amendment 92
11.2 Withdrawal 92
11.3 Termination 92
11.4 Allocation of Funds Between Employers 93
11.5 Trust to be Applied Exclusively for
Participants and Their Beneficiaries 93
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<PAGE> 5
MICHCON
SAVINGS AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
TABLE OF CONTENTS
(Continued)
Article XII. Participation by Affiliated
Companies
12.1 Adoption of the Plan 95
12.2 Withdrawal from the Plan 95
12.3 Special Provisions Relating to Withdrawal
by MCN Computer Services, Inc. 95
12.4 Company as Agent for Employers 97
Article XIII. Top-Heavy Plan Rules
13.1 Application of Top-Heavy Plan Rules 98
13.2 Special Definitions 98
13.3 Determination of Top-Heavy Status 100
13.4 Superseding Rules 104
13.5 Participants in More Than One Top-Heavy
Plan of the Employer 106
13.6 Changes in Applicable Vesting Schedule 107
Article XIV. Special Provisions Relating to
the ESOP
14.1 Establishment of ESOP 109
14.2 ESOP Account 109
14.3 Discrimination Testing 109
14.4 Loans 110
14.5 Diversification 113
14.6 Put Option 113
14.7 Purchase of MCN Stock 114
Article XV. Miscellaneous
15.1 Beneficiary Designation 115
15.2 Incompetency 116
15.3 Expenses 117
15.4 Nonassignability 117
15.5 Employment Noncontractual 117
15.6 Merger or Consolidation with Another Plan 117
15.7 Continuance by a Successor 118
15.8 Elimination of Certain Provisions 119
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<PAGE> 6
MICHCON
SAVINGS AND STOCK OWNERSHIP PLAN
(As Amended and Restated Effective as of January 1, 1989)
Article I. The Plan
1.1 Establishment and Amendment of the Plan. Michigan Consolidated Gas
Company which is also known as MichCon (hereinafter referred to as the
"Company") presently maintains a savings and stock ownership plan for the
benefit of its Eligible Employees and the Eligible Employees of its
participating Affiliated Companies. The plan was last restated effective as of
April 1, 1989, and was amended from time to time thereafter.
The plan as previously restated established the MichCon Employee Stock Ownership
Plan for Non-Union Employees ("ESOP") and incorporated the ESOP into the MichCon
Savings Plan to form the MichCon Savings and Stock Ownership Plan.
The plan is hereby further amended and completely restated as set forth herein
effective as of January 1, 1989, except as otherwise provided herein or required
by law, and shall continue to be known as the "MichCon Savings and Stock
Ownership Plan" (the "Plan"). The ESOP provisions of the Plan shall be
effective as of April 1, 1989.
1.2 Applicability of the Plan. Except as otherwise specified herein or
required by law, the provisions of the Plan as amended and restated herein
effective as of January 1, 1989, shall be applicable only with respect to
Eligible Employees of an Employer in current employment on or after January 1,
1989, and their beneficiaries.
Any person who was covered under the Plan as in effect prior to January 1, 1989,
and whose employment terminated under the Plan
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<PAGE> 7
prior to January 1, 1989, shall continue to have his rights to receive benefits
determined under the provisions of the Plan in effect when his employment
relationship so terminated.
1.3 Purpose and Type of Plan. The purpose of the Plan is to provide a
convenient way for Participants to save on a regular and long-term basis for
their retirement income needs; to recognize the contribution made to the
Employer's successful operation by its employees and to reward such contribution
for those employees who qualify as participants under the terms of the Plan; and
to facilitate ownership of MCN Stock by participating Eligible Employees.
The non-ESOP portion of the Plan is intended to qualify as a profit-sharing plan
and the ESOP portion of the Plan is intended to qualify as a stock bonus and an
employee stock ownership plan for purposes of Code sections 401(a), 402, 412,
417, 4975, and related provisions.
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<PAGE> 8
Article II. Definitions
2.1 Definitions. Whenever used in the Plan, the following words and
phrases shall have the respective meanings stated below unless a different
meaning is plainly required by the context.
(a) "Accounting Period" means a period of one calendar month
except that the first accounting period shall commence with the date
on which the Plan first becomes effective with respect to any
Employer and end on the last day of the calendar month in which such
effective date occurs.
(b) "Actual Deferral Percentage" means the ratio (expressed as a
percentage) of the Elective Deferrals of an Employee who is eligible
to participate in the Plan for a Plan Year to the Compensation of
that Employee for such Plan Year.
(c) "Affiliated Company" means--
(1) any corporation other than the Company, i.e., either a
subsidiary corporation or an affiliated or associated
corporation of the Company, which together with the Company is
a member of a "controlled group" of corporations (as defined in
Code section 414(b));
(2) any organization which together with the Company is under
"common control" (as defined in Code section 414(c));
(3) any organization which together with the Company is an
"affiliated service group" (as defined in Code section 414(m));
or
(4) any other entity required to be aggregated with the Company
pursuant to Regulations under Code section 414(o).
(d) "Anniversary Date" means with respect to each Employee, the
anniversary each year of the first day of the first
Accounting Period coincident with or next following the Employee's
first Hour of Employment. If an Employee whose employment was
terminated is reemployed but prior
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<PAGE> 9
to his reemployment he incurs a Break in Service Year or following
his reemployment he incurs a Break in Service Year before completing
a Year of Service, his Anniversary Date shall be based upon his first
Hour of Employment coincident with or next following his date of
reemployment; otherwise, his Anniversary Date shall not be changed.
(e) "Annual Addition" means the amount allocated to a
Participant's account as such term is defined in section 4.13(a).
(f) "Average Actual Deferral Percentage" means the average
(expressed as a percentage) of the Actual Deferral Percentages of
the Employees in a group who are eligible to participate in the Plan
for a Plan Year.
(g) "Average Contribution Percentage" means the average
(expressed as a percentage) of the Contribution Percentages of the
Employees in a group who are eligible to participate in the Plan for
a Plan Year.
(h) "Break in Service Year" means a 12-month period described in
section 3.6.
(i) "Code" means the Internal Revenue Code of 1986, as amended.
(j) "Committee" means the committee appointed pursuant to section
10.1 to administer the Plan.
(k) "Company" means Michigan Consolidated Gas Company.
(l) "Compensation" means a Participant's pay, determined as
follows:
(1) For all purposes of the Plan, except as otherwise specified in
(2) or (3) below or required by the context, Compensation means
Eligible Compensation.
(2) For purposes of satisfying the limits on contributions described
in sections 4.8 and 4.11 (ADP and ACP tests) and applying the
limits of section 415 of the Code as described in section 4.13,
Compensation includes all of the items listed below as
includible (to the extent
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<PAGE> 10
applicable) and excludes all of the items listed below as
excludable (to the extent applicable) on a Plan Year basis:
(A) Includible.
(i) The Employee's wages, salaries, fees, for
professional services, and other amounts received
(without regard to whether or not an amount is paid
in cash) for personal services actually rendered in
the course of employment with the Employer and any
Affiliates to the extent that the amounts are
includible in gross income including, but not being
limited to, commissions paid salesmen, compensation
for services on the basis of a percentage of
profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan
(as described in Treasury regulation section
1.62-2(c));
(ii) Amounts described in Code sections 104(a)(3),
105(a), and 105(h), but only to the extent that
these amounts are includible in the Employee's gross
income;
(iii) Amounts paid or reimbursed by the Employer or any
Affiliate for moving expenses incurred by the
Employee, but only to the extent that at the time of
the payment it is reasonable to believe that these
amounts are not deductible by the Employee under
Code section 217;
(iv) The value of a nonqualified stock option granted to
an Employee by the Employer or any Affiliate, but
only to the extent
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<PAGE> 11
that the value of the option is includible in the
Employee's gross income for the taxable year in
which it is granted; and
(v) The amount includible in an Employee's gross income
upon making the election described in Code section
83(b).
Compensation under clause (i) includes foreign earned
income as defined in Code section 911(b), whether or not
excludable from gross income under Code section 911.
Compensation under clause (i) is to be determined without
regard to the exclusions from gross income in Code
sections 931 and 933.
(B) Excludable.
(i) Contributions made by the Employer or any Affiliate
to a plan of deferred compensation to the extent
that, before the application of the Code section 415
limitations to that plan, the contributions are not
includible in the Employee's gross income for the
taxable year in which they are contributed;
(ii) Contributions made by the Employer or any Affiliate
on an Employee's behalf to a simplified employee
pension described in Code section 408(k) (such
contributions are not considered as compensation for
the taxable year in which contributed);
(iii) Distributions from a plan of deferred compensation,
regardless of whether such amounts are includible in
the Employee's gross income when distributed, except
that amounts received by an Employee
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<PAGE> 12
pursuant to an unfunded, nonqualified plan are
permitted to be considered as Compensation for Code
section 415 purposes in the year in which the
amounts are includible in the Employee's gross
income;
(iv) Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property)
held by an Employee either becomes freely
transferable or is no longer subject to a
substantial risk of forfeiture within the meaning of
Code section 83 and regulations thereunder;
(v) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified
stock option; and
(vi) Other amounts which receive special tax benefits,
such as premiums for group-term life insurance (but
only to the extent that the premiums are not
includible in the Employee's gross income).
(3) For purposes of determining whether an individual
is a Highly Compensated Employee, Compensation means an
Employee's Compensation as defined in paragraph (2) of this
section 2.1(l) but without regard to Code sections 125,
402(a)(8), and 402(h)(1)(B) (i.e., with the addition of
elective deferrals pursuant to a cafeteria plan, a
cash-or-deferred arrangement, or a simplified employee
pension).
For Plan Years beginning on or after January 1, 1989 and prior to
January 1, 1994, the Compensation of each Employee that may be
taken into account under the Plan, except for purposes of section
4.13 (Code section 415
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<PAGE> 13
limits), shall not exceed the first $200,000 of an Employee's
Compensation (as adjusted by the Secretary of the Treasury under Code
section 415(d)). For Plan Years begnning on or after January 1,
1994, the Compensation of each Employee that may be taken into
account under the Plan, except for purposes of section 4.11, shall
not exceed the first $150,000 of an Employee's Compensation (as
adjusted pursuant to Code section 401(a)(17)). For purposes of the
preceding two sentences, if an Employee is a 5-percent owner of the
Employer or one of the ten Highly Compensated Employees paid the
greatest Compensation during the year, then any Compensation paid to
the spouse of such Employee or to any lineal descendants of such
Employee who have not attained age 19 before the close of the year
(and any applicable contribution on behalf of any such individual)
shall be treated as if it were paid to (or on behalf of) such
Employee.
(m) "Compensation Rate" means the amount of an Employee's Eligible
Compensation per pay period determined under uniform rules
established by the Committee and before recognition of any Salary
Reduction allotment or cafeteria plan election.
(n) "Contribution Percentage" means
(1) with respect to the non-ESOP portion of the Plan, the ratio
(expressed as a percentage) of the sum of Voluntary Deduction
allotments and the Employer contributions under section 4.2
made on behalf of an Employee who is eligible to participate
for a Plan Year to the Compensation of the Employee for such
Plan Year; provided, however, that in accordance with Code
section 401(m), the Company may elect to take into account
Elective Deferrals in computing such Contribution Percentage;
and
(2) with respect to the ESOP portion of the Plan, the ratio
(expressed as a percentage) of the sum of the Employer
contributions under section 4.3(a)
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<PAGE> 14
made on behalf of an Employee who is eligible to participate
and the value of the shares allocated under section 14.4(d) to
the ESOP Account of the Employee for a Plan Year to the
Compensation of the Employee for such Plan Year.
(o) "Disability Retirement Date" means the date a Participant--
(1) becomes eligible to receive benefits under a
long-term disability plan maintained by the Employer, or
(2) is determined by the Committee to be totally and
permanently disabled.
In determining whether a Participant is totally and permanently
disabled, the Committee may, in its discretion, rely on the opinion
of a physician selected by the Committee to assist it in making
such a determination.
(p) "Early Retirement Date" means the first day of any month
prior to a Participant's Normal Retirement Date on which he
terminates his employment by giving at least 60 days' written notice
to the Committee of his intention to retire after he has attained
age 55 and the sum of his attained age and the number of his full
Years of Service is at least 70.
(q) "Elective Deferrals" means Salary Reduction allotments under
section 4.1(a) and contributions under other plans maintained by the
Company or an Affiliated Company that constitute elective deferrals
within the meaning of Code section 402(g)(3).
(r) "Eligible Compensation" means the regular basic salary or wage paid
to an Employee by the Employer before any payroll deduction for
taxes or any other purpose, and before any Salary Reduction
allotment or cafeteria plan election, but excluding bonuses, awards,
shift differentials, deferred compensation, severance payments,
differential payments made by reason of the Employee's entry into
Military Service, all amounts
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<PAGE> 15
paid for work in excess of 40 hours in any one week, all overtime or
other premium paid for work in excess of a maximum number of hours
in any one day, for work on holidays or for any other reason,
payments for so-called fringe benefits such as Employer
contributions to this Plan or any pension or retirement plan,
increased wages or salary resulting from temporary promotion,
upgrading or transfer, of whatever duration, to a higher paid job or
classification, and any other premium, auxiliary, or special pay of
any sort whatsoever.
January 1, 1994, the Eligible Compensation of an Employee for
purposes of the Plan shall not exceed $200,000; provided, however,
that such limit shall be adjusted as provided in Code section
415(d). For Plan Years beginning on or after January 1, 1994, the
Eligible Compensation of each Employee that may be taken into
account under the Plan, except for purposes of section 4.11, shall
not exceed the first $150,000 of an Employee's Compensation (as
adjusted pursuant to Code section 401(a)(17)). For purposes of the
preceding two sentences, if an Employee is a 5-percent owner of the
Employer or one of the ten Highly Compensated Employees paid the
greatest Compensation during the year, any Compensation paid to the
spouse of such Employee or to any lineal descendants of such
Employee who have not attained age 19 before the close of the year
(and any applicable contribution on behalf of any such individual)
shall be treated as if it were paid to (or on behalf of) such
Employee.
(s) "Eligible Employee" means an Employee of an Employer, other than a
"leased employee" described in section 3.9 or an Employee covered by
a collective bargaining agreement between Employee representatives
and the Employer.
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<PAGE> 16
(t) "Employee" means an individual who is an employee of the Company or
an Affiliated Company.
(u) "Employee Post-1986 Voluntary Deduction Account" means an Employee's
Voluntary Deduction allotments after December 31, 1986, and
investment gains and losses therefrom.
(v) "Employee Pre-1987 Voluntary Deduction Account" means an Employee's
Voluntary Deduction allotments before January 1, 1987, and
investment gains and losses therefrom.
(w) "Employee Salary Reduction Account" means an Employee's Salary
Reduction allotments, and investment gains and losses therefrom.
(x) "Employer" means the Company and any Affiliated Company which has
adopted the Plan with the consent of the Company and in the manner
prescribed in section 12.1 and any successor corporation which shall
adopt the Plan pursuant to section 15.7. If any such corporation
shall withdraw from participation in the Plan in accordance with
section 12.2, the term Employer shall not thereafter include such
corporation.
(y) "Employer Salary Reduction Account" means the Employer contributions
to the Salary Reduction Account of an Employee pursuant to section
4.2, and investment gains and losses therefrom.
(z) "Employer Voluntary Deduction Account" means the Employer
contributions to the Voluntary Deduction Account of an Employee
pursuant to section 4.2, and investment gains and losses therefrom.
(aa) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(bb) "ESOP" means the employee stock ownership plan established pursuant
to section 14.1.
(cc) "ESOP Account" means the account established and maintained on
behalf of each Participant in accordance with sections 8.1(c) and
(d) and 14.2.
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(dd) "Excess Aggregate Contributions" means the amount described in
section 4.12(a).
(ee) "Excess Contributions" means the amount described in section 4.10(a).
(ff) "Excess Deferrals" means the portion of Elective Deferrals for a
calendar year, if any, described in section 4.9.
(gg) "Family Member" means an individual described as a family member in
Code section 414(q)(6).
(hh) "Highly Compensated Employee" means, with respect to any Plan Year,
any Employee who at any time during the preceding Plan Year (or such
other period as the Company may elect pursuant to Treasury
regulations)--
(1) received Compensation (as defined in section 2.1(l)(3) of the
Plan) from the Employer and all Affiliates in excess of
$75,000,
(2) received Compensation (as defined in section 2.1(l)(3) of the
Plan) from the Employer and all Affiliates in excess of $50,000
and was in the top-paid 20 percent of Employees,
(3) was an officer who received Compensation (as defined in section
2.1(l)(3) of the Plan) from the Employer and all Affiliates in
excess of the amount in effect under Code section 415(b)(1)(A)
for the preceding Plan Year, or
(4) was a 5-percent owner.
Unless the Company makes the "calendar year calculation election"
under Treasury regulations, Highly Compensated Employee also means,
with respect to any Plan Year, any Employee who, at any time during
that Plan Year, met the descriptions contained in paragraph (1),
(2), or (3) and was among the top-paid 100 Employees or any Employee
who was a 5-percent owner.
A Family Member of a Highly Compensated Employee and a former
employee shall be treated as a Highly
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<PAGE> 18
Compensated Employee to the extent required by sections 414(q)(6)
and (9) of the Code and the regulations thereunder.
The dollar limits described in paragraphs (1), (2), and (3) will be
adjusted to reflect increases in the cost of living, in the manner
and at the times prescribed by the Secretary of the Treasury.
(ii) "Hour of Employment" means an hour for which an individual receives
credit pursuant to section 3.7.
(jj) "MCN Stock" means common stock of MCN Corporation.
(kk) "Military Service" means service--
(1) on active duty, in time of national or local emergency, in the
armed forces of the United States or of any State thereof,
(2) in the armed forces of the United States or of any State
thereof under any compulsory service law, or
(3) in the armed forces of the United States or any of its allies
in time of war in which the United States is engaged.
(ll) "Nonhighly Compensated Employee" means an Employee of the Employer
who is neither a Highly Compensated Employee nor a Member of a
Highly Compensated Employee who is a 5-percent owner of the Employer
or one of the ten Highly Compensated Employees paid the greatest
Compensation during the year.
(mm) "Normal Retirement Date" means the Participant's sixty-fifth
birthday, if such birthday falls on the first day of the month;
otherwise, the first day of the month next following the month in
which such birthday occurs.
(nn) "Participant" means an Employee who is participating in the Plan in
accordance with its provisions.
(oo) "Plan" means MichCon Savings and Stock Ownership Plan and any
amendments thereto or restatements thereof from time to time
adopted.
(pp) "Plan Account" means the total value of an Employee's Savings Plan
Account and ESOP Account.
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<PAGE> 19
(qq) "Plan Year" means the calendar year.
(rr) "Primark Corporation Stock" means common stock of Primark
Corporation.
(ss) "Regulations" means regulations issued by the Department of Labor
construing Title I of ERISA or by the Internal Revenue Service
construing the Code.
(tt) "Salary Reduction" means an election by a Participant to have the
Compensation Rate that would otherwise be payable reduced and
contributed by the Employer to the Plan as a regular allotment on
behalf of the Participant.
(uu) "Salary Reduction Account" means an Employee's Salary Reduction
allotments, related Employer matching contributions, and investment
gains and losses therefrom.
(vv) "Savings Plan Account" means the total value of an Employee's
Salary Reduction Account and Voluntary Deduction Account.
(ww) "Suspense Account" means the account used to reflect MCN Stock
acquired with loan proceeds pursuant to section 14.4.
(xx) "Trust" means the Trust created by agreement between the Employers
and the Trustee, as from time to time amended.
(yy) "Trust Agreement" means the agreement between the Employers and the
Trustee referred to in section 8.8.
(zz) "Trustee" means the Trustee hereinafter provided for in section 8.8
or any successor Trustee.
(aaa) "Valuation Date" means the last day of each Accounting Period on
which the New York Stock Exchange shall be open for business.
(bbb) "Vesting Requirement" means the requirement for vesting described
in section 5.2.
(ccc) "Voluntary Deduction" means an Employee's payroll deduction
allotments other than Salary Reduction allotments.
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<PAGE> 20
(ddd) "Voluntary Deduction Account" means an Employee's Voluntary
Deduction allotments, related Employer matching contributions, and
investment gains and losses therefrom.
(eee) "Years of Service" means year(s) of employment of an Employee by an
Employer or nonparticipating Affiliated Company as such term is
defined in section 3.5.
2.2 Construction. Unless the context clearly requires otherwise--
(a) the masculine pronoun whenever used shall include the feminine, the
singular shall include the plural, and vice versa, and
(b) headings of Articles and sections herein are included solely for
convenience, and if there is any conflict between such headings and
the text of the Plan, the text shall control.
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<PAGE> 21
Article III. Participation and Service
3.1 Eligibility Requirements.
(a) Each individual who was eligible to participate in the Plan
on December 31, 1988, in accordance with the terms of the Plan in
effect on said date shall continue to be eligible to participate,
subject to the provisions of this Plan. Each other Employee shall
become eligible to participate on the first day of the first
Accounting Period coincident with or next following the latest to
occur of--
(1) the date he is employed as an Eligible Employee,
(2) the date on which he completes at least one year
of eligibility service (as defined in section 3.1(b)), or
(3) the date on which he attains age 21;
provided he is employed as an Eligible Employee on such date.
(b) For purposes of this Article III, a year of eligibility
service shall mean the 12-month period beginning on the date of an
Employee's first Hour of Employment, or the 12-month period
beginning on an Employee's Anniversary Date during which he
completes at least 1,000 Hours of Employment.
3.2 Eligibility Upon Merger or Reemployment. Any Employee who is a
Participant in any plan which is merged into this Plan shall become a
Participant in this Plan immediately upon the effective date of the merger. Such
an Employee shall be eligible to actively participate in this Plan in accordance
with section 3.4.
If a Participant's employment is terminated and he is thereafter reemployed
before incurring a Break in Service Year, he shall be eligible again to actively
participate in the Plan commencing with the first day of the first Accounting
Period coincident with or next following his date of reemployment. In the event
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<PAGE> 22
such Participant does incur a Break in Service Year, he shall be eligible again
to actively participate in the Plan commencing with the first day of the first
Accounting Period coincident with or immediately preceding the day on which he
is reemployed after he has again satisfied the eligibility requirement of
section 3.1(a).
3.3 Collective Bargaining Agency. If any Employee shall become a
Participant in the Plan and shall thereafter be represented by a collective
bargaining agency pursuant to a collective bargaining agreement between his
Employer and the collective bargaining agency representing such Employee, he
shall nevertheless continue to be eligible to actively participate in the Plan
until such time as the terms and conditions of his employment are governed by a
collective bargaining agreement between his Employer and the collective
bargaining agency representing such Employee, but shall be eligible thereafter
only if such agreement shall expressly so provide.
If such an Employee becomes eligible to participate in the Michigan Consolidated
Gas Company Union Employees' Investment Plan or any successor plan, his entire
Plan Account shall be transferred to such plan and the Employee shall no longer
be eligible to participate in this Plan. Effective as of April 1, 1989, the
Participant's Plan Account shall be fully vested upon such transfer.
3.4 Applications. An Employee who is eligible to participate on the date
the Plan becomes effective with respect to his Employer may become a Participant
commencing with such effective date by filing a written application with his
Employer in the form prescribed by the Committee not later than 20 days after
such effective date. Thereafter, an Eligible Employee may become a Participant
by filing a written application with his Employer in the form prescribed by the
Committee at least 20 days prior to the date upon which his participation is to
commence.
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The Employee's application shall authorize the Employer to deduct allotments
from the Employee's Eligible Compensation in amounts specified by the Employee
pursuant to Article IV, and to have allotments made as a Salary Reduction
pursuant to Article IV. The application shall evidence the Employee's
acceptance of and agreement to all of the provisions of the Plan.
3.5 Years of Service. An Employee shall be credited for Years of Service
for his period of employment with the Employer and each nonparticipating
Affiliated Company, determined as follows:
(a) An Employee shall receive credit, for purposes of vesting,
for all Years of Service. An Employee shall have one "Year of
Service" for each 12-month period beginning on the date of the
Employee's first Hour of Employment and on each subsequent
Anniversary Date, during which the Employee completes 1,000 or more
Hours of Employment.
(b) Years of Service shall not be interrupted--
(1) by any transfer of employment of an Employee between Affiliated
Companies regardless of whether the Affiliated Company is an
Employer hereunder; or
(2) during such period as an Employee is receiving credit for Hours
of Employment under section 3.7.
(c) If an Employee is reemployed following a Break in Service Year, he
shall be considered a new Employee for purposes of the Plan, except--
(1) If prior to such Break in Service Year he had a vested interest
in his ESOP Account, Employer Salary Reduction Account, or
Employer Voluntary Deduction Account, Years of Service he had
prior to the Break in Service Year shall be reinstated after
such Employee completes a Year of Service after such Break in
Service Year.
(2) If section 3.5(c)(1) is not applicable, and if the Employee's
number of consecutive Break in Service
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<PAGE> 24
Years does not equal or exceed the greater of five or the
number of Years of Service he had before incurring a Break in
Service Year, the Years of Service he had prior to such Break
in Service Years shall be reinstated after such Employee
completes a Year of Service after such Break in Service
Years.
(d) Notwithstanding the foregoing provisions, an Employee's Years
of Service shall exclude any Years of Service completed before an
Employee attains age 18.
3.6 Break in Service Year. "Break in Service Year" shall mean a 12-month
period beginning on an Employee's Anniversary Date during which the Employee
has not completed more than 500 Hours of Employment (as defined in section
3.7). Notwithstanding the foregoing, the following periods shall not be deemed
to be Break in Service Years:
(a) If a Participant retires on his Disability Retirement Date,
thereafter ceases to be totally and permanently disabled, and
returns to the employ of an Employer, the period between his
Disability Retirement Date and the date as of which he ceases to be
totally and permanently disabled.
(b) If a Participant commences receiving benefits under a
long-term disability benefit program maintained by an Employer and
thereafter ceases to receive benefits under such program and returns
to the employ of the Employer, the period during which he was
receiving benefits under such program.
If an Employee incurs a Break in Service Year and prior to such Break in
Service Year has not completed five Years of Service, his Years of Service
completed prior to such a Break in Service Year shall be disregarded unless he
completes a Year of Service after such Break in Service Year and before the
total of such Break in Service Year and any ensuing consecutive Break in
Service Years equals the greater of five or the number of his
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<PAGE> 25
Years of Service (as defined in section 3.5 but without excluding Years of
Service completed prior to attaining age 18) prior to such Break in Service
Year.
3.7 Hours of Employment. "Hours of Employment" shall mean, for any
individual performing or who has performed services for one or more Employers
or nonparticipating Affiliated Companies, the sum of the following:
(a) All hours for which the individual is directly or indirectly
paid or entitled to payment by an Employer or nonparticipating
Affiliated Company for the performance of duties. These hours shall
be credited to the individual for the computation period or periods
in which the duties are performed.
(b) Except as provided in section 3.7(e) below, all hours for
which the individual is directly or indirectly paid or entitled to
payment by an Employer or nonparticipating Affiliated Company for
reasons (such as vacation, holiday, sickness, incapacity, layoff,
jury duty, leave of absence, Military Service, or disability) other
than for the performance of duties. These hours shall be credited
to the individual for the computation period or periods in which the
period during which no duties are performed occurs, beginning with
the first unit of time to which the payment relates.
(c) All hours for which back pay, irrespective of mitigation of
damages, has been awarded, agreed to, or paid by an Employer or
nonparticipating Affiliated Company, with no duplication of credit
for hours. These hours shall be credited to the individual for the
computation period or periods to which the award or agreement
pertains rather than the computation period in which the award,
agreement, or payment is made.
(d) Except as provided in section 3.7(e) below, eight Hours of
Employment per day for each working day that an individual is absent
from work without pay for an
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approved leave of absence, voluntary time, sick time, disciplinary
leave, or Military Service if the individual returns to the employ
of an Employer or nonparticipating Affiliated Company within 90
days after the end of such period. These hours shall be credited
to the individual for the computation period or periods in which
the period during which no duties are performed occurs, beginning
with the first such period.
(e) Eight Hours of Employment per day for each working day that
an individual is absent from work with or without pay because of
pregnancy of the individual, birth of a child to the individual,
placement of a child with the individual in connection with the
adoption of such child by such individual, or caring for such child
for a period beginning immediately following such birth or
placement. The Committee may, in its discretion, request such
information from the individual as the Committee shall deem relevant
in order to verify that an absence is for the reasons described in
this subsection (e).
Notwithstanding the foregoing, no more than 501 Hours of Employment
shall be credited under this subsection (e) on account of any such
pregnancy or placement if the individual does not return to the
employ of an Employer or participating Affiliated Company within 90
days after the end of the period approved for such absence. Hours
credited under this subsection (e) shall be credited to the
individual only in the year in which the absence begins if the
crediting is necessary to prevent a Break in Service Year for such
year; or, in any other case, in the immediately following year;
provided, however, that if more than 501 hours are credited under
this subsection (e) on account of any
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such pregnancy or placement, the excess over 501 hours shall be
credited to the period or periods to which it relates.
(f) Notwithstanding the foregoing, any individual whose
compensation is not computed on the basis of hours worked and who
normally performs services for any Employer or nonparticipating
Affiliated Company during its entire work day shall be credited with
ten Hours of Employment for each working day in any period during
which he is entitled to receive compensation from the Employer or
nonparticipating Affiliated Company for the performance of services
pursuant to section 3.7(a) and eight Hours of Employment for each
working day in any period during which such individual performed no
duties but is entitled to Hours of Employment under section 3.7(b)
or (c).
Hours of Employment credited under this section 3.7 shall comply with the rules
set forth in 29 C.F.R. section 2530.200b-2(b) and (c), which rules are hereby
incorporated by reference.
3.8 Employment by Related Entities. If an Employee's employer is a
nonparticipating Affiliated Company, any period in which the Employee is
employed by the nonparticipating Affiliated Company, while such membership or
common control as defined in section 2.1(c) exists, shall be taken into account
for purposes of satisfying the eligibility service requirement set forth in
section 3.1 and measuring such Employee's Years of Service to the same extent
it would have been had such period of employment been employment by an
Employer.
3.9 Leased Employees. A person who is not an Employee of an Employer or
nonparticipating Affiliated Company and who performs services for an Employer
or a nonparticipating Affiliated Company pursuant to an agreement between the
Employer or nonparticipating Affiliated Company and a leasing organization
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shall be considered a "leased employee" if such person performed the services
on a substantially full-time basis for a year and the services are of a type
historically performed by employees. A person who is considered a "leased
employee" of an Employer or nonparticipating Affiliated Company shall not be
considered an Employee for purposes of participating in this Plan or receiving
any contribution or benefit under this Plan. A leased employee shall be
excluded from this Plan regardless of whether the leased employee participates
in any plan maintained by the leasing organization. However, if a leased
employee participates in the Plan as a result of subsequent employment with an
Employer, his previous service as a leased employee shall be counted in
calculating his Years of Service. Notwithstanding the preceding provisions of
this section 3.9, a leased employee will be included as an Employee for
purposes of applying the requirements described in Code section 414(n)(3) and
for purposes of determining the number and identity of Highly Compensated
Employees.
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Article IV. Contributions
4.1 Employee Allotments.
(a) Amount of Allotments. Each Participant may make a regular
allotment to the Plan. Such allotment shall not be less than 1
percent nor more than--
(1) Prior to April 1, 1992, 12 percent of his
Compensation Rate, in incremental percentages of
1 percent;
(2) On and after April 1, 1992 and prior to
September 1, 1993, 14 percent of his Compensation Rate, in
incremental percentages of 1 percent, or
(3) On and after September 1, 1993, 15 percent of his
Compensation Rate, in incremental percentages of 1 percent.
Allotments will be effected by Voluntary Deductions, Salary
Reductions, or any combination thereof, as elected by the
Participant. The amount of such Voluntary Deductions or Salary
Reductions shall be transferred to the Trustee after each pay
period; provided, however, that a Participant's Salary Reduction
allotments shall not exceed
(A) Prior to October 1, 1990, 6 percent of the Participant's
Compensation Rate, subject to adjustment pursuant to section
5.1 of the Plan as in effect on April 1, 1989;
(B) On and after October 1, 1990 and prior to April 1, 1992, 6
percent of the Participant's Compensation Rate;
(C) On and after April 1, 1992 and prior to September 1, 1993, 8
percent of the Participant's Compensation Rate; or
(D) On and after September 1, 1993, 8 percent of the
Participant's Compensation Rate, if the Participant is a
Highly Compensated Employee, or
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9 percent of the Participant's Compensation Rate if the
Participant is not a Highly Compensated Employee;
and further provided, however, that Voluntary Deductions and Salary
Reductions shall be limited as provided in sections 4.8 and 4.11.
Notwithstanding the foregoing, the Committee may, in its sole
discretion, (1) reduce the Salary Reduction allotments permitted by
a group of Participants if, in the opinion of the Committee, it is
advisable to do so in order to satisfy the requirements of section
4.8 or 4.13; or (2) reduce the Voluntary Deduction allotments
permitted by a group of Participants if, in the opinion of the
Committee, it is advisable to do so in order to satisfy the
requirements of section 4.11 or 4.13.
(b) Changes in Allotments. The allotment of Voluntary Deductions
and/or Salary Reductions designated by a Participant shall continue
in effect, notwithstanding any change in his Compensation Rate,
until the Participant shall change such allotment; provided,
however, that such allotment shall in no event be less than 1
percent, nor more than--
(1) 12 percent of his Compensation Rate, in incremental
percentages of 1 percent, prior to April 1, 1992, or
(2) effective April 1, 1992, 14 percent, in incremental
percentages of 1 percent, of the Participant's prevailing
Compensation Rate, or
(3) effective September 1, 1993, 15 percent, in incremental
percentages of 1 percent of the Participant's prevailing
Compensation Rate.
A Participant may change his allotment--
(A) prior to August 1, 1991, as of the first day of any
Accounting Period, or
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(B) on or after August 1, 1991, but prior to December 1,
1993, as of the first day of any calendar quarter, or
(C) on or after December 1, 1993, as of the first day of
any month,
by giving written directions to his Employer in the form prescribed
by the Committee at least 20 days prior to the effective date of
the change. Prior to August 1, 1991, such changes may be made only
once in each calendar year except that any time a Participant's
Compensation Rate is changed he shall have the right to change his
allotment as of the first day of any Accounting Period commencing
not more than 60 days thereafter by giving 20 days' written notice
to his Employer in the form prescribed by the Committee.
(c) Voluntary Suspension of Allotments. Any Participant may, by
giving 20 days' written notice to his Employer in the form
prescribed by the Committee, suspend his allotment of Voluntary
Deductions and/or Salary Reductions, effective as of the end of any
Accounting Period, either indefinitely or for any specified period
provided that in either case the suspension shall be for at least 12
full Accounting Periods. In case of any such suspension of any
allotments, the Employer's contributions on behalf of the
Participant shall be automatically suspended for a like period.
(d) Automatic Suspension of Allotments. A Participant's allotments
of Voluntary Deductions and Salary Reductions and the Employer's
contributions on behalf of the Participant shall be suspended
automatically for any period during which the Participant
is absent without pay under any of the circumstances described in
section 3.7(c), (d), or (e), and such an absence shall not
constitute termination of service for purposes of any of the
provisions of Article IX. A Participant may, by giving 20 days'
written notice to his Employer in the form prescribed by the
Committee, suspend his
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allotment of Voluntary Deductions and/or Salary Reductions for any
period during which he is absent from work under any of the
circumstances described in section 3.7(b) or (c) and receiving
Compensation at a reduced Compensation Rate, in which case the
Employer contributions on behalf of such Participant shall be
automatically suspended for a like period.
4.2 Employer Savings Plan Contributions. Each Employer shall contribute,
to the Salary Reduction Account of each of its participating Employees, an
amount equal to 25 percent of the Salary Reduction allotment of such
Participant; provided, however, that Salary Reduction allotments in excess of 4
percent of the Participant's Compensation Rate shall be disregarded. In cases
where the Participant's Salary Reduction allotment is less than 4 percent of
his Compensation Rate, the Employer shall contribute to the Voluntary Deduction
Account of such participating Employee an amount equal to 25 percent of the
smaller of (a) his Voluntary Deduction allotment, or (b) 4 percent of his
Compensation Rate reduced by his Salary Reduction allotment.
Effective as of the first pay period following the date on which a Participant
has completed ten Years of Service, 5 percent shall be substituted for 4
percent in each place that it appears in the preceding paragraph.
For periods beginning on or after September 1, 1993, effective as of the first
pay period following the date on which a Participant has completed 25 Years of
Service or as of September 1, 1993, if later, 6 percent shall be substituted
for 4 percent in each place that it appears in the first paragraph of this
section 4.2.
Notwithstanding the foregoing, the Committee, in its sole discretion, may
reduce the Employer contribution on behalf of a
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group of Participants if, in the opinion of the Committee, it is advisable to
do so in order to satisfy the contribution percentage test specified in section
4.11.
4.3 Employer ESOP Contributions.
(a) Basic ESOP Contribution. Effective on and after
April 1, 1989, each Employer shall contribute to the ESOP Account
of each of its participating Employees each pay period an amount
equal to the difference, if any, between (1) and (2) below:
(1) 75 percent of the sum of the Salary Reduction and
Voluntary Deduction allotments of such Participant for such
pay period; provided, however, that Salary Reduction and
Voluntary Deduction allotments shall be disregarded to the
extent that they exceed, in the aggregate, 4 percent of such
Participant Compensation Rate. Effective as of the dates
specified in section 4.2--
(A) the 4 percent shall be increased to 5 percent for
Participants who have completed ten Years of Service, and
(B) for periods beginning on or after September 1, 1993, the
4 percent shall be increased to 6 percent for
Participants who have completed 25 Years of Service.
(2) The value of the shares of MCN Stock allocated to the ESOP
Account of such Participant pursuant to section 14.4(d) for
such pay period. The value of shares allocated under section
14.4(d) shall be the market value thereof as of the last day
of the pay period for which the shares are allocated, with
the market value to be determined by the Committee in a
nondiscriminatory manner.
(b) Contribution of Principal, Interest, or Other Payments. Each
Employer also shall contribute to the ESOP its proportionate share
of any additional amount necessary to make principal, interest, or
other payments required
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by the terms of any loan made to the ESOP in accordance with
section 14.4. Each Employer's proportionate share shall be equal
to the proportion that its contributions under section 4.3(a) bears
to the total contributions under section 4.3(a).
Effective November 1, 1989, each Employer also may make additional
contributions to make principal, interest, or other payments in
accordance with the terms of any loan made to the ESOP in
accordance with section 14.4.
(c) Dividend-Related Contributions. Effective November 1, 1989,
each Employer also shall contribute to the ESOP Account of each of
its participating Employees such amounts as may be necessary to
acquire for the ESOP Account of such Participant shares of MCN Stock
having a fair market value equal to the amount of any dividends on
shares of MCN Stock allocated to the ESOP Account of such
Participant that were used to repay an ESOP loan in accordance with
section 14.4(c). Such contributions shall be made on, or as soon as
practicable after, each date on which dividends on allocated shares
of MCN Stock are used to repay a loan. In no event shall the shares
of MCN Stock acquired with contributions under this subsection (c)
be allocated to the ESOP Account of such Participant later than the
last day of the Plan Year during which (but for the use of the
dividend to repay the loan) the dividend giving rise to such
contribution would have been allocated to the ESOP Account of such
Participant.
4.4 Additional Employer Contributions. Effective January 14, 1991, if a
Participant receiving payments (based upon 40 or more hours per week) under the
terms of any Workers' Compensation law does not have sufficient compensation to
make Salary Reduction or Voluntary Deduction allotments in an amount
equal to the amount of the Participant's allotments as in effect during the
Participant's last period of active service, then the
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Participant's Employer shall contribute on behalf of the Participant such
additional amount as would have been contributed by the Employer under sections
4.2 and 4.3 on behalf of such Participant had the Participant's allotments been
continued at the rate in effect during the Participant's last period of active
service. Additional contributions under this section 4.4 shall be treated for
accounting purposes as if made under section 4.2 or 4.3, as applicable, except
such contributions shall not be considered when computing the Contribution
Percentage (as defined in section 2.1(n).
4.5 Rollover Contributions.
(a) From Qualified Plan. If an Employee receives, either before
or after becoming an Employee--
(1) prior to January 1, 1993, a qualified total distribution
(within the meaning of Code section 402(a)(5)(E)) or,
(2) effective January 1, 1993, an eligible rollover
distribution (within the meaning of Code section 402(c)(4))
from an employees' trust described in Code section 401(a) which is
exempt from tax under Code section 501(a) or from a qualified
annuity plan described in Code section 403(a) (other than an
employees' trust or an annuity plan under which the Employee was an
Employee within the meaning of Code section 401(c)(1) at the time
contributions were made on his behalf under such trust or annuity
plan), then such Employee may transfer and deliver to the
Committee, to be credited to his Employee Salary Reduction Account
as if it were a Salary Reduction allotment, an amount which does
not exceed the amount of such qualified total distribution or
eligible rollover distribution (including any proceeds from the
sale of any property received as a part of such qualified total
distribution or eligible
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<PAGE> 36
rollover distribution) less, in the case of a qualified total
distribution, the amount considered contributed to such trust or
annuity plan by the Employee.
(b) From Individual Retirement Account or Annuity. If--
(1) an Employee receives, either before or after
becoming an Employee, a distribution or distributions from an
individual retirement account or individual retirement annuity
(within the meaning of Code section 408) or from a retirement
bond (within the meaning of Code section 409);
(2) no amount in such account, no part of the value of such
annuity, or no part of the value of the proceeds of such bond
is attributable to any source other than--
(A) prior to January 1, 1993, a qualified total distribution
(within the meaning of Code section 402(a)(5)(E)), or
(B) effective January 1, 1993, an eligible rollover
distribution (within the meaning of Code section
402(c)(4))
from an employees' trust described in Code section 401(a)
which is exempt from tax under Code section 501(a) or annuity
plan described in Code section 403(a) (other than an
employees' trust or an annuity plan under which the Employee
was an Employee within the meaning of Code section 401(c) at
the time contributions were made on his behalf under such
trust or annuity plan) and any earnings on such a qualified
total distribution or eligible rollover distribution; and
(3) for rollovers prior to January 1, 1993, the amount received
represents the entire amount in such account, the entire
value of such annuity or the entire value of such bond,
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<PAGE> 37
then such Employee may transfer and deliver to the Committee, to be
credited to his Salary Reduction Account as if it were a Salary
Reduction allotment, such distribution or distributions.
(c) Timing and Substantiation. Any transfer and delivery
pursuant to this section 4.5 shall be delivered by the Employee to
the Committee and by the Committee to the Trustee on or before the
sixtieth day after the day on which the Employee receives the
distribution or on or before such later date as may be prescribed by
law. Any such transfer and delivery must be accompanied by--
(1) a statement of the Employee that to the best of his knowledge
the amount so transferred meets the conditions specified in
this section 4.5, and
(2) a copy of such documents as may have been received by the
Employee advising him of the amount and the character of such
distribution.
Notwithstanding the foregoing, the Committee shall not accept a
rollover contribution if, in its judgment, such acceptance would
cause the Plan to violate any provision of the Code or Regulations.
(d) Deemed Allotment for Certain Purposes. A rollover contribution
pursuant to this section 4.5 shall be deemed to be an allotment of
a Participant for purposes of the value of a Participant's fund
account as provided in section 8.2 and in determining the amount
distributable to a Participant, the provisions of Article IX that
are applicable to Salary Reduction allotments will be used,
pursuant to section 9.1, but not for purposes of determining the
amount of the contribution to be made on behalf of a Participant
by his Employer pursuant to section 4.2, 4.3, or 4.4 or
calculating the Annual Addition of such Participant.
(e) Deemed Participation for Certain Purposes. If the amount of
rollover contribution is made by an Employee prior to his becoming a
Participant, such Employee shall, until such time as he becomes a
Participant, be
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deemed to be a Participant for all purposes of the Plan except for
purposes of any determination of when he becomes a Participant
pursuant to section 3.1 and the making of allotments pursuant to
section 4.1(a).
4.6 Transfers from the MichCon Investment and Stock Ownership Plan.
Effective April 1, 1989, if an Employee who previously had participated in the
MichCon Investment and Stock Ownership Plan (the "Investment Plan") becomes a
Participant in the Plan and the Participant's plan account in the Investment
Plan is transferred to the Plan in accordance with section 3.3 of the
Investment Plan, the Plan shall accept such transfer. Amounts transferred
shall be 100 percent vested at all times and shall be treated for all purposes
in the same manner as they were treated under the Investment Plan; that is:
(a) Amounts attributable to Employer salary reduction allotments
under the Investment Plan shall be allocated to the Participant's
Employee Salary Reduction Account;
(b) Amounts attributable to voluntary deduction allotments under
the Investment Plan shall be allocated to the Participant's Employee
Voluntary Deduction Account;
(c) Amounts attributable to Employer Investment Plan
contributions shall be allocated to the Participant's Employer
Salary Reduction Account or Employer Voluntary Deduction Account, as
the case may be; and
(d) Amounts transferred from the ESOP Account of the Participant
in the Investment Plan shall be allocated to the Participant's ESOP
Account.
Notwithstanding the foregoing, amounts transferred shall not be used for
purposes of determining the amount of the contribution to be made on behalf of
a Participant by the Employer pursuant to section 4.2, 4.3, or 4.4, or
calculating the Actual Deferral Percentage, Contribution Percentage, or Annual
Addition of the Participant.
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4.7 Transfers from the MichCon Employee Stock Ownership Plan.
(a) In General. The Company has previously maintained the MichCon
Employee Stock Ownership Plan (the "Tax Credit ESOP"), which was a
plan separate and distinct from the MichCon Employee Stock Ownership
Plan for Non-Union Employees which constitutes a part of the Plan.
The Company terminated the Tax Credit ESOP and, upon such
termination, a portion of the assets of the Tax Credit ESOP were
transferred to this Plan. The purpose of this section 4.7, which is
effective as of January 25, 1991, is to set forth specific
provisions applicable to the assets so transferred. In the event of
any conflict between any other provision of the Plan and this
section 4.7 the terms of this section 4.7 shall govern with respect
to amounts transferred from the Tax Credit ESOP, adjusted for
earnings and losses thereon.
(b) Allocation to ESOP Account. All amounts transferred from the
Tax Credit ESOP attributable to Plan Years 1975 through 1982 on
behalf of any Participant or former Participant who has an account
balance in this Plan shall be allocated to the ESOP Account of such
Participant or former Participant. The amounts transferred to the
ESOP Account of a Participant or former Participant, adjusted for
any earnings or losses thereon, shall, subject to the special rules
set forth in this section 4.7, be treated in the same manner as
other assets of the ESOP Accounts for all purposes of this Plan,
including, but not limited to, distributions, loans, investments,
and diversification of investments. The amounts transferred shall
not be deemed to constitute an Employee Allotment or an Employer
Contribution for discrimination testing or any other purpose.
(c) Allocation to MCN Salary Reduction Account. All amounts
transferred from the Tax Credit ESOP
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attributable to Plan Years 1983 through 1986 on behalf of any
Participant or former Participant who has an account balance in
this Plan shall be allocated to the Salary Reduction Account of
such Participant or former Participant. The amounts transferred to
the Salary Reduction Account of a Participant or former
Participant, adjusted for any earnings or losses thereon, shall,
subject to the special rules set forth in this section 4.7, be
treated in the same manner as other assets of the Salary Reduction
Accounts for all purposes of this Plan, including, but not limited
to, distributions, loans, investments, and diversification of
investments. The amounts transferred shall not be deemed to
constitute an Employee Allotment or an Employer Contribution for
discrimination testing or any other purpose.
(d) Vesting. All amounts transferred from the Tax Credit ESOP on
behalf of any Participant or former Participant, adjusted for any
earnings or losses thereon, shall at all times be fully vested and
nonforfeitable.
4.8 Limitations on Salary Reduction Allotments.
(a) Dollar Limitation. In no event shall any Employer make
Salary Reduction allotments for any calendar year, with respect to
any Participant in excess of $7,627 (for 1989) (as adjusted by the
Secretary of the Treasury to reflect increases in the cost of
living). This limit shall be applied by aggregating all plans and
arrangements maintained by the Company and all Affiliated Companies
that provide for elective deferrals (as defined in Code section
402(g)).
(b) ADP Test. In addition to the limitations set forth elsewhere
in this Plan, one of the following tests must be satisfied for the
Plan Year:
(1) The Average Actual Deferral Percentage for Highly
Compensated Employees who are eligible to
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participate for the Plan Year shall not exceed the Average
Actual Deferral Percentage for Nonhighly Compensated
Employees who are eligible to participate for the Plan Year
multiplied by 1.25; or
(2) The Average Actual Deferral Percentage for Highly
Compensated Employees who are eligible to participate for the
Plan Year shall not exceed the Average Actual Deferral
Percentage for Nonhighly Compensated Employees who are
eligible to participate for the Plan Year multiplied by two,
provided that the Average Actual Deferral Percentage for such
Highly Compensated Employees does not exceed the Average
Actual Deferral Percentage for such Nonhighly Compensated
Employees by more than two percentage points or such lesser
amount as the Secretary of Treasury shall prescribe in
accordance with Code section 401(m)(9) to prevent the multiple
use of this alternative limitation with respect to any Highly
Compensated Employee. Any such restriction on the multiple
use of the alternative limit shall be implemented pursuant to
uniform rules adopted by the Committee.
(c) Determination of Actual Deferral Percentages. For purposes
of the Actual Deferral Percentage test described in this section
4.8--
(1) An Elective Deferral will be taken into account for a Plan
Year only if it relates to Compensation that either would
have been received by the Eligible Employee in the Plan
Year (but for the deferral election) or is attributable to
services performed by the Eligible Employee in the Plan Year
and would have been received by the Eligible Employee within
2 1/2 months after the close of the Plan Year (but for the
deferral election);
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(2) An Elective Deferral will be taken into account for a Plan
Year only if it is allocated to the Eligible Employee as of a
date within that Plan Year. For this purpose, an Elective
Deferral is considered allocated as of a date within a Plan
Year if the allocation is not contingent on participation or
performance of services after such date and the Elective
Deferral is actually paid to the Trust no later than 12
months after the Plan Year to which the contribution relates;
(3) The Actual Deferral Percentage for an Employee who is eligible
to participate shall be computed by treating any Excess
Deferral (as defined in section 4.9) as an Elective Deferral,
except to the extent provided by Regulations;
(4) The Actual Deferral Percentage for any Employee who is a
participant under two or more section 401(k) plans or
arrangements that are maintained by the Company or an
Affiliated Company shall be determined as if all such Elective
Deferrals were made under a single arrangement; provided,
however, that no Elective Deferrals under an employee stock
ownership plan (as defined in Code section 4975(e)(7)) shall
be taken into account for purposes of this section 4.8;
(5) In the event that two or more plans which include
cash-or-deferred arrangements are considered as one plan for
purposes of Code section 401(a)(4) or 410(b), the
cash-or-deferred arrangements included in such plans shall be
treated as one arrangement for purposes of this section 4.8;
(6) For purposes of determining the Actual Deferral Percentage of
an Employee who is a 5-percent owner of the Company or one of
the ten Highly Compensated Employees paid the most
Compensation during the year, the Elective Deferrals and
Compensation of such Employee shall include the
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Elective Deferrals and Compensation of Family Members, and
such Family Members shall be disregarded in determining the
Actual Deferral Percentage for Employees who are Nonhighly
Compensated Employees; and
(7) The determination and treatment of the Elective
Deferrals and Actual Deferral Percentage of any Employee shall
satisfy such other requirements as may be prescribed by the
Secretary of Treasury.
4.9 Distribution of Excess Deferrals. "Excess Deferrals" means excess
deferrals as defined under Code section 402(g). Notwithstanding any other
provision of the Plan, the Excess Deferral, if any, of each Employee with
respect to a calendar year plus any income and minus any loss allocable thereto
shall be distributed no later than April 15 of the following calendar year to
each Employee who claims an Excess Deferral for the preceding calendar year.
Excess Deferrals shall be treated as Annual Additions under the Plan.
The Employee's claim shall be in writing; shall be submitted to the Committee
no later than March 1; shall specify the Employee's Excess Deferral for the
preceding calendar year; and shall be accompanied by the Employee's written
statement that if such amount is not distributed, such Excess Deferral, when
added to amounts deferred under other plans or arrangements described in Code
section 401(k), 408(k), or 403(b), exceeds the limit imposed on the Employee by
Code section 402(g) for the year in which the deferral occurred.
Notwithstanding the preceding paragraph, the Employer may notify the Plan on
behalf of the individual of Excess Deferrals to the extent that the individual
has Excess Deferrals for the calendar year calculated by taking into account
only elective deferrals under this Plan and other plans of the Company and any
Affiliated Company.
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The Excess Deferral distributed to an Employee with respect to a calendar year
shall be adjusted for any income or loss thereon for such calendar year and for
the period between the end of such calendar year and the date of distribution.
The income or loss allocable to such calendar year shall be determined by
multiplying the income or loss for such calendar year allocable to the
Employee's Salary Reduction Account by a fraction, the numerator of which is
the Excess Deferral of the Employee for such calendar year and the denominator
of which is the Employee's Salary Reduction Account balance on the last day of
such calendar year. The income or loss allocable to the period between the end
of such calendar year and the date of distribution shall be equal to 10 percent
of the income or loss allocable to the Excess Deferral for the preceding
calendar year multiplied by the number of calendar months that have elapsed
from the end of the preceding calendar year to the date of distribution. A
distribution occurring on or before the fifteenth day of the month shall be
treated as having been made on the last day of the preceding month and a
distribution occurring after such fifteenth day shall be treated as having been
made on the first day of the following month.
In the event that an Employee's Salary Reduction allotments are distributed to
such Employee under this section 4.9, any Employer contributions attributable
thereto plus any income and minus any loss allocable thereto shall be
forfeited.
4.10 Distribution or Recharacterization of Excess Contributions.
(a) Determination of Excess Contributions. "Excess
Contributions" means, with respect to any Plan Year,
the excess of--
(1) the aggregate amount of Elective Deferrals
actually paid over to the Trust on behalf of
Highly Compensated Employees for such Plan Year, over
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(2) the maximum amount of such Elective Deferrals
permitted under the limitations of section 4.8(b), determined
by reducing Elective Deferrals as follows:
(A) First, the Actual Deferral Percentage (as defined in
section 2.1(b)) of the Highly Compensated Employee with
the highest Actual Deferral Percentage is reduced to
the extent necessary to satisfy the test described in
section 4.8(b) or to cause such percentage to equal the
Actual Deferral Percentage of the Highly Compensated
Employee with the next highest Actual Deferral
Percentage.
(B) Second, this process is repeated until the test
described in section 4.8(b) is satisfied.
Excess Contributions shall be treated as Annual Additions under the
Plan.
For purposes of this section 4.10, to the extent permitted by the
Code, the Excess Contributions shall be reduced by the amount of
any Excess Deferrals included in such Excess Contributions and
distributed to the Employee pursuant to section 4.9.
(b) Distribution or Recharacterization. Notwithstanding any
other provision of the Plan, either--
(1) Excess Contributions with respect to a calendar
year plus any income and minus any loss allocable thereto
shall be distributed no later than the last day of the
following calendar year to Employees on whose behalf such
Excess Contributions were made for the preceding calendar
year; or
(2) at the election of the Employee and to the extent
permitted by the Code, the Excess Contributions
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shall be treated as distributed to the Employee and then
contributed by the Employee to the Plan as a Voluntary
Deduction allotment.
(c) Adjustment for Income and Loss. The Excess Contributions to
be distributed to an Employee with respect to a calendar year shall
be adjusted for any income or loss thereon for such calendar year
and for the period between the end of such calendar year and the
date of distribution. The income or loss allocable to such calendar
year shall be determined by multiplying the income or loss for such
calendar year allocable to the Employee's Salary Reduction Account
by a fraction, the numerator of which is the Excess Contributions
for such calendar year and the denominator of which is the
Employee's Salary Reduction Account balance on the last day of such
calendar year. The income or loss allocable to the period between
the end of such calendar year and the date of distribution shall be
equal to 10 percent of the income or loss allocable to the Excess
Contributions for the preceding calendar year multiplied by the
number of calendar months that have elapsed from the end of the
preceding calendar year to the date of distribution. A distribution
occurring on or before the fifteenth day of the month shall be
treated as having been made on the last day of the preceding month
and a distribution occurring after such fifteenth day shall be
treated as having been made on the first day of the following month.
In the event that an Employee's Salary Reduction allotments are
distributed to such Employee under this section 4.10, any Employer
contributions attributable thereto plus any income and minus any
loss allocable thereto shall be forfeited.
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4.11 Limitations on Voluntary Deduction Allotments and Employer
Contributions.
(a) ACP Test. In addition to the limitations set forth elsewhere
in this Plan, both the ESOP and the non-ESOP portions of the Plan,
tested separately, must satisfy one of the following tests for each
Plan Year:
(1) The Average Contribution Percentage for Highly Compensated
Employees who are eligible to participate for the Plan Year
shall not exceed the Average Contribution Percentage for
Nonhighly Compensated Employees who are eligible to
participate for the Plan Year multiplied by 1.25; or
(2) The Average Contribution Percentage for Highly Compensated
Employees who are eligible to participate for the Plan Year
shall not exceed the Average Contribution Percentage for
Nonhighly Compensated Employees who are eligible to
participate for the Plan Year multiplied by two, and the
Average Contribution Percentage for such Highly Compensated
Employees shall not exceed theAverage Contribution Percentage
for such Nonhighly Compensated Employees by more than two
percentage points or such lesser amount as the Secretary of
Treasury shall prescribe in accordance with Code section
401(m)(9) to prevent the multiple use of this alternative
limitation with respect to any Highly Compensated Employee.
Any such restriction on the multiple use of the alternative
limit shall be implemented pursuant to uniform rules adopted
by the Committee.
(b) Determination of Contribution Percentages. For purposes of
the Average Contribution Percentage test described in this section
4.11--
(1) the Contribution Percentage for any Employee who is a Highly
Compensated Employee for the Plan Year and who is eligible to
make Employee contributions
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or to receive Employer contributions or Elective Deferrals
allocated to his account under two or more plans described in
Code section 401(a) or arrangements described in Code section
401(k) that are maintained by the Company or an Affiliated
Company shall be determined as if all such contributions and
Elective Deferrals were made under a single plan; provided,
however, that contributions and Elective Deferrals under an
employee stock ownership plan (as defined in Code section
4975(e)(7)) shall not be combined with contributions and
Elective Deferrals under a plan that is not an employee stock
ownership plan.
(2) In the event that this Plan satisfies the requirements of
Code section 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the
requirements of Code section 410(b) only if aggregated with
either the ESOP or the non-ESOP portion of this Plan, then
this section 4.11 shall be applied by determining the
Contribution Percentages of Employees as if all such plans
were a single plan. The ESOP portion of the Plan will not be
used in conjunction with any other plan to satisfy the
requirements of Code section 401(a)(4) or 410(b).
(3) For purposes of the application of this section 4.11 to an
Employee who is a 5-percent owner of the Employer or one of
the ten Highly Compensated Employees paid the most
Compensation during the year, Voluntary Deduction allotments,
Employer contributions, and Compensation (and, if applicable,
Elective Deferrals under this Plan and Employee contributions,
Employer contributions, and Elective Deferrals under other
plans maintained by the Company or an Affiliated Company) of
such Participant shall include such allotments, contributions,
Elective Deferrals, and
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Compensation of Family Members, and such Family Members shall
be disregarded in determining the Contribution Percentage for
Employees who are Nonhighly Compensated Employees.
(4) The determination and treatment of the Contribution Percentage
of any Employee shall satisfy such other requirements as may
be prescribed by the Secretary of Treasury.
4.12 Disposition of Excess Aggregate Contributions.
(a) Determination of Excess Aggregate Contributions.
"Excess Aggregate Contributions" means, with respect to any Plan
Year, the excess of--
(1) the aggregate amount of Employer contributions
under section 4.2 or sections 4.3(a) and 14.4(d) (as
applicable) and Voluntary Deduction allotments (and any
Elective Deferrals taken in account in computing Contribution
Percentages under section 4.11(b)) actually made on behalf of
Highly Compensated Employees for such Plan Year, over
(2) the maximum amount of such contributions permitted under the
limitations of section 4.11(a), determined by reducing such
Employer contributions and Voluntary deduction allotments as
follows:
(A) First, the Contribution Percentage (as defined in
section 4.11(b)) of the Highly Compensated Employee with
the highest Contribution Percentage is reduced as
described in the following subsections of this section
to the extent necessary to satisfy the test described in
section 4.11(a) or to cause such percentage to equal the
Contribution Percentage of the Highly Compensated
Employee with the next highest Contribution Percentage.
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(B) Second, this process is repeated until the test
described in section 4.11(a) is satisfied.
Excess Aggregate Contributions shall be treated as Annual Additions
under the Plan.
For purposes of this section 4.12, the determination of an
Employee's Excess Aggregate Contributions shall be made after first
determining the Excess Deferral (as defined in section 4.9) and the
Excess Contribution (as defined in section 4.10(a)) of such
Employee.
(b) Distribution of Excess Voluntary Deduction Allotments. To
the extent necessary to satisfy the contribution percentage test
specified in section 4.11, Voluntary Deduction allotments with
respect to a calendar year plus any income and minus any loss
allocable thereto for such calendar year and for the period between
the end of such calendar year and the date of distribution shall be
distributed no later than the last day of the following calendar
year to the Highly Compensated Employees who made such Voluntary
Deduction allotments for the preceding calendar year.
The income or loss allocable to the Voluntary Deduction allotments
for such calendar year returned to the Employee pursuant to this
subsection shall be determined by multiplying the income or loss
for such calendar year allocable to the Employee's Post-1986
Voluntary Deduction Account by a fraction, the numerator of which
is such Voluntary Deduction allotments returned to the Employee and
the denominator of which is the Employee's Post-1986 Voluntary
Deduction Account balance on the last day of such calendar year.
The income or loss allocable to the period between the end of such
calendar year and the date of distribution
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shall be equal to 10 percent of the income or loss allocable to the
Voluntary Deduction allotments for the preceding calendar year
returned to the Employee multiplied by the number of calendar
months that have elapsed from the end of the preceding calendar
year to the date of distribution.
A distribution occurring on or before the fifteenth day of the
month shall be treated as having been made on the last day of the
preceding month and a distribution occurring after such fifteenth
day shall be treated as having been made on the first day of the
following month.
(c) Distribution of Excess Elective Deferrals Taken into Account.
If, after returning all Voluntary Deduction allotments made by
Highly Compensated Employees for the preceding calendar year, the
contribution percentage test is still not satisfied, then to the
extent necessary to satisfy such test, any Elective Deferrals taken
into account for such test plus any income and minus any loss
allocable thereto for such calendar year and for the period between
the end of such calendar year and the date of distribution shall be
distributed no later than the last day of the following calendar
year to the Highly Compensated Employees on whose behalf such
Elective Deferrals were made for the preceding calendar year.
The income or loss allocable to the Elective Deferrals for such
calendar year returned to the Employee pursuant to this subsection
shall be determined by multiplying the income or loss for such
calendar year allocable to the Employee's Salary Reduction Account
by a fraction, the numerator of which is such Elective
Deferrals returned to the Employee and the denominator of which is
the Employee's Salary Reduction Account balance on the last day of
such calendar year.
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The income or loss allocable to the period between the end of such
calendar year and the date of distribution shall be equal to 10
percent of the income or loss allocable to the Elective Deferrals
for the preceding calendar year returned to the Employee multiplied
by the number of calendar months that have elapsed from the end of
the preceding calendar year to the date of distribution.
A distribution occurring on or before the fifteenth day of the
month shall be treated as having been made on the last day of the
preceding month and a distribution occurring after such fifteenth
day shall be treated as having been made on the first day of the
following month.
(d) Distribution of Other Excess Employer Contributions. If,
after returning all Voluntary Deduction allotments and Elective
Deferrals included in the Excess Aggregate Contributions, the
contribution percentage test is still not satisfied, to the extent
necessary to satisfy such test, the Employer contributions with
respect to the calendar year made on behalf of Highly Compensated
Employees and shares of MCN Stock allocated to Highly Compensated
Employees under section 14.4(d) plus any income and minus any loss
allocable thereto for such calendar year and for the period between
the end of such calendar year and the date of distribution shall be
forfeited and used to reduce Employer contributions to the Plan.
The income or loss allocable to the Employer contributions under
section 4.2 forfeited for such calendar year pursuant to this
subsection shall be determined by multiplying the income or loss
for such calendar year allocable to the Employer's Voluntary
Deduction Account and the Employer's Salary Reduction Account by a
fraction, the numerator of which is such
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Employer contributions forfeited and the denominator of which is
the sum of the Employer's Voluntary Deduction Account balance and
the Employer's Salary Reduction Account balance, both determined on
the last day of such calendar year.
The income or loss allocable to the period between the end of such
calendar year and the date of distribution shall be equal to 10
percent of the income or loss allocable to the Employer
contributions under section 4.2 for the preceding calendar year
that were forfeited multiplied by the number of calendar months
that have elapsed from the end of the preceding calendar year to
the date of distribution.
The income or loss allocable to any Employer contribution under
section 4.3(a) or any shares of MCN Stock allocated to a Highly
Compensated Employee under section 14.4(d) shall be calculated in a
similar manner based upon the ESOP Account of the Participant.
A distribution occurring on or before the fifteenth day of the
month shall be treated as having been made on the last day of the
preceding month and a distribution occurring after such fifteenth
day shall be treated as having been made on the first day of the
following month.
4.13 Statutory (Code Section 415) Limitations on Allocations to Accounts.
Notwithstanding any other provision of the Plan, contributions under the Plan
shall be subject to the limitations set forth in Code section 415, which are
incorporated herein by reference. For purposes of applying such limitations to
contributions under the Plan, the rules set forth in this section 4.13 shall be
applicable.
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(a) Annual Addition. The term "Annual Addition" means the amount
allocated to a Participant's account during any calendar year that
constitutes--
(1) Employer contributions;
(2) Employee contributions;
(3) forfeitures; and
(4) amounts described in Code sections 415(l)(1) and
419A(d)(2).
The compensation limitation referred to in Code section
415(c)(1)(B) shall not apply to--
(A) any contribution for medical benefits (within the
meaning of Code section 419A(f)(2)) after separation
from service which is otherwise treated as an Annual
Addition, or
(B) any amount otherwise treated as an Annual Addition
under Code section 415(l)(1).
The Annual Addition for any calendar year before 1987 shall not be
recomputed to treat all Employee contributions as an Annual
Addition.
(b) Combined-Plan Limits. In the case of an individual who was a
Participant in the Plan on December 31, 1986, an amount shall be
subtracted from the numerator of the defined contribution fraction
(not exceeding such numerator) as prescribed by the Secretary of
Treasury so that the sum of the defined benefit plan fraction and
defined contribution plan fraction does not exceed 1.0 as of such
date.
Code section 415 shall be applied in such manner as to maximize the
permissible contributions and benefits thereunder and, in
determining the permissible amount of contributions under the Plan,
any grandfathering provisions heretofore or hereafter adopted
pursuant to Code section 415 shall be applicable. For purposes of
applying the limitations set forth in Code section
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415(e), the MichCon Retirement Plan shall be the primary plan and
any required reductions shall be made in the Annual Additions to
this Plan.
(c) Reduction of Annual Additions.
(1) If the limitations of Code section 415 would be exceeded
as a result of a reasonable error in estimating a
Participant's compensation or on account of such other limited
facts and circumstances as the Commissioner of Internal
Revenue finds justify the application of the rules hereinafter
set forth, the Annual Additions to the Participant's account
which exceed the applicable limitation shall be returned to
the Participant to the extent of all or any portion of any
Voluntary Deduction allotments which were made by him pursuant
to Article IV. Any net earnings and gains allocable to such
allotments for the period between the date of such allotment
and the date returned shall also be repaid to the Participant
but such return of net earnings and gains will not be deemed a
further reduction of any excess Annual Additions.
(2) If the Participant made no Voluntary Deduction allotments or
if, after returning all or part of such allotments in
accordance with the previous paragraph, his Annual Additions
still exceed the limitations of Code section 415, then such
excess shall be returned to the Participant to the extent of
all or any portion of any Salary Reduction allotments made on
behalf of such Participant, together with any net earnings
and gains on such allotments as hereinabove described.
(3) If, after returning all or any portion of Voluntary Deduction
and Salary Reduction allotments of a Participant in accordance
with the preceding paragraphs, his Annual Additions still
exceed the limitations of Code section 415, such
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portion of the Employer contributions under section 4.2 made
on behalf of the Participant as must be removed to meet the
limitations shall be allocated and reallocated to other
Participants' Savings Plan Accounts as contributions by the
Employer.
(4) If, after reallocating all or any portion of Employer
contributions under section 4.2, a Participant's Annual
Additions still exceed the limitation of Code section 415,
such portion of the Employer contributions under section
4.3(a) made on behalf of the Participant and shares of MCN
Stock allocated to his ESOP Account under section 14.4(d) as
must be removed to meet the limitations shall be allocated and
reallocated to other Participant's ESOP Accounts as
contributions by the Employer.
(5) If, as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's Compensation, or
under other limited facts and circumstances which the
Commissioner of the Internal Revenue Service finds justify the
availability of the following rules, any amount cannot be
allocated during the Plan Year in accordance with the
foregoing procedure without exceeding the applicable
limitations for one or more Participants, any remaining amount
shall be held unallocated in a special suspense account to be
allocated to Participants in the succeeding Plan Year or Plan
Years; provided, however, that (A) no Employer contributions
and no Voluntary Deduction allotments shall be made in such
succeeding Plan Year or Plan Years until such special suspense
account is exhausted by allocations and reallocations; (B) no
investment gains (or losses) or other income shall be
allocated to the special suspense account; and (C)
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the amounts in the special suspense account shall be
allocated as soon as possible without violating the
limitations of this section 4.13.
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Article V. Vesting in Accounts
5.1 Employee Salary Reduction Accounts, Employee Post-1986 Voluntary
Deduction Account, and Employee Pre-1987 Voluntary Deduction Account. The
Employee Salary Reduction Account, the Employee Post-1986 Voluntary Deduction
Account, and the Employee Pre-1987 Voluntary Deduction Account of each
Participant shall be fully vested and nonforfeitable at all times.
5.2 Employer Salary Reduction Account, Employer Voluntary Deduction
Account, and ESOP Account.
(a) In General. A Participant shall have a vested and
nonforfeitable interest in his Employer Salary Reduction Account,
Employer Voluntary Reduction Account, and ESOP Account after he has
completed at least five Years of Service. Prior to that time he
shall have no vested interest in such accounts.
(b) Accelerated Vesting. Notwithstanding section 5.2(a) above, a
Participant shall be fully vested and have a nonforfeitable interest
in his entire Employer Salary Reduction Account, Employer Voluntary
Deduction Account, and ESOP Account if--
(1) while still an Employee, he attains age 65;
(2) while still an Employee, he dies or suffers a total and
permanent disability as defined in section 2.1(o); or
(3) while he is an Employee, contributions to the Plan are
completely discontinued or the Plan is terminated, or the Plan
is partially terminated and such Participant is affected by
such partial termination.
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Article VI. Investment Provisions
6.1 Investment of Contributions and Allotments. Employer contributions
under sections 4.2, 4.3, and 4.4 and Employee allotments shall be invested in
accordance with the following provisions:
(a) The Employer contributions made pursuant to section 4.3(a)
and (c) shall be invested in the MCN Stock fund, which fund is
described in Article VII.
(b) Each Participant shall, by written direction to the Committee
in the form prescribed by the Committee, direct that the Employer
contributions made pursuant to section 4.2 and Employee allotments,
including those made as a Salary Reduction, be invested in such
funds offered by the Trustee as are selected by the Committee.
Employee allotments, including those made as a Salary Reduction, and the
portion of Employer contributions referenced in section 6.1(b) above, need not
be invested in the same fund. A Participant shall direct the manner in which
the total of such allotments and such Employer contributions referenced in
section 6.1(b) above shall be divided, equally or otherwise, among the funds.
6.2 Change of Investment Direction. Any investment direction given by a
Participant under section 6.1 shall be deemed to be a continuing direction
until changed by the Participant. A Participant may change any such direction
in accordance with such procedures as the Committee may from time to time
provide and apply in a nondiscriminatory manner.
6.3 Transfers Between Investment Funds. A Participant may direct that all
or any part of the value of his interest in any investment fund be transferred
to one or more of the other funds except that a Participant may not transfer
any amount from the
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MCN Stock fund to the extent that the balance remaining in such fund immediately
after the transfer would be less than the value of his ESOP Account.
A transfer of all or any part of the value of a Participant's interest in the
Fixed Income fund may from time to time be restricted by the terms of agreements
which govern the investment of assets in such fund, in which event the Committee
shall give notice of such restrictions to the Participants.
Prior to September 1, 1991, transfers between funds shall be effected only as of
the first day of any Accounting Period upon written directions to the Committee
in the form prescribed by the Committee given at least 20 days prior to the
effective date of such transfer. Prior to September 1, 1991, if a Participant
shall direct the transfer of all or any part of the value of his interest in a
fund, the Participant shall not be allowed to direct transfers to such fund for
a period of one year from the date of such transfer.
Prior to April 30, 1991, the procedures set forth above were equally applicable
to the Primark Corporation Stock fund. After that date, such fund ceased to
exist.
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Article VII. Investment Funds
7.1 Investment Funds. The Trustee shall establish, operate, and maintain
the following funds exclusively for the collective investment and reinvestment
of monies directed by the Committee to be invested in such funds on behalf of
Participants:
(a) MCN Stock Fund. A MCN Stock fund which shall be invested solely in
the common stock of MCN Corporation.
(b) Fixed Income Fund. A Fixed Income fund which shall be invested,
except as hereinafter provided, in accounts or, effective as of
December 18, 1992, in marketable fixed income securities or
accounts maintained by financial institutions which provide for
fixed or variable rates of interest for specified periods of time.
The terms of such agreements and the selection of such institutions
shall be determined by the Company. Investment advisors for
marketable fixed income securities may use fixed income futures and
options to reduce the effect of market volatility.
(c) Primark Corporation Stock Fund. Until April 30, 1991, a Primark
Corporation Stock Fund to be invested in accordance with the
terms of this paragraph (e). Until April 12, 1991, the assets of
the fund were and are to be invested solely in Primark Corporation
Stock. As soon as practicable after April 12, 1991, the shares of
Primark Corporation Stock in the fund shall be sold and the proceeds
of such sales shall be invested solely in any short-term fixed
income fund described in section 8.1. As of May 1, 1991 (or, if the
sale of all shares of Primark Corporation Stock is not completed by
April 30, 1991, then June 1, 1991), the assets of the fund shall be
transferred to the MCN Stock Fund and the Primark Corporation Stock
Fund shall cease to exist. Each Participant shall be entitled to
direct the transfer of all or any portion of the amounts so
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transferred to the MCN Stock Fund on his or her behalf to any other
fund or funds in accordance with, and subject to the limitations of
section 7.3.
(d) Other Funds. Such other funds offered by the Trustee as the
Committee may select.
Notwithstanding the foregoing, the Trustee or the investment manager, as the
case may be, shall invest such portion of the assets of the funds as the
Committee may deem necessary or appropriate to facilitate the administration of
such funds in any short-term fixed income fund as may be established under any
common, commingled, or collective trust for employee benefit plans established
and maintained by the Trustee.
7.2 Management of Investment Funds. Except as otherwise provided in
this Article VII, each fund shall be under the exclusive management and control
of the Trustee; the ownership of the assets and investments of the funds shall
be in the Trustee as such; and the Trustee shall have in respect of any and all
assets of the funds the same powers as if it were absolute owner thereof.
7.3 Voting of MCN Stock.
(a) Instructions from Participants. The Trustee shall vote, in
person or by proxy, shares of MCN Stock held by the Trustee in the
MCN Stock fund in accordance with instructions obtained from
Participants.
Each Participant shall be entitled to give voting instructions with
respect to the number of shares of such respective stock which
bears the same ratio to the total number of shares held by the
Trustee on the record date as the number of shares allocated to the
respective stock fund account of such Participant as of the
Valuation Date preceding such record date bears to
the total number of shares allocated to the respective stock fund
accounts of all Participants as of such
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Valuation Date, excluding shares allocated to the accounts of
persons whose accounts have been distributed prior to such record
date.
Written notice of any meeting of stockholders of MCN Corporation
and a request for voting instructions shall be given by the
Committee or the Trustee, at such time and in such manner as the
Committee shall determine, to each Participant entitled to give
instructions for the voting of stock at such meeting.
Shares with respect to which no voting instructions are received
from Participants and unallocated shares of the ESOP shall be voted
by the Trustee in the same proportion as shares for which voting
instructions are received from Participants. The Trustee shall
combine and vote fractional shares to the extent possible to
reflect the voting instructions of Participants.
(b) Confidentiality. The instructions received by the Trustee
from Participants shall be held by the Trustee in strict confidence
and shall not be divulged or released to any person, including
officers or employees of the Company or any Affiliated Company.
7.4 Tender Offers.
(a) Rights of Participants. Notwithstanding any other provisions
of this instrument, in the event an offer is made generally to the
shareholders of MCN Corporation to transfer all or a portion of the
common stock of MCN Corporation in return for valuable consideration
including, but not limited to, offers regulated by section 14(D) of
the Securities Exchange Act of 1934, as amended, each Participant
owning a beneficial interest in the MCN Stock fund shall have the
sole and exclusive right to decide if the common stock representing
his interest in such fund shall be tendered. Each Participant shall
have the right, to
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the extent the terms of the tender offer so permit, to direct the
withdrawal of such shares from tender. A Participant shall not be
limited as to the number of instructions to tender or withdraw from
tender which he can give; provided, however, the Participant shall
not have the right to give instructions to tender or withdraw from
tender after a reasonable time established by the Trustee pursuant
to section 7.4(c) below.
(b) Duties of the Committee. Within a reasonable time after the
commencement of a tender offer, the Committee shall provide to each
Participant having an ownership interest in the MCN Stock fund--
(1) the offer to purchase as distributed by the
offeror to the shareholders of MCN Corporation,
(2) a statement of the shares representing his interest in the
MCN Stock fund as of the most recent information available
from the Committee, and
(3) directions as to the means by which a Participant can give
confidential instructions to the Trustee with respect to the
tender. The Committee shall establish and pay for a means
such as, but not limited to, Datagram by which a Participant
can expeditiously deliver to the Trustee instructions with
respect to the tender.
(c) Duties of the Trustee. The Trustee shall follow the instructions
of the Participants with respect to the tender offer.
The Trustee shall not tender shares for which no instructions are
received. Unallocated shares of MCN Stock of the ESOP shall be
tendered or exchanged by the Trustee in the same proportion as the
allocated shares for which the Trustee has received written
direction are tendered or exchanged, subject to the terms of any
loan or pledge agreement covering such shares. On the basis of its
ability to comply with the
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terms of the offer, the Trustee shall establish a reasonable time
after which it shall not accept the instructions of Participants.
(d) Confidentiality. The instructions received by the Trustee
from Participants shall be held by the Trustee in strict confidence
and shall not be divulged or released to any person, including
officers or employees of the Company or any Affiliated Company.
7.5 Named Fiduciary Status. For purposes of sections 7.3 and 7.4, each
Participant is hereby designated a "named fiduciary" within the meaning of
ERISA section 403(a)(1) with respect to shares of MCN Stock as to which he is
entitled to make voting or tender offer decisions.
7.6 Expenses of Funds. Brokerage commissions, transfer taxes, and other
charges and expenses in connection with the purchase and sale of securities for
a fund shall be charged to the fund. Any income and other taxes payable with
respect to a fund shall likewise be charged to the fund.
7.7 Primark Corporation Stock. The provisions of sections 7.3, 7.4, and
7.5 pertaining to MCN Stock shall also be applicable to Primark Corporation
Stock during the period of its existence.
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Article VIII. Accounts and Records of the Plan
8.1 Committee to Maintain Accounts. The Committee shall maintain, or
cause to be maintained, for each Participant--
(a) a Savings Plan Account attributable to Voluntary Deduction
allotments and related Employer contributions under section 4.2, and
(b) a separate account attributable to Salary Reduction
allotments and related Employer contributions under section 4.2,
each of which shall be composed, to the extent required by the investment
directions of the particular Participant, of a MCN Stock fund account, a Fixed
Income fund account, and an account for each other applicable fund in which his
allotments and related contributions are invested.
The Committee also shall maintain, or cause to be maintained, for each
Participant--
(c) an ESOP Account attributable to Employer contributions under
section 4.3(a) and (c), and
(d) shares of MCN Stock allocated to the Participant pursuant to
section 14.4(d),
each of which shall be composed of a MCN Stock fund account and, to the extent
diversification elections are made by the Participant under section 14.5, such
other accounts as the Committee or its delegate deems necessary or appropriate
in giving effect to the diversification requirements of section 14.5.
The Committee shall maintain, or cause to be maintained, all necessary records.
8.2 Plan Accounting. The interests of each Participant in the funds shall
be his proportionate share of the value of such funds as of any Valuation Date.
The Participant's proportionate
share may be determined under any accounting method selected by the Committee
that allocates fairly, in the opinion of the
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Committee, the investment gains and losses by or on behalf of each Participant
to the fund and that complies with the Code requirements of the Code and the
Regulations thereunder. The value of Participants' fund accounts shall be
redetermined as of each Valuation Date.
8.3 Valuation of Funds. The value of a fund as of any Valuation Date
shall be the market value of all assets (including any uninvested cash) held by
the fund as determined by the Trustee reduced by the amount of any accrued
liabilities of the fund on such Valuation Date. The Trustee's determination of
market value shall be binding and conclusive upon all parties.
8.4 Valuation of Savings Plan Account. The value of a Participant's
Savings Plan Account as of any Valuation Date shall be the sum of the values of
his MCN Stock fund account, Fixed Income fund account, and any other of his
fund accounts attributable to Salary Reductions, Voluntary Deductions, and
Employer Contributions under section 4.2.
8.5 Valuation of ESOP Account. The value of a Participant's ESOP Account
as of any Valuation Date shall be the sum of--
(a) the value of his MCN Stock fund account attributable to
Employer contributions on his behalf under section 4.3(a) and (c)
and shares of MCN Stock allocated to his ESOP Account under section
14.4(d); and
(b) the sum of the values of his Fixed Income fund account and
any other of his fund accounts attributable to diversification
elections under section 14.5.
8.6 Valuation of Plan Account. The value of a Participant's Plan Account
as of any Valuation Date shall be the sum of the values of his MCN Stock fund
account, Fixed Income fund account, and any other investment fund accounts
maintained on his behalf under the Plan.
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8.7 Committee to Furnish Annual Statements of Value of Plan Accounts. The
Committee shall, not less frequently than annually, distribute to each
Participant in the Plan a statement setting forth the Plan Account of such
Participant. Such statement shall be deemed to have been accepted as correct
unless written notice of objections thereto is received by the Committee or the
Employer within 30 days after the distribution of such statement to the
Participant.
8.8 Trust Agreement. A Trust has been established to fund benefits under
the Plan. The Employers may, without further reference to or action by any
Employee or Participant, from time to time enter into further agreements with
the Trustee and make such amendments to such Trust Agreement or such further
agreements as they may deem necessary or desirable to carry out the Plan, and
may take such other steps and execute such other instruments as the Employers
may deem necessary or desirable to put the Plan into effect or to carry it out.
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Article IX. Distributions, Withdrawals, and Loans
9.1 Distribution Upon Termination of Employment Entitling Participant to
Value of Plan Account. Upon termination of a Participant's employment with his
Employer--
(a) due to retirement on his Normal Retirement Date, his Early
Retirement Date, or his Disability Retirement Date,
(b) by the death of the Participant,
(c) because of total and permanent disability or legally
established mental incompetency of the Participant not qualifying
the Participant for retirement pursuant to section 2.1(o), or
(d) under any circumstances after the Participant has satisfied
the Vesting Requirement,
the Committee shall, subject to the provisions of section 9.7, direct the
Trustee to distribute to the Participant, or, in a proper case his designated
beneficiary or legal representative, the value of the Participant's Plan
Account as of the Valuation Date coincident with or next following the date of
termination of employment.
Notwithstanding the foregoing, the value of a Participant's Plan Account shall
become nonforfeitable as of the date on which the Participant attains his
sixty-fifth birthday, provided he is an Employee on that date.
9.2 Distribution Upon Termination of Employment Under Circumstances
Resulting in Forfeiture of Employer Contributions. Upon termination of a
Participant's employment under circumstances other than those described in
sections 9.1 and 9.7(c)(2), the Committee shall, subject to the provisions of
section 9.7, direct the Trustee to distribute to the Participant an amount
equal to the value of the Participant's Employee Pre-1987 Voluntary Deduction
Account, Employee Post-1986 Voluntary Deduction Account, and Employee Salary
Reduction Account each of which shall be fully vested and nonforfeitable at all
times. The
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Participant's Employer Voluntary Deduction Account, Employer Salary Reduction
Account, and ESOP Account shall be forfeited and applied in reduction of the
next succeeding contribution which the Participant's Employer would otherwise
contribute to the Trust; provided, however--
(a) If all or any portion of such account is vested as a result
of the application of the accelerated vesting schedule set forth in
section 13.4(d), the Committee shall direct the Trustee to
distribute such portion to the Participant; and
(b) If such Participant is reemployed prior to his incurring five
consecutive Break in Service Years, then as of the Valuation Date
coincident with or next following his date of reemployment, the
Participant's Employer shall contribute on behalf of such
Participant an amount equal to the amount that was forfeited upon
his termination of employment, and such contribution shall be
credited to the same accounts from which it was forfeited, in the
same amounts, except amounts that would otherwise be credited to the
Primark Corporation Stock fund shall be credited to the MCN Stock
fund.
Contributions made pursuant to (b) shall not be taken into account in
determining under section 4.13 the Annual Additions to such Participant's
Savings Plan Account.
9.3 Certain Distributions from Participant Accounts.
(a) In General. Any Participant may, upon 20 days' written notice
to the Committee in the form prescribed by the Committee,
terminate his participation in the Plan as of any Valuation Date.
Upon such termination, the Committee shall direct the Trustee to
distribute to the Participant an amount equal to the value of the
Participant's Employee Pre-1987 Voluntary Deduction Account and
Employee Post-1986 Voluntary Deduction Account. Such a Participant
shall continue to be considered a Participant for all purposes of
the Plan
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except for purposes of Article IV (Contributions), but shall be
ineligible to again elect to make allotments under the Plan for a
period of 12 full Accounting Periods from the date of termination
of his participation.
(b) Withdrawals After Age 59 1/2.
(1) Prior to January 25, 1991, upon 20 days' written
notice to the Committee in the form prescribed by the
Committee, any Participant who has satisfied the Vesting
Requirement and attained age 59 1/2 may terminate his
participation in the Plan as of any Valuation Date. Upon such
termination, the Committee shall direct the Trustee to
distribute to the Participant the value of his Plan Account as
of such Valuation Date and such Participant shall be
ineligible to again elect to make allotments under the Plan
for a period of 12 full Accounting Periods from the date of
termination of participation.
(2) Effective January 25, 1991, upon 20 days' written
notice to the Committee in the form prescribed by the
Committee, any Participant who has attained age 59 1/2 may
make an election, not more frequently than--
(A) prior to December 1, 1993, once in any 12-month period, or
(B) on or after December 1, 1993, once every calendar year,
to withdraw all or any portion of the vested amount of his
Plan Account as of any Valuation Date. Upon such withdrawal,
the Committee shall direct the Trustee to distribute to the
Participant as of such Valuation Date the amount the
Participant has elected to withdraw.
(c) Limited Withdrawal in the Event of Hardship. Effective
January 25, 1991, if a Participant incurs a financial hardship as
defined in section 9.6, he may limit the
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amount of a distribution from his Voluntary Deduction Account under
section 9.3(a) to the amount necessary to satisfy the hardship and
to pay any taxes resulting from such distribution.
9.4 In-Service Withdrawals--General. At its discretion, the Committee may
adopt rules limiting the number of withdrawals that may be made in any Plan
Year and prescribe a minimum amount that may be withdrawn. All requests for a
withdrawal shall be submitted in a form prescribed by the Committee. A
Participant may not rescind a request for withdrawal which has been submitted
to the Committee unless the Committee consents. A withdrawal shall be
distributed as soon as reasonably practicable after the withdrawal request is
received.
9.5 Withdrawal of Voluntary Deduction Allotments. Any Participant who
shall have actively participated in the Plan for 24 or more calendar months
(for purposes of this section 9.5 active participation means the Participant
shall have made allotments to the Plan in each month in which compensation was
available), including months in which the Participant made allotments under the
Michigan Consolidated Gas Company Employees' Savings Plan, may, upon 20 days'
written notice to the Committee, withdraw as of any Valuation Date an amount
not in excess of 100 percent of his Voluntary Deduction allotments under the
Plan; provided, however, that the amount withdrawn shall in no event exceed the
sum of the values of his Employee Pre-1987 Voluntary Deduction Account and
Employee Post-1986 Voluntary Deduction Account invested in the MCN Stock fund,
the Fixed Income fund, and any other investment funds under the Plan as of such
Valuation Date. Successive withdrawals may be made at intervals of not less
than two full years provided that the total amount withdrawn may never exceed
the limitations prescribed in the preceding sentence.
Withdrawals under this section 9.5 shall be from the MCN Stock fund, the Fixed
Income fund, or such other investment funds
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offered by the Trustee as the Committee shall make available for purposes of
this section. If the Participant has an account in more than one fund, he
shall specify in his written direction to the Committee the amount to be
withdrawn from each fund. The allotments in all funds in the Employee Pre-1987
Voluntary Deduction Account must be withdrawn before a withdrawal is permitted
from a fund in the Employee Post-1986 Voluntary Deduction Account. The amount
of an in-service withdrawal from a specific fund in a Voluntary Deduction
Account shall not exceed the Employee's allotments in such fund prior to the
withdrawal.
9.6 Hardship Withdrawal of Salary Reduction Allotments. A Participant may
request, upon 20 days' written notice to the Committee, a withdrawal from his
Salary Reduction Account if the withdrawal is necessary to satisfy an immediate
and heavy financial need of a Participant as defined below. The amount of such
withdrawal shall be limited to the Participant's Salary Reduction allotments or
the total value of the Participant's Employee Salary Reduction Account as of
the latest Valuation Date for which information is available, whichever is
smaller. Withdrawals under this section 9.6 shall be from the MCN Stock fund,
the Fixed Income fund, or such other investment funds under the Plan as the
Participant specifies in his written request for a hardship withdrawal.
The determination of whether or not a distribution is necessary to satisfy an
immediate and heavy financial need and the amount required to be distributed to
meet the need shall be made by the Committee. All determinations regarding
financial need shall be made in accordance with written procedures established
by the Committee and applied in a uniform and nondiscriminatory manner.
Such written procedures shall specify the requirements for requesting and
receiving distributions on account of financial need, including the forms that
must be submitted and to whom the forms are to be submitted. All determinations
regarding financial need must comply with applicable Regulations under the Code.
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For purposes of this section 9.6, a financial hardship withdrawal shall be
limited to the amount required to meet the need created by one of the following
situations:
(a) Expenses for medical care described in Code section 213(d)
previously incurred by the Participant, his spouse, or any
dependents of the Participant or necessary for these persons to
obtain medical care described in Code section 213(d).
(b) Costs directly related to the purchase (excluding mortgage
payments) of the principal residence for the Participant.
(c) Payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant, his
spouse, children, or dependents (as defined in Code section 152).
(d) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage on the
Participant's principal residence.
A distribution will be deemed necessary to satisfy an immediate and heavy
financial need of a Participant only if both of the following conditions are
met:
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant. Effective January 1,
1993, this amount may be increased by the lesser of the amount
withheld from the distribution under Code section 3405(c), as
enacted by section 522(b) of the Unemployment Compensation
Amendments of 1992, Public Law No. 102-318, Stat. 290 or remaining
Salary Reduction allotments or total value of the Salary Reduction
Account, if less, after subtracting the amount of the immediate and
heavy financial need.
(2) The Participant has obtained all distributions, other than hardship
distributions, and all loans available under this Plan and all
other plans maintained by the Employer.
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If a Participant receives a hardship distribution, (A) the Participant shall
not be entitled to make Salary Reduction allotments or Voluntary Deduction
allotments for a period of one year after the hardship distribution, and (B)
the Participant may not make Salary Reduction allotments for the Participant's
taxable year immediately following the taxable year of the hardship
distribution in excess of the amount specified in Code section 402(g) for such
taxable year less the amount of the Participant's Salary Reduction allotments
for the taxable year of the hardship distribution.
9.7 Time of Distributions.
(a) In General. Except as hereinafter provided and subject to
the provisions of section 9.9, distributions made pursuant to
section 9.1 or 9.7(c)(2) shall be made by the Trustee at the
direction of the Committee on such date as the Committee shall
determine after consultation with the Participant or his
beneficiary, but in no event later than March 1 of the calendar year
following termination of the Participant's employment.
Except as hereinafter provided, all other distributions or
withdrawals under this Article IX shall be paid as soon as
reasonably practicable by the Trustee at the direction of the
Committee after the applicable Valuation Date. Notwithstanding any
other provision of the Plan--
(1) if the vested portion of a Participant's Plan Account exceeds
$3,500, no distribution shall be made to such Participant
pursuant to section 9.1, 9.2, 9.7(c)(2), or 9.9 prior to the
date the Participant attains the age of 65 without written
consent of the Participant; and
(2) if a distribution to a Participant is deferred pursuant to
(1), the amount that would otherwise have been distributed to
such Participant shall be invested--
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(A) prior to August 1, 1991, in the Fixed Income fund, and
(B) on and after August 1, 1991, in the Fixed Income fund
or any other investment fund under the Plan, as the
Participant shall direct,
except that the ESOP Account of such Participant shall
continue to be invested in the MCN Stock fund, subject to the
diversification rules set forth in section 14.5.
As soon as practicable after April 30, 1990, the Committee shall
direct the Trustee to transfer from the Fixed Income fund to the
MCN Stock fund, on behalf of each former Participant who terminated
employment on or after April 1, 1989 and prior to the date of
adoption of the Second Amendment, and whose distribution has been
deferred, an amount equal to the sum of (A) the amount required to
purchase the number of shares of MCN Stock credited to his or her
ESOP Account immediately prior to his or her termination of
employment, plus (B) the amount of dividends that would have been
credited thereon from April 1, 1989 to the date of such transfer.
Such amount shall be credited to the ESOP Account of such former
Participant.
A former Participant whose distribution has been deferred pursuant
to (1) above will not thereafter be eligible for withdrawals under
section 9.3 or 9.5 or loans under section 9.10 but shall continue
to have the voting and tender offer rights described sections 7.3
and 7.4 and to be treated as a Participant for purposes of Article
VIII.
A former Participant whose distribution has been deferred may
initiate a distribution upon 30 days' prior written notice to the
Committee and shall receive an amount equal to the vested portion
of his Plan
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Account as of the Valuation Date next following the expiration of
such 30-day period, with such amount to be distributed in a lump
sum cash payment except that--
(i) amounts invested in the MCN Stock fund shall be distributed
in accordance with section 9.8,
(ii) effective as of August 1, 1991, such former Participant may
upon 30 days' prior notice to the Committee receive a partial
distribution rather than a total distribution, of the vested
portion of his Account, but not more frequently than once in
any calendar year (prior to December 1, 1993, not more
frequently than once in any 12-month period), and
(iii) to the extent that such distribution comes from the Fixed
Income fund account, such distribution shall be subject to
the provisions of section 9.9.
Notwithstanding any other provision of this Plan, if a Participant
attains age 70 1/2 and still has a balance allocated to his or her
Plan Account, a distribution shall be made under section 9.1 as if
the Participant had terminated employment in the month in which the
Participant attains age 70 1/2. Such distribution shall in no
event be later than April 1 of the calendar year following the year
in which the Participant attains age 70 1/2. Distributions to such
Participant shall be made annually thereafter no later than April 1
of each year and shall be equal to at least the minimum amount
required to be distributed by Code section 401(a)(9). For purposes
of this paragraph, the life expectancy of a Participant and the
Participant's spouse shall be redetermined annually.
(b) Suspension of Participation. If a Participant shall, prior
to termination of his employment, cease to meet the eligibility
requirements of the Plan, his allotments and Employer contributions
on his behalf shall be suspended during the period of his
ineligibility. Subject to section 3.1, distribution of
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such Participant's Plan Account shall be deferred until termination
of his employment with the Company and any Affiliated Company. If
the provisions of section 3.3 relating to the transfer of a
Participant's Plan Account to the Michigan Consolidated Gas Company
Union Employees' Investment Plan or its successor are not
applicable--
(1) with respect to Participants who cease to meet
the eligibility requirements of the Plan prior to January 1,
1987, the Committee shall direct the Trustee to distribute the
value of the Participant's Plan Account in accordance with
section 9.1 whether or not such termination of employment
shall be under the circumstances set forth in said section
9.1; and
(2) with respect to Participants who cease to meet the eligibility
requirements of the Plan subsequent to December 31, 1986, such
distribution shall be in accordance with section 9.1 or 9.3,
whichever is applicable.
(c) Transfer of Employment.
(1) A transfer of employment from an Employer to an Affiliated
Company shall not be considered a termination of employment.
(2) If a Participant shall be transferred to the employ of an
Affiliated Company which has not elected to participate in
the Plan, distribution of such Participant's Plan Account
shall be deferred until the date on which he is no longer in
the employ of the Company or any Affiliated Company, whereupon
the Committee shall direct the Trustee to distribute the
value of the Participant's Plan Account in the manner
prescribed in section 9.1, subject to the provisions of
section 9.7, whether or not termination of employment shall
be under circumstances set forth in said section 9.1.
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(d) Special Rules Relating to Distributions in the Event of
Death. In the event that a Participant dies before a distribution
of his Plan Account, the Committee shall direct the Trustee to
distribute the entire value of his Plan Account to his beneficiary
no later than March 1 of the calendar year following the
Participant's death, as provided in section 9.1. In the event of
the death of the Participant after the distribution of his Plan
Account has begun, any remaining balance in his Plan Account at the
time of death will be distributed at least as rapidly as under the
method of distribution in effect at the date of the Participant's
death.
9.8 Distributions of Stock. In the case of distributions under section
9.1, 9.2, 9.3(b), 9.7(a), or 9.7(c)(2), the value of the Participant's MCN
Stock and/or Primark Corporation Stock fund account(s), if any, shall be paid
in full shares of stock except that cash shall be distributed in lieu of
fractional shares; provided, however, that a Participant entitled to such a
distribution may elect to receive cash in lieu of MCN Stock and/or Primark
Corporation Stock. Except in the case of an election to receive cash in lieu
of MCN Stock and/or Primark Corporation Stock--
(a) prior to August 1, 1991, the number of shares to be
distributed from such account shall be the quotient of the value of
such account as of the applicable Valuation Date divided by the
value assigned by the Trustee to a share of MCN Stock or Primark
Corporation stock for purposes of valuing the fund as of such
Valuation Date; and
(b) on and after August 1, 1991, the total number of shares
allocated to such account shall be distributed from such account.
Any remaining value of such account and, subject to the provisions of section
9.9, the value of the Participant's accounts in other funds shall be
distributed in cash. Any
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transfer taxes payable with respect to the distribution of shares of stock
shall be charged to the respective MCN Stock or Primark Corporation Stock fund.
Distributions pursuant to section 9.3(a) and withdrawals under sections 9.5
and 9.6 shall be paid entirely in cash.
9.9 Distributions from Fixed Income Fund.
(a) Normal Form. Notwithstanding any provision of the Plan,
other than the final paragraph of section 9.7(a), if a distribution
is to be made under section 9.1(a) or (c) and the Participant has a
Fixed Income fund account and at least one Hour of Employment prior
to May 31, 1988, then unless the Participant or legal representative
shall make an election in the manner prescribed in section 9.9(b),
the value of such account (exclusive of the portion thereof
attributable to diversification elections under section 14.5) shall
be distributed by the purchase of a single premium annuity contract
providing for monthly payments during the Participant's lifetime
and, if the Participant is married on the date payment of his
benefit commences and his spouse shall survive him, for monthly
payments during the remainder of such spouse's lifetime, each such
payment to such spouse being equal to one-half of the monthly
payment received by the Participant, commencing no later than March
1 of the calendar year following the calendar year of the
Participant's termination of employment, and delivery of such
contract to the Participant within a reasonable time after the
Participant's termination of employment.
If a distribution is to be made under section 9.1(b) because of a
Participant's death and the Participant had a Fixed Income fund
account at the time of his death and at least one Hour of
Employment prior to May 31, 1988, then unless the Participant had
made or the Participant's spouse or beneficiary, as the case
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may be, makes an election at the time and in the manner prescribed
in section 9.9(b), the value of the Participant's Fixed Income fund
account (exclusive of the portion thereof attributable to
diversification elections under section 14.5) shall be distributed
by purchase of a single premium annuity contract providing for
monthly payments to the Participant's spouse, or, if the
Participant was not married on the day of his death, to his
beneficiary during such person's lifetime, commencing no later than
March 1 of the calendar year following the calendar year of the
Participant's death and delivery of such contract to such person
within a reasonable time after the date of Participant's death.
(b) Election to Reject Normal Form. Subject to the provisions of
this section 9.9(b), each Participant entitled to a distribution
under section 9.9(a) (or legal representative on behalf of such a
Participant) may, at any time during the 90-day period ending on the
annuity starting date, elect to have the value of the Participant's
Fixed Income fund account (exclusive of the portion thereof
attributable to diversification elections under section 14.5)
distributed by one or more of the methods set forth in section
9.9(c).
Within 30 days after a Participant provides written notice to the
Committee of his intention to retire on his Early Retirement Date,
Normal Retirement Date, or Disability Retirement Date, or within 30
days after the Committee receives notice of a Participant's death,
or within five business days after determining, pursuant to section
2.1(o), that a Participant is totally and permanently disabled, or
within five business days after receiving notice of the legally
established mental incompetency of the Participant, if the
Participant has a Fixed Income fund account at such time, the
Committee shall deliver to such Participant
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or his legal representative, by mail or by personal delivery,
written notice in nontechnical language explaining the terms and
conditions of the annuity provided in section 9.9(a).
The notice shall explain the Participant's or legal
representative's right to elect an optional form of distribution
and that such election may be revoked by the Participant or legal
representative at any time prior to the annuity starting date or,
if a lump sum payment is elected, prior to the first day on which
all events have occurred which entitle the Participant or legal
representative to the lump sum payment.
The notice shall explain that a married Participant may elect a
distribution pursuant to section 9.9(c) only if the spouse consents
in writing to such election. Such written consent shall
acknowledge consent to the designated beneficiary and the optional
form of distribution, neither of which may be changed thereafter
without again obtaining written spousal consent (or the consent of
the spouse expressly permits changes by the Participant without
further consent by the spouse). Such written consent shall
acknowledge the effect of such election and shall be witnessed by a
notary public or by a representative of the Committee who is
designated to act in such capacity by the Committee.
If the Participant establishes to the satisfaction of the Committee
that such written consent cannot be obtained because his spouse
cannot be located, the requirement of such written consent shall be
waived. Any election, change, or revocation under this section
9.9(b) shall be effective when written notice is delivered to the
Committee in a form approved by the Committee for this purpose,
provided such election,
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change, or revocation is delivered prior to the annuity starting
date or, if a lump sum payment is elected, prior to the first day
on which all events have occurred which entitle the Participant or
legal representative to the lump sum payment. The notice shall
explain that an effective revocation shall result in the benefit
being provided as an annuity described in section 9.9(a).
(c) Optional Forms. In addition to the form described in section
9.9(a), distribution of the value of a Participant's Fixed Income
fund account (exclusive of the portion thereof attributable to
diversification elections under section 14.5) may be made either--
(1) in a lump sum payment no later than March 1 of
the calendar year following the calendar year of the
Participant's termination of employment or death; or
(2) by purchase of any form of single premium annuity
contract that satisfies Code section 401(a)(9) as may from
time to time be offered by the legal reserve life insurance
companies with which the Trustee has agreements governing the
investment of assets in the Fixed Income fund and delivery of
such contract to the Participant or distributee within a
reasonable time after the Participant's termination of
employment or death. Within five business days after the
Committee receives an election pursuant to this provision, the
Committee shall provide the same written notice provided under
section 9.9(b). An election pursuant to this provision shall
be subject to the provisions of section 9.9(b).
9.10 Loans. The Trustee is hereby authorized to establish a loan program
in accordance with this section 9.10. Upon application of a party in interest
(as defined in ERISA section 3(14)) who is a Participant or beneficiary under
the Plan, the
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Committee shall direct the Trustee to make a cash loan to such Participant or
beneficiary, secured by 50 percent of the nonforfeitable value of the
Participant's Employee and Employer Salary Reduction and ESOP Accounts
determined as of the date the loan is made. The loan program shall be
administered by the Committee subject to the following conditions and such
other conditions that are consistent with Labor Regulation section 2550.408b-1
and are from time to time set forth in a written document, delivered to
Participants and beneficiaries who are parties in interest (which document may
but need not be the Summary Plan Description), which provisions shall
constitute a part of the Plan and are hereby incorporated by reference:
(a) Effective October 18, 1989, the term of a loan shall not
extend beyond the earlier of four years or the date upon which the
Participant or beneficiary ceases to be a party in interest;
provided, however, that the four years shall be changed to eight
years where the proceeds of the loan are used by the Participant or
beneficiary to acquire the Participant's principal residence.
(b) Effective October 18, 1989, a loan shall bear interest at a
reasonable rate which shall be based upon the prevailing interest
rate charged by persons in the business of lending money on similar
commercial loans under comparable circumstances at the time that
such loan is granted, as determined by the Committee and uniformly
applied.
(c) Effective October 18, 1989, the amount of a loan (when added
to the balance of other outstanding loans) shall not exceed the
lesser of--
(1) $50,000 reduced by the excess (if any) of--
(A) the highest outstanding balance of loans from the Plan
during the one-year period ending on the day before the
date on which such loan was made, over
(B) the outstanding balance of loans outstanding on the
date such loan was made, or
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(2) 50 percent of the nonforfeitable value of the Participant's
Employee and Employer Salary Reduction and ESOP Accounts
under the Plan which the Participant would have been
entitled to receive if the Participant's employment had
terminated on the date such loan was made.
In no case shall a Participant be entitled to a loan under this
Plan if the amount of the proposed loan is less than $500.
(d) A loan shall be evidenced by a promissory note.
(e) Effective October 18, 1989, payments of principal and
interest shall be made by approximately equal payments not less
frequently than monthly on a basis that would permit the loan to be
fully amortized over its term. Loan payments shall be made by
payroll deductions for Participants in active pay status.
(f) Appropriate disclosure shall be made pursuant to the Truth in
Lending Act to the extent applicable.
(g) Amounts of principal and interest received on a loan shall be
credited to the Participant's account and the outstanding loan
balance shall be considered an investment of the assets of the
account. Payment of principal and interest shall be credited to the
investment funds in the same proportion as the amount distributed
from the funds from which the loan was granted to the Participant,
except amounts that would otherwise be credited to the Primark
Corporation Stock fund shall be credited to the MCN Stock fund.
(h) The frequency of loans and the minimum amount for a loan
shall be determined through uniform rules prescribed by the
Committee and at the sole discretion of the Committee.
(i) All applications for a loan shall be submitted to the Committee on
a form prescribed by the Committee. Distribution shall be made as
soon as reasonably practicable after the application of the loan is
received.
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(j) If a Participant borrows from an account which is invested in
more than one fund, he shall instruct the Committee as to the funds
from which the loan is to be applied; provided, however, that no
borrowing shall be applied from the MCN Stock fund unless and until
the Participant's ability to borrow from each of the other funds has
been exhausted.
(k) A married Participant may not borrow any amount from the Plan
unless his spouse executes a written consent as hereinafter
provided. Such consent must be executed during the 90-day period
ending on the date on which the loan is made and shall specifically
provide that the spouse consents both to the loan and to the use of
the Participant's Salary Reduction and ESOP Accounts as security for
the loan. The consent shall acknowledge the effect of the use of
the Participant's accounts as security for the loan and shall be
witnessed by a notary public or a representative of the Committee
who is designated to act in such capacity by the Committee.
(l) In the event a Participant defaults on a loan, the entire
outstanding balance of and accrued interest on the loan shall be due
and payable. The Trustee and/or Committee may pursue collection on
such defaulted loan by any means generally available to a creditor
where a promissory note is in default, or if the entire amount due
is not paid by such Participant following the default, the amount of
such loan default shall be charged against the "secured portion" of
the Participant's Plan Account and treated as a distribution with
respect to such Participant; provided, however, that such a charge
against a Participant's Plan Account shall not occur with respect to
funds in his Employee Salary Reduction Account at a time so as to
cause a violation of Code section 401(k)(2)(B)(i).
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9.11 Definition of Allotments and Employer Contributions. For the purposes
of this Article IX, a Participant's allotments shall include only those
allotments made either as a Voluntary Deduction or a Salary Reduction which
have not been previously withdrawn or distributed.
If a Participant has previously had a portion of his Plan Account forfeited
under section 9.2, the Employer contributions, exclusive of those made as a
Salary Reduction to the Plan on his behalf, shall include only such Employer
contributions made subsequent to such forfeiture.
9.12 Spousal Consent to Payment. Subject to section 9.7(a), the spouse of
a married Participant or former Participant shall be required to consent in
writing to any in-service withdrawal, loan, or distribution under the Plan to
the Participant or former Participant; provided, however, for distributions on
account of termination of employment, this sentence shall be effective as of
January 1, 1993. The spouse's consent shall be in such form as the Committee
may prescribe.
9.13 Distributions Pursuant to a Qualified Domestic Relations Order. Upon
receipt of a domestic relations order, the Committee will notify the involved
Participant and any alternate payee that the order has been received and
explain the Plan's procedures for determining whether the order is a qualified
domestic relations order as defined in Code section 414(p). After determining
that the order is a qualified domestic relations order, the Committee shall
direct the Trustee to distribute or segregate the Participant's Account as
provided in the qualified domestic relations order. If required by the
qualified domestic relations order, the Trustee shall make distribution prior
to the time that the Participant, whose account is subject to distribution,
could have received a distribution.
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In a case of a dispute regarding the validity of a domestic relations order or
the amounts or identities of parties to be paid thereunder, the Committee may
segregate the portion of the Participant's account in question, and may bring
an action in a court of competent jurisdiction to determine the proper amount
and/or recipient of benefits, or may submit such segregated amount to a court
of competent jurisdiction (through an interpleader action or otherwise) until
resolution of the matter.
Further, if the Committee receives notice that a domestic relations order is
forthcoming, the Committee may suspend payments from the Participant's Account
or may follow the procedures described in the preceding sentence, until
resolution of the matter.
9.14 Direct Rollovers of Eligible Distributions.
(a) General. This section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's election
under this section, a distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an
eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(b) Definitions.
(1) Eligible rollover distribution. An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a
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specified period of ten years or more; any distribution to
the extent such distribution is required under Code section
401(a)(9); and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(2) Eligible retirement plan. An eligible retirement
plan is an individual retirement account described in Code
section 408(a), an individual retirement annuity described in
Code section 408(b), an annuity plan described in Code section
403(a), or a qualified trust described in Code section 401(a),
that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to
the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
(3) Distributee. A distributee includes an Employee
or former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Code
section 414(p), are distributees with regard to the interest
of the spouse or former spouse.
(4) Direct rollover. A direct rollover is a payment
by the Plan to the eligible retirement plan specified by the
distributee.
(c) Waiver of 30-Day Notice Period. If a distribution is one to
which Code sections 401(a)(ll) and 417 do not apply, such
distribution may commence less than 30 days after the notice
required under section 1.411(a)-11(c) of the Income Tax Regulations
is given, provided that:
(1) the Committee clearly informs the Participant that the
Participant has a right to a period of at
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least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
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SAVINGS PLAN
Article X. Administration
10.1 The Savings and Stock Ownership Plan Committee.
(a) The Employers shall appoint a Committee consisting of at
least three members which shall be known as the Savings and Stock
Ownership Plan Committee (the "Committee") and which shall be
responsible (except for duties specifically vested in the Trustee)
for the administration of the provisions of the Plan.
(b) Each Employer may have at least one representative on the
Committee who shall be appointed by and remain in the office at the
will of such Employer. Each Employer shall have the right at any
time, with or without cause, to remove its representative on the
Committee. A member of the Committee may resign and his resignation
shall be effective upon delivery of his written resignation to each
Employer. Upon resignation, removal, or failure or inability for
any reason of any member of the Committee to act hereunder, the
Board of Directors of the Employer by whom such member was appointed
shall appoint a successor member. All successor members of the
Committee shall have all of the rights and privileges and all of the
duties of their predecessors but shall not be held accountable for
the acts of their predecessors. Two or more Employers may appoint
the same individual as their representative on the Committee,
provided that the Committee shall consist of at least three members.
(c) Any member of the Committee may, but need not, be a Participant or
a director, officer, or shareholder of any of the Employers, and
such status shall not disqualify him from taking any action
hereunder or render him accountable for any distribution or
material advantage received by him under the Plan, provided that
no member of the Committee who is a Participant shall take part in
any action of the Committee on any matter involving solely his
rights under the Plan.
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(d) The Committee shall be responsible for the administration of
the Plan. The Committee shall have all such powers as may be
necessary to carry out the provisions of the Plan and may from time
to time establish rules and procedures for the administration of the
Plan and the transaction of the Plan's business.
The Committee shall have the exclusive right to make any finding of
fact necessary or appropriate for any purpose under the Plan. The
Committee shall have the maximum discretion permitted by law to
interpret and construe the terms of the Plan and to resolve all
issues arising under the Plan including, but not limited to the
authority to--
(1) construe disputed or doubtful terms of the Plan;
(2) determine the eligibility of an individual to participate in
the Plan;
(3) determine the amount, if any, of benefits to which any
Participant, former Participant, beneficiary, or other person
may be entitled under the Plan;
(4) determine the timing and manner of payment of benefits; and
(5) resolve all other issues arising under the Plan.
To the extent permitted by law, all findings of fact,
determinations, interpretations, and decisions of the Committee
shall be conclusive and binding upon all persons having or claiming
to have any interest or right under the Plan.
The Employers shall, from time to time, on request of the
Committee, furnish to the Committee such data and information as
the Committee shall require in the performance of its duties.
(e) The Committee shall each month collect Employee allotments
and Employer contributions from each Employer and shall deliver the
amounts collected to the
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Trustee, together with instructions concerning the portions of such
total amount to be invested in each fund.
(f) The Committee shall direct the Trustee to make payments of
amounts to be distributed or withdrawn from the Trust under Article
IX and to make any transfers from one fund to another directed by
Participants under section 6.3.
(g) The Committee may act at a meeting, or by writing without a
meeting, by the vote or assent of a majority of its members. The
Committee shall elect a Secretary and such Secretary shall keep
records of all meetings of the Committee and shall forward all
necessary communications to the Trustee. The Committee may adopt
such by-laws and regulations as it deems desirable for the conduct
of its affairs and the administration of the Plan, provided that any
such regulations shall be consistent with the provisions of the
Plan.
(h) The members of the Committee, and each of them, shall be free
from all liability, joint or several, for their acts, omissions, and
conduct in administration of the Plan herein embodied, and the
Employers shall jointly and severally indemnify them, and each of
them, from the effects and consequences of their acts, omissions,
and conduct in their official capacity except to the extent that
such effects and consequences shall result from their own willful
misconduct.
(i) No member of the Committee shall receive any compensation or
fee for his services, unless otherwise agreed between such member of
the Committee and the Employers, but the Employers shall reimburse
the Committee members for any necessary expenditures incurred in the
discharge of their duties as Committee members.
(j) The Committee may employ such counsel (who may be of counsel
for any Employer) and agents, and may arrange for such clerical and
other services as it may require
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in carrying out the provisions of the Plan, and all fees, charges,
and costs so incurred shall be payable by the Plan except to the
extent the Employers elect to pay such fees, charges, and costs.
(k) The Committee shall maintain a record of all of its proceedings,
shall maintain or cause to be maintained the Plan Accounts
prescribed by Article VIII, and shall make the reports to
Participants prescribed by section 8.7.
10.2 Notice to Employees. All notices, reports, and statements given,
made, delivered, or transmitted to a Participant shall be deemed to have been
duly given, made, or transmitted when mailed with postage prepaid and addressed
to the Participant at the address last appearing on the books of the Employer.
A Participant may record any change of his address from time to time by written
notice filed with the Employer.
10.3 Notices to Employers or Committee. Written directions, notices, and
other communications from Participants to the Employers or the Committee shall
be mailed by first class mail with postage prepaid or delivered to such
location as shall be specified upon the forms prescribed by the Committee for
the giving of such directions, notices, and other communications, and shall be
deemed to have been received by the addressee when received at such location.
Any other notice to the Employers or the Committee shall be addressed.
(a) If intended for the Committee:
Savings Plan Committee
c/o Michigan Consolidated Gas Company
500 Griswold Street
Detroit, Michigan 48226
(b) If intended for an Employer, at its principal place of business.
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10.4 Participants' Acceptance of the Provisions of the Plan. Each
Participant at the time of becoming a Participant in the Plan and as a
condition of participation shall sign an instrument evidencing the fact that he
accepts and agrees to all provisions of the Plan.
10.5 Audit of Plan Records. The records of the Committee and the records
of the Employers in respect of the Plan shall be examined annually by a firm of
independent public accountants appointed by the Committee. Such accountants
shall, on the basis of such examination, make such reports to the Committee and
to the Employers as they may request. The audited records of the Committee and
the Employers shall be conclusive in respect of all matters involved in the
administration of the Plan.
10.6 Claims Procedure. If any Participant or distributee believes he is
entitled to benefits in an amount greater than those which he is receiving or
has received, he may file a claim with the Secretary of the Committee. Such a
claim shall be in writing and state the nature of the claim, the facts
supporting the claim, the amount claimed, and the address of the claimant.
The Secretary of the Committee shall review the claim and give written notice
by registered or certified mail to the claimant of his decision with respect to
the claim. Such notice shall be provided within 90 days after receipt of the
claim, unless special circumstances require an extension, in which event the
notice shall be provided within 180 days after receipt of the claim. Such
notice shall be written in a manner calculated to be understood by the claimant
and, if the claim is wholly or partially denied, set forth the specific reasons
for the denial, specific references to the pertinent Plan provisions on which
the denial is based, a description of any additional material or information
necessary for the claimant to perfect the claim, and an explanation of why such
material or information is necessary, and an explanation of the claim review
procedure under the Plan.
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The Secretary shall also advise the claimant that he or his duly authorized
representative may request a review by the full Committee of the denial by
filing with the Committee, within 60 days after notice of the denial has been
received by the claimant, a written request for such review. The claimant
shall be informed that he may have reasonable access to pertinent documents and
submit comments in writing to the Committee within the same 60-day period. If
a request is so filed, review of the denial shall be made by the full Committee
and the claimant shall be given written notice of the Committee's final
decision. Such notice shall be provided within 60 days after receipt of such
request, unless special circumstances require an extension, in which event the
notice shall be provided within 120 days after receipt of the request. Such
notice shall include specific reasons for the decision and specific references
to the pertinent Plan provisions on which the decision is based and shall be
written in a manner calculated to be understood by the claimant.
10.7 Effect of a Mistake. In the event of a mistake or misstatement as to
the eligibility, participation, or service of any Participant, or the amount of
payments made or to be made to a Participant or beneficiary, the Committee
shall, if possible, adjust the Plan's records and cause to be withheld or
accelerated or otherwise make adjustment of such amounts of payments as will in
its sole judgment result in the Participant or beneficiary receiving the proper
amount of payments under the Plan.
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Article XI. Amendment and Termination
11.1 Amendment. The Company may at any time and from time to time amend
or modify the Plan by written instrument duly adopted by the Board of Directors
of the Company. Any such amendment or modification shall become effective on
such date as the Company shall determine, may apply to Participants in the Plan
at the time thereof as well as future Participants, but may not reduce the Plan
Account of any Participant as of the date of adoption of such amendment or
modification.
11.2 Withdrawal. If an Employer shall withdraw from the Plan under
section 12.2, or if an Employer shall adopt an amendment to the Plan which
shall render impracticable the continued administration of the Plan as a joint
plan of the several Employers, the Committee shall determine the portions of
the various funds held by the Trustee which are applicable to the Participants
of such Employer and shall direct the Trustee to segregate such portions in a
separate trust. Such separate trust shall thereafter be held and administered
as a part of the separate plan of such Employer. After such portions of the
funds have been segregated in a separate trust, no such Participant or any
distributee with respect to such Participant shall have any right to any
benefit under the Plan or any claim against the Trust.
11.3 Termination. Any Employer may at any time terminate its
participation in the Plan by resolution of its Board of Directors. In the
event of any such termination, the Committee shall determine the portions of
the various funds held by the Trustee which are applicable to the Participants
of such Employer and shall direct the Trustee to distribute such portions to
such Participants ratably in proportion to the values of their respective fund
accounts; provided, however, amounts attributable to a Participant's Elective
Deferrals shall not be distributed on account of such termination if the
Employer, after such termination, maintains a defined contribution plan (other
than an
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employee stock ownership plan or a simplified employee pension). The portions
of the MCN Stock fund and the Primark Corporation Stock fund so distributed
shall be distributed in kind except that cash shall be distributed in lieu of
fractional shares. The portions of the Fixed Income fund and other investment
funds so distributed shall be distributed in cash or in kind, or partly in cash
and partly in kind, as determined by the Committee.
Upon termination or partial termination of the Plan by any Employer or upon the
complete discontinuance of contributions by any Employer, the benefits under
the Plan of all affected Participants employed or formerly employed by such
Employer shall become nonforfeitable.
11.4 Allocation of Funds Between Employers. The portion of a fund
applicable to Participants of a particular Employer shall be an amount which
bears the same ratio to the value of the fund which the aggregate value of the
fund accounts of Participants employed by such Employer bears to the total
value of the fund accounts of all Participants.
11.5 Trust to be Applied Exclusively for Participants and Their
Beneficiaries. Subject to section 15.3, any provision of the Plan to the
contrary notwithstanding, it shall be impossible for any part of the Trust to
be used for or diverted to any purpose not for the exclusive benefit of
Participants and their beneficiaries either by operation or termination of the
Plan, by power of amendment, or by other means.
Notwithstanding the preceding paragraph, if a contribution is made to the Trust
by an Employer by a mistake of fact, then such contribution shall be returned
to such Employer within one year after the payment of the contribution; and if
any part or all of a contribution is disallowed as a deduction under Code
section 404, then to the extent such contribution is disallowed as a
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deduction it shall be returned to such Employer within one year after the
disallowance. All Employer contributions are conditioned upon their
deductibility under Code section 404.
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Article XII. Participation by Affiliated Companies
12.1 Adoption of the Plan. Any Affiliated Company may become a
participating Employer under the Plan by (a) taking such corporate action as
shall be necessary to adopt the Plan, and (b) executing and delivering such
instruments and taking such other action as may be necessary or desirable to
put the Plan into effect with respect to such Affiliated Company.
The Plan shall become effective with respect to each particular Affiliated
Company which becomes a participating Employer after January 1, 1993, as of a
date to be determined by the Board of Directors of such Employer after
complying with all legal requirements pertaining to the participation of such
Employer in the Plan.
12.2 Withdrawal from the Plan. Any Employer may withdraw from
participation in the Plan at any time by filing with the Committee a duly
certified copy of a resolution of its Board of Directors to that effect and
giving notice of its intended withdrawal to the Committee, the other Employers,
and the Trustee at least 30 days prior to the effective date of withdrawal.
12.3 Special Provisions Relating to Withdrawal by MCN Computer Services,
Inc.
(a) General. The purpose of this section 12.3 is to set forth
the terms and conditions that shall govern the withdrawal by MCN
Computer Services, Inc. ("CSI") from participation in the Plan. In
the event of any conflict between any other provision of the Plan
and this section 12.3, the terms of this section 12.3 shall govern
with respect to such withdrawal. This section 12.3 shall be
effective as of June 18, 1992 (the date on which the Internal
Revenue Service issued a favorable determination letter with
respect to the provisions contained in this section 12.3 (then
Article 21).
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(b) Provisions with Respect to Withdrawal by CSI. Upon CSI's
withdrawal of its participation in the Plan as a participating
Employer--
(1) the value of the Plan Account of each Participant
who is actively employed by CSI on the date of CSI's
withdrawal of participation in the Plan shall be transferred
to the Genix Group Retirement Savings Plan (formerly known as
the Retirement Savings Plan for Salaried Employees of Genix
Corporation) (the "Genix Plan") and such Participant shall no
longer have any rights of any nature under this Plan;
(2) the value of such Participant's Plan Account, determined as
of the Valuation Date coincident with or immediately preceding
the transfer, shall be transferred to the Genix Plan as
follows:
(A) the value of the Participant's MCN
Stock fund account(s), if any, determined in accordance
with section 9.8, shall be transferred in full shares of
stock, except that cash shall be transferred in lieu of
fractional shares; and
(B) the value of the Participant's other fund accounts shall
be transferred in cash;
(3) Such amounts shall be transferred to the Genix Plan as soon
as practicable following the filing of any applicable forms
required by the Internal Revenue Service and the expiration
of any waiting period in connection therewith; and
(4) the amount so transferred shall be subject to the terms and
provisions of the Genix Plan; provided, however, that the
amount so transferred, as adjusted for earnings or loss
thereon, shall be fully vested at all times.
Any Participant that has retired according to the provisions of the
Plan on the date of CSI's withdrawal
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shall continue to participate in the Plan and to receive benefits
in accordance with the terms and conditions of the Plan.
(c) No Further Service or Contributions. Notwithstanding any
other provision of this Plan, employees of CSI shall not receive
credit under this Plan for any service on or after January 1, 1992,
and shall receive no further contributions under this Plan on or
after such date.
12.4 Company as Agent for Employers. Each Employer named under section
2.1(x), other than the Company, hereby appoints, and each other corporation
which shall become an Employer pursuant to section 12.1 or 15.7 by so doing
shall be deemed to have appointed the Company its agent to exercise on its
behalf all of the powers and authorities hereby conferred upon the Employers by
the terms of the Plan, including, but not by way of limitation, the power to
amend, restate, and terminate the Plan. The authority of the Company to act as
agent shall continue unless and until the portion of the Trust fund held for
the benefit of Employees of the particular Employer and their beneficiaries is
set aside in a separate trust as provided in section 11.2.
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Article XIII. Top-Heavy Plan Rules
13.1 Application of Top-Heavy Plan Rules. If the Plan is top-heavy as
determined under section 13.3, then the requirements in section 13.4 shall
apply to the Plan to the extent indicated by that section 13.4.
13.2 Special Definitions. Any reference in this Article XIII to a "plan"
means a stock bonus, pension, or profit-sharing plan of the Company and any
Affiliated Company for the exclusive benefit of its employees or their
beneficiaries, including this Plan. For purposes of this Article XIII only,
the following terms shall have the meanings indicated:
(a) "Compensation" means a Participant's Compensation from the
Employer for any calendar year as defined in section 2.1(l) except
amounts not currently includible in gross income by reason of the
application of Code section 125 or 402(e)(3) (402(a)(8) prior to
1993) shall be excluded.
(b) "Determination Date" means, with respect to any Plan Year,
the last day of the preceding Plan Year, except that in the case of
the Plan's first Plan Year, the Determination Date shall be the last
day of that Plan Year. Where one or more other plans are required
or permitted to be aggregated with this Plan under section 13.3 and
where all plan years of all such plans do not coincide, the "Key
Employee Sum" and the "All Employee Sum" in section 13.3 each shall
be determined separately for each plan as of its appropriate
Determination Date and the results shall then be combined for the
Determination Dates falling within the same calendar year.
(c) "Employee" means a common law employee of the Employer who is
or once was a Participant, including his beneficiary, but excluding
any employee who is a member of a unit of employees covered by a
collective bargaining agreement under which retirement benefits
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were the subject of good faith bargaining with the Employer unless
a member of such unit is a Key Employee. For purposes of making
computations involving the MichCon Employee Stock Ownership Plan,
employee shall include any common law employee of the Employer,
including his beneficiary.
(d) "Employer" means the Company and any other employing unit
which would be included in the same controlled group as the Company
(as defined in Code section 414(b)) or which is under common control
with the Company (as defined in Code section 414(c)) or which is
included in the same affiliated service group (as defined in Code
section 414(m)) or which is required to be aggregated with the
Company pursuant to Regulations under Code section 414(o).
(e) "Key Employee" means each Employee or former Employee
(including the beneficiary of either) who at any time during the
Plan Year containing the Determination Date or any of the four
preceding Plan Years received Compensation from the Employer and
who--
(1) is one of the 50 (or, if fewer, the greater of 3 or 10
percent of all Employees) officers of the Employer who
had the largest Compensation in the five-year period ending on
the last day of the current Plan Year but only if such
officer's Compensation exceeds 0.5 times the dollar limitation
of Code section 415(b) for the calendar year in which the
Determination Date falls;
(2) is one of the ten Employees owning the largest interest in
the Employer and who has Compensation from the Employer in
the amount greater than the dollar limitation of Code section
415(c) in effect for the calendar year in which the
Determination Date falls;
(3) owns 5 percent or more of the outstanding stock or voting
power of the Employer; or
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(4) owns 1 percent or more of the outstanding stock or voting
power of all stock of the Employer and has annual compensation
from the Employer of more than $150,000.
For purposes of (2), (3), and (4), the constructive ownership rules
of Code section 318 shall apply with the modification that 5
percent shall be substituted for 50 percent appearing in Code
section 318(a)(2)(C). For purposes of (2), an Employee shall be
considered a Key Employee even if he is not among the ten largest
owners, if his ownership interest in the Employer is not less than
at least one of the top ten owners, and provided he has the
requisite level of Compensation described in (2); and in the event
two Employees have the same interest in the Employer, the Employee
with the greater Compensation shall be regarded as having the
larger interest. For purposes of (2), (3), and (4), each Employer
that otherwise would be aggregated under this Article XIII's
definition of Employer shall be treated as a separate Employer to
determine ownership percentages.
(f) "Non-Key Employee" means any Employee or former Employee
(including the beneficiary of either) who is not a Key Employee.
(g) "Plan Year" means the calendar year.
(h) "Valuation Date" means the date used for computing plan costs
for minimum funding in the case of any defined benefit plan and the
last day of the plan year in the case of any defined contribution
plan, including this Plan.
(i) "Years of Service" means an Employee's Years of Service
determined under section 3.5.
13.3 Determination of Top-Heavy Status. Determination of whether the
Plan is top-heavy for any Plan Year shall be made as follows:
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(a) Required Plan Aggregation. First, there shall be aggregated
with the Plan (1) each plan of the Employer in which a Key Employee
participates in the plan year containing the Determination Date, or
any of the four preceding plan years, (2) each other plan of the
Employer which, during this period, enables any plan in which a Key
Employee participates to meet the requirements of Code section
401(a)(4) or 410, and (3) any terminated plan that was maintained by
the Employer during the five year period ending on the Determination
Date for the plan year in question if a Key Employee participated in
such plan.
(b) Key Employee Sum. Second, there shall be computed, as of the
Determination Date, the sum of the present values of the accrued
benefits of all Key Employees as determined by the Plan actuary
under all defined benefit plans required to be aggregated under
section 13.3(a) and the account balances of all Key Employees under
all defined contribution plans, including this Plan, required to be
aggregated under section 13.3(a). For purposes of this computation,
the present value of an accrued benefit shall be determined as of
the most recent Valuation Date occurring within a 12-month period
ending on the Determination Date with the accrued benefit for a
current Participant determined as if the individual had terminated
employment as of such Valuation Date.
For purposes of this computation, the accrued benefit of an
Employee other than a Key Employee shall be determined under (1)
the method, if any, that uniformly applies for accrual purposes
under all plans maintained by the Company and Affiliated Companies,
or (2) if there is no such method, as if such benefit accrued not
more rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Code section 411(b)(1)(C).
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For purposes of this computation, account balance means the account
balance as of the most recent Valuation Date occurring within a
12-month period ending on the Determination Date, plus an
adjustment for contributions due as of the Determination Date. In
the case of a profit-sharing plan or other plan not subject to the
minimum funding requirements of Code section 412, the adjustment is
the amount of any contributions actually made after the Valuation
Date but on or before the Determination Date, except that in the
first plan year after a plan is adopted, the adjustment shall
include any contributions made after the Determination Date that
are allocated as of a date within the first plan year. In the case
of a money purchase pension plan or other plan subject to the
minimum funding requirements of Code section 412, the adjustment is
the amount of any contributions that would be allocated as of a
date not later than the Determination Date, even though such amount
is not yet required to be contributed, plus the amount of any
contribution actually made (or due to be made) after the Valuation
Date but prior to the expiration of the extended payment period
under Code section 412(c)(10).
For purposes of this computation--
(A) there shall be included in the Key Employee Sum
any distribution (other than rollover amounts or plan-to-plan
transfers not initiated by the Employee or made to another
plan maintained by the Employer) made to an Employee from the
Plan, or from another plan required to be aggregated under
section 13.3(a), within the five-year period ending on the
Determination Date;
(B) there shall be excluded from the Sum any rollover contribution
and any plan-to-plan transfer
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initiated by the Employee and accepted after December 31,
1983, by any plan required to be aggregated under section
13.3(a) from a plan other than one maintained by the
Employer;
(C) there shall be excluded from the Sum the account balance and
present value of the accrued benefit of any Employee who
formerly was a Key Employee but who is not a Key Employee for
the year ending on the Determination Date; and
(D) there shall be excluded from the Sum any amounts attributable
to tax deductible employee contributions.
(c) All Employee Sum. Third, under the same procedures as set forth
in section 13.3(b) above, including the special rules in (A),
(B), and (C), there shall be computed the sum of present values of
accrued benefits and account balances for all Employees of the
Employer.
(d) Top-Heavy Test Fraction. Fourth, the Key Employee Sum computed
in section 13.3(b) shall be divided by the All Employee Sum
computed in section 13.3(c), and if the resulting fraction is 0.60
or less, neither this Plan nor any plan required to be aggregated
under section 13.3(a) is top-heavy for the Plan Year. If the
fraction is greater than 0.60, both this Plan and any plan required
to be aggregated under section 13.3(a) are top-heavy for the Plan
Year, unless after the permissive plan aggregation described in
section 13.3(e) below, the recomputed fraction is 0.60 or less.
(e) Permissive Plan Aggregation. Fifth, at the election of the
Employer, plans of the Employer, other than those required to be
aggregated under section 13.3(a), but which provide benefits or
contributions comparable to this Plan, may be aggregated with this
Plan and the plans required to be aggregated under section 13.3(a),
provided that such aggregated group would meet the requirements of
Code section 401(a)(4) and 410. The computations under section
13.3 (b) to (d) above may
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then be repeated, based on this permissively aggregated group, and
if the fraction computed in section 13.3(d) is 0.60 or less for
this group, then neither this Plan nor any plan required to be
aggregated under section 13.3(a) is top-heavy for the Plan Year.
If the fraction computed in section 13.3(d) is still greater than
0.60, both this Plan and any plan required to be aggregated under
section 13.3(a) are top-heavy for the Plan Year but no plan which
is permissively aggregated under this section 13.3(e) will be
deemed to be top-heavy for such reason.
13.4 Superseding Rules.
(a) Provisions Mandatory. For each Plan Year that the Plan is
top-heavy, the provisions of paragraphs (b), (c), (d), and (e) of
this section 13.4 are mandatory and shall apply to the Plan for that
Plan Year, notwithstanding any other provision or provisions of the
Plan that may conflict with or vary from said mandatory provisions.
(b) Compensation Limit. For Plan Years beginning before January
1, 1989, Compensation of any Employee from the Employer shall be
disregarded for all purposes under the Plan to the extent such
Compensation exceeds $200,000 (or such higher cost-of-living
adjusted amount as determined from time to time by the Secretary of
Treasury).
(c) Minimum Contributions for Non-Key Employee Participants.
Contributions by the Employer to the Plan Account of each Non-Key
Employee Participant who is employed by the Employer on the last day
of the Plan Year and who is eligible to have an Employer
contribution made to his Plan Account under section 4.2, 4.3, or 4.4
(without regard to any requirement of a minimum number of Hours of
Employment (as defined in section 3.7) during the Plan Year) shall
be equal to the lesser of (1) 3 percent of the Participant's
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Compensation for that Plan Year or (2) the maximum percentage of
the Employer's contributions (as a percentage of Compensation not
in excess of $200,000) allocated to the account of any Participant
who is a Key Employee for the Plan Year multiplied by the Non-Key
Employee Participant's Compensation for that Plan Year. For
purposes of this section 13.4(c), Employer contributions made under
any other defined contribution plan of the Employer in which any
Key Employee participates or which enables another defined
contribution plan of the Employer to meet the requirements of
either Code section 401(a)(4) or 410 shall be considered
contributions made under this Plan.
Notwithstanding the foregoing, in the event that the contribution
to be made to the Plan Account on behalf of the Non-Key Employee
under the provisions of sections 4.2, 4.3, and 4.4 is greater than
the contribution which would be made under this section 13.4(c),
the provisions of Article IV shall prevail.
(d) Accelerated Vesting. A Participant's vested percentage in the
portion of his account balance derived from Employer contributions
described sections 4.2, 4.3, and 4.4 shall be determined in
accordance with the following schedule but only with respect to
those who are Participants during part or all of the Plan Year
after the Plan becomes top-heavy and only if the following
schedule results in a higher vested percentage than the application
of the Plan's normal Vesting Requirement:
<TABLE>
<CAPTION>
Years of Vested Service Percentage
----------------------- ----------
<S> <C>
0 0%
2 20%
3 40%
4 60%
5 80%
6 100%
</TABLE>
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(e) Reduction in Multiple Plan Limitations. In order to reduce
the overall limitations on combined plan contributions and benefits
under Code section 415, the number 1.0 shall be substituted for 1.25
in determinations of the maximum dollar amount which can be added to
a Participant's account and of the dollar amount of the maximum
benefit allowable in section 4.3 of the Plan; provided, however,
that the foregoing sentence shall not apply if the top-heavy test
fraction or recomputed fraction of section 13.3(e) is .90 or less,
in which event each Non-Key Employee Participant shall receive an
additional minimum contribution to his account equal to 1 percent of
the Participant's Compensation for that Plan Year.
13.5 Participants in More Than One Top-Heavy Plan of
the Employer. For each Plan Year that the Plan is top-heavy--
(a) Subject to the provisions of section 13.4(c), in the event
that a Non-Key Employee is a Participant in both this Plan and
another defined contribution plan of the Employer in the same Plan
Year, such Employee shall in all events be entitled to have the
portion of the contribution by the Employer specified in section
4.2, 4.3, or 4.4 or the contribution by the Employer specified in
section 13.4(c), whichever is appropriate, allocated to his account.
This provision shall in no way limit the Employee's right to have a
contribution made on his behalf to such other defined contribution
plan as shall be maintained by the Employer and in which he is a
participant.
(b) In the event that a Non-Key Employee is a Participant in both
this Plan and a defined benefit plan of the Employer in the same
Plan Year, such Employee shall not be entitled to have the
contribution specified in section 13.4(c) made by the Employer to
this Plan on his behalf. This provision shall in no way limit the
Employee's right to have the portion of the
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contribution by the Employer specified in section 4.2, 4.3, or 4.4
allocated to his account. Such Employee shall, however, receive
the defined benefit minimum as specified in Treasury Regulation
section 1.416-1, M-12, and such minimum shall be increased, if the
Company uses a factor of 1.25 in computing the denominators of the
defined benefit and defined contribution factors under Code section
415(e), by one percentage point (up to a maximum of ten percentage
points) for each Year of Service described in Treasury Regulation
1.416-1, M-2 (disregarding, as permitted therein, any Year of
Service if the Plan was not top-heavy for any Plan Year ending
during such Year of Service, or if the Year of Service was
completed in a Plan Year beginning before January 1, 1984) of the
Participant's average Compensation for the Plan Years described in
Treasury Regulation section 1.416-1, M-2 (disregarding, as
permitted therein, Compensation received for years ending in Plan
Years beginning before January 1, 1984 and Compensation received
for years beginning after the close of the last Plan Year in which
the Plan is top-heavy). Treasury Regulation sections 1.416-1,
M-14, M-12, and M-2 shall govern how the multiple plan requirements
are satisfied.
13.6 Changes in Applicable Vesting Schedule. In the case of any change in
the vesting provisions of the Plan, whether or not due to a change in the
Plan's status as a top-heavy plan determined pursuant to section 13.3, each
Participant whose nonforfeitable benefits are adversely affected by the change
may elect during the election period to have his nonforfeitable benefits
determined without regard to such change. The election period shall begin on
the date the change is adopted or becomes effective, whichever is earlier, and
end on the latest of (a) the
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date which is 60 days after the change is adopted, (b) the date which is 60
days after the date such change becomes effective, or (c) the date which is 60
days after the day the Participant is given written notice of such change.
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Article XIV. Special Provisions Relating to the ESOP
14.1 Establishment of ESOP. The MichCon Employee Stock Ownership Plan for
Non-Union Employees was originally established effective as of April 1, 1989.
Each Employer shall make contributions to the ESOP in accordance with section
4.3 hereof and the assets of the ESOP shall be invested at all times primarily
in MCN Stock. The Company from time to time may direct the Trustee to incur
debt in accordance with section 14.4 hereof to finance the acquisition of MCN
Stock.
14.2 ESOP Account. The Committee shall establish an ESOP Account in the
name of each Participant to which there shall be credited or charged--
(a) the Employer contributions under section 4.3(a) and (c) hereof made
on behalf of such Participant;
(b) the shares allocated to the Participant pursuant to section 14.4(d)
hereof; and
(c) the investment gains and losses on such amounts.
A Participant's ESOP Account shall be invested only in the MCN Stock fund,
except to the extent that monies diversified under section 14.5 may, at the
Participant's election, be directed to the Equities fund, the Senior Securities
fund, or the Fixed Income fund.
14.3 Discrimination Testing. For purposes of the limitations on Salary
Reduction allotments set forth in section 4.8 and the limitations on Voluntary
Deduction allotments and Employer contributions set forth in section 4.13, the
ESOP and non-ESOP portions of the Plan shall be tested separately. For
purposes of such testing--
(a) the ESOP portion of the Plan shall mean Employer contributions under
section 4.3(a) made on behalf of the Participant and the shares
allocated to a Participant's ESOP Account pursuant to section
14.4(d); and
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(b) the non-ESOP portion of the Plan shall mean all Elective Deferrals,
Voluntary Deductions and Employer contributions under section 4.2.
14.4 Loans.
(a) Stock Acquired with Exempt Loan. The Company may direct the
Trustee to incur a loan on behalf of the ESOP in a manner and under
conditions which will cause the loan to qualify as an "exempt loan"
within the meaning of Code section 4975(d)(3). A loan shall be used
primarily for the benefit of Participants and their beneficiaries.
The proceeds of each such loan shall be used, within a reasonable
time after the loan is obtained, only to purchase MCN Stock, to
repay the loan, or to repay any prior loan.
Any such loan shall provide for a reasonable rate of interest and
an ascertainable period of maturity, and shall be without recourse
against the Plan. Any such loan shall be secured solely by shares
of MCN Stock acquired with the proceeds of the loan and shares of
MCN Stock that were used as collateral on a prior loan which was
repaid with the proceeds of the current loan.
MCN Stock acquired with the proceeds of a loan, including shares
pledged as collateral, shall be placed in a Suspense Account and
released in accordance with subsection (b) below as the loan is
repaid as if all shares in the Suspense Account were pledged. MCN
Stock released from the Suspense Account shall be allocated in the
manner described in subsection (d) below.
No person entitled to payment under a loan made pursuant to this
section 14.4 shall have recourse against any assets of the Plan
other than the MCN Stock used as collateral for the loan, Employer
contributions
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under section 4.3 that are available to meet obligations under the
loan, and earnings attributable to such collateral and the
investment of such contributions. Employer contributions under
section 4.3(b) made with respect to any Plan Year during which the
loan remains unpaid, and earnings on such contributions, shall be
deemed available to meet obligations under the loan, unless
otherwise provided by the Employer at the time such contributions
are made.
(b) Release of Pledged Shares. Any pledge of MCN Stock as collateral
under this section 14.4 shall provide for the release of shares
so pledged upon the payment of any portion of the principal
of the loan. Shares so pledged shall be released in the proportion
that the principal paid on the loan bears to the total principal
amount of the loan, as provided in Treasury Regulation
54.4975-7(b)(8)(ii). The number of shares of MCN Stock that shall
be released with each principal payment on the loan shall be equal
to the number of shares of MCN Stock held as collateral on the loan
immediately prior to the release multiplied by a fraction the
numerator of which is the amount of principal of the loan repaid on
such date and the denominator of which is the sum of the numerator
plus the remaining outstanding principal amount of the loan after
giving effect to the repayment of principal of the loan on such
date. Each loan under this section 14.4 shall comply with the
requirements of Treasury Regulation 54.4975-7(b)(8)(ii). If such a
loan provides for monthly principal payments, shares of MCN Stock
shall be released monthly.
(c) Repayment of Loan. Payments of principal and interest on any loan
under this section 14.4 shall be made by the Trustee at the
direction of the Company solely from--
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(1) the proceeds of such loan, if any portion of such proceeds
are used for such purpose within a reasonable period
of time after the loan is obtained as provided in section
14.4(a) above;
(2) Employer contributions under section 4.3(b) available to meet
obligations under the loan;
(3) earnings from the investment of such contributions;
(4) earnings attributable to MCN Stock acquired with the proceeds
of such loan, whether allocated or unallocated;
(5) the earnings on other allocated shares of MCN Stock held by
the ESOP if the Internal Revenue Service, by private letter
ruling, advises the Company that the use of such earnings to
repay the loan will be deductible under Code section
404(k)(2)(C) and will not violate the requirements of
Code section 4975; and
(6) the proceeds of a subsequent loan made to repay the loan.
The contributions and earnings available to pay a loan must be
accounted for separately by the Committee until all loans under
this section 14.4 have been paid. If dividends on MCN Stock
allocated to the ESOP Account of any Participant are used to repay
any loan, shares of MCN Stock with a fair market value not less
than the amount of such dividends shall be allocated in accordance
with section 4.3(c) to the ESOP Account of such Participant prior
to the end of the Plan Year during which (but for the use of the
dividends to repay the loan) such dividend would have been
allocated to the ESOP Account of such Participant.
(d) Allocation of Released Shares. Subject to the limitations in
section 4.13 on Annual Additions to a Participant's accounts,
shares of MCN Stock released from a Suspense Account described in
section 14.4(a) shall be allocated immediately to the ESOP
Accounts of
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each Participant in the proportion that the contribution that would
be required to be made on behalf of such Participant under section
4.3(a)(1) for the applicable period if no shares were allocated
under section 4.3(a)(2) during such period bears to the total of
all Employer contributions that would be required under section
4.3(a)(1) hereof for the applicable period if no shares were
allocated under section 4.3(a)(2) during such period.
14.5 Diversification. Any Participant or any former Participant whose
distribution has been deferred pursuant to section 9.7(a), who, in either case,
has completed at least ten years of participation in the Plan, and who has
attained the age of 55 is a "Qualified Participant". Any Qualified Participant
shall have the right to make an election to direct the investment of a portion
of his ESOP Account. Such a Participant may elect within 90 days after the
close of each Plan Year in the six plan-year period beginning with the first
Plan Year in which the individual becomes a Qualified Participant to diversify
25 percent of his ESOP Account, less any amount to which a prior election
applies. In the case of the last year to which an election applies, 50 percent
shall be substituted for 25 percent.
The portion of a Qualified Participant's ESOP Account which is eligible for
diversification may be invested in the Fixed Income fund and/or any other
investment funds under the Plan, in any combination thereof.
14.6 Put Option. If MCN Stock becomes not readily tradable on an
established market, then any Participant who is otherwise entitled to a
distribution of his ESOP Account, shall have the right (hereinafter referred to
as "Put Option") to require that his Employer repurchase any MCN Stock
allocated to his ESOP Account under a fair valuation formula. The Put Option
shall be exercisable only by written notice to the Participant's Employer
during the 60-day period immediately following the date of
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distribution and if the Put Option is not exercised within such 60-day period,
then it can be exercised for an additional period of 60 days in the following
Plan Year. The period during which the Put Option is exercisable shall not
include any time when a Participant is unable to exercise it because his
Employer is prohibited from honoring it by applicable federal or state law.
This Put Option shall be nonterminable within the meaning of Treasury
Regulation 54.4975-(11)(a)(ii).
The amount paid for MCN Stock under the Put Option shall be paid in
substantially equal periodic payments (not less frequently than annually) over
a period beginning not later than 30 days after the exercise of the Put Option
and not exceeding five years. There shall be adequate security provided and
reasonable interest paid on the unpaid balance due under this section 14.6.
14.7 Purchase of MCN Stock. The ESOP may acquire shares of MCN Stock on a
national securities exchange, from the Company or any Affiliated Company or
otherwise; provided, however, that if any shares of MCN Stock are purchased
from the Company or any Affiliated Company, the price shall not exceed an
amount which constitutes adequate consideration (as defined in ERISA section
3(18) and any Regulations thereunder) and such purchase shall satisfy all other
requirements of ERISA and the Code applicable to such purchases. Except as
provided in section 14.6 or as otherwise required by applicable law, no shares
of MCN Stock acquired by the ESOP shall be subject to a put, call, or other
option, or buy-sell or similar arrangement while held by and when distributed
from the Plan, whether or not any part of the Plan is then an ESOP. The
protection afforded to Participants in the preceding sentence is nonterminable
within the meaning of Treasury Regulation section 54.4975-(1)(a)(ii).
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Article XV. Miscellaneous
15.1 Beneficiary Designation. Subject to the provisions of section 9.9
and this section 15.1, each Participant shall have the right to designate a
beneficiary or beneficiaries to receive any distribution to be made under
section 9.1 upon the death of such Participant, or, in the case of a
Participant who dies subsequent to termination of his employment but prior to
the distribution of the entire amount to which he is entitled under the Plan,
any undistributed balance to which such Participant would have been entitled.
In the event of the death of a Participant whose spouse survives him, the
beneficiary of the Participant shall be his surviving spouse unless such spouse
has consented in writing to the designation of another beneficiary or
beneficiaries. Any such written consent shall acknowledge the effect of such
election and shall be witnessed by a notary public or by a representative of
the Committee who is designated to act in such capacity by the Committee. In
the event a Participant dies without a surviving spouse, or, in the event the
surviving spouse of a Participant has executed the written consent hereinabove
described, any distributions to be made under section 9.1 upon the death of the
Participant shall be made to his designated beneficiary or beneficiaries. If
the Participant establishes to the satisfaction of the Committee or its
designated representative that such written consent cannot be obtained because
his spouse cannot be located, the requirement of such written consent shall be
waived.
If no beneficiary has been named by a Participant who dies without a surviving
spouse or if the beneficiary designated by such a Participant or by a
Participant whose surviving spouse has executed the written consent hereinabove
described has predeceased the Participant or such designated beneficiary has
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died prior to complete disbursement of the Participant's Plan Account, the
value of his account, or the undistributed portion thereof, shall be paid by
the Trustee at the direction of the Committee--
(a) to the surviving spouse of such deceased Participant, if any;
(b) if there shall be no surviving spouse, to the surviving
children of such deceased Participant, if any, in equal shares;
(c) if there shall be no surviving spouse or surviving children,
to the executors or administrators of the estate of such deceased
Participant; or
(d) if no executor or administrator shall have been appointed for
the estate of such deceased Participant, to the person or persons
who would be entitled to the personal estate of such deceased
Participant under the laws of his state of domicile if he had died
leaving no will.
In the event that a Participant and his spouse die under circumstances such
that it is not clear whether the spouse survived the Participant, the
Participant shall be presumed to have survived the spouse.
15.2 Incompetency. Any distribution under this Plan which is payable to a
beneficiary who is a minor or to a Participant or beneficiary who, in the
opinion of the Committee, is unable to manage his affairs by reason of illness
or mental incompetency, may be made to or for the benefit of any such
Participant or beneficiary in such of the following ways as the Committee shall
direct:
(a) Directly to any such minor beneficiary, if, in the opinion of
the Committee, he is able to manage his affairs;
(b) To the legal representative of any such Participant or beneficiary;
or
(c) To some near relative of any such Participant or beneficiary to be
used for the latter's benefit.
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15.3 Expenses. Except as otherwise provided in the Plan, all costs and
expenses incurred in administering the Plan, including the expenses of the
Committee, the fees and expenses of the Trustee, the fees of its counsel, and
other administrative expenses, shall be borne by the Plan except to the extent
the several Employers elect to bear such costs, fees, and expenses in such
proportions as the Committee shall determine to be equitable and proper having
regard to the nature of the particular expense.
15.4 Nonassignability. Except as may be required to comply with a
qualified domestic relations order (as defined in Code section 414(p)), it is a
condition of the Plan, and all rights of each Participant shall be subject
thereto, that no right or interest of any Participant in the Plan or in a Plan
Account shall be assignable or transferable in whole or in part, either
directly or by operation of law or otherwise, including, but not by way of
limitation, execution, levy, garnishment, attachment, pledge, or bankruptcy but
excluding devolution by death or mental incompetency, and no right or interest
of any Participant in the Plan or in his Plan Account shall be liable for, or
subject to, any obligation or liability of such Participant.
15.5 Employment Noncontractual. The Plan confers no right upon any
Employee to continue in employment.
15.6 Merger or Consolidation with Another Plan. A merger or consolidation
with, or transfer of assets or liabilities to, any other plan shall not be
effected unless the terms of such merger, consolidation, or transfer are such
that each Participant, distributee, beneficiary, or other person entitled to
receive benefits from the Plan would, if the Plan then terminated, receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit such person would have been entitled to receive
immediately before the merger, consolidation, or transfer if the Plan had then
terminated.
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<PAGE> 123
If any other plan shall be merged into and become a part of this Plan, each
Participant or the person entitled to receive a benefit under such other plan
shall be entitled to receive a benefit under this Plan which is equal to the
benefit such person would have been entitled to receive had such other plan
terminated immediately before the merger.
15.7 Continuance by a Successor. In the event that any Employer
corporation shall be reorganized by way of merger, consolidation, transfer of
assets, or otherwise, so that another Affiliated Company shall succeed to all
or a portion of such Employer's business, such successor corporation, with the
consent of each other participating Employer, may be substituted for such
Employer under the Plan by adopting the Plan and becoming a party to the Trust
Agreement. Employee allotments and Employer contributions shall be
automatically suspended from the effective date of any such reorganization
until the date upon which the substitution of such successor corporation for
the Employer under the Plan becomes effective. If, within 90 days from the
effective date of any such reorganization, such successor corporation shall not
have become a party to the Plan, or, if the Employer shall adopt a plan of
complete liquidation other than in connection with a reorganization, the Plan
shall be automatically terminated with respect to Employees of such Employer as
of the close of business on the ninetieth day following the effective date of
such reorganization or as of the close of business on the date of adoption of
such plan of complete liquidation, as the case may be, and the Trustee shall
distribute the portion of the Trust applicable to Participants of such Employer
in the manner provided in section 11.3.
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15.8 Elimination of Certain Provisions. Effective January 1, 1993--
(a) all references to Primark Corporation Stock and the Primark
Corporation Stock fund shall be deleted from the Plan; and
(b) all provisions that ceased to apply on any date prior to January 1,
1993 shall be deleted from the Plan.
* * * * * * * * * *
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<PAGE> 125
IN WITNESS WHEREOF, Michigan Consolidated Gas Company has caused its
corporate name to be hereunto affixed by its duly authorized officers as of the
29th day of December, 1993.
MICHIGAN CONSOLIDATED GAS COMPANY
ATTEST:
By /s/ Carol McCallion
---------------------
By /s/ Douglas A. Green
--------------------
(Corporate Seal)
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<PAGE> 126
FIRST AMENDMENT TO THE
1989 AMENDMENT AND RESTATEMENT OF THE
MICHCON SAVINGS AND STOCK OWNERSHIP PLAN
WHEREAS, Michigan Consolidated Gas Company (the "Company") has previously
established the MichCon Savings and Stock Ownership Plan (the "Plan"), which was
most recently amended and restated effective January 1, 1989;
WHEREAS, FURTHER, pursuant to Section 11.1 of the Plan, the Company has
reserved the right to amend the Plan from time to time;
WHEREAS, FURTHER, in connection with the process by which the Company is
seeking a favorable determination letter from the Internal Revenue Service
regarding the 1989 Amendment and Restatement of the Plan, the Internal Revenue
Service has requested that certain provisions of the Plan be amended, effective
January 1, 1989.
NOW, THEREFORE, the Plan is hereby amended as follows, effective January 1,
1989:
1. THE FOLLOWING SHALL BE ADDED AT THE END OF SECTION 2.1(l):
If as a result of the application of such rules, the adjusted
$200,000/$150,000 limitation is exceeded, then the limitation shall be
prorated among the affected individuals in proportion to each such
individual's compensation as determined under this Section prior to
the application of the limitation.
2. SECTION 2.1(r) SHALL BE AMENDED BY THE ADDITION OF THE FOLLOWING AT
THE END THERETO:
If as a result of the application of such rules, the adjusted
$200,000/$150,000 limitation is exceeded, then the limitation shall be
prorated among the affected individuals in proportion to each such
individual's compensation as determined under this Section prior to
the application of the limitation.
3. SECTION 3.2 SHALL BE AMENDED IN ITS ENTIRETY AS FOLLOWS:
Section 3.2 Eligibility Upon Merger or Reemployment. Any
Employee who is a Participant in any plan which is merged into this
Plan shall become a Participant in this Plan immediately upon the
effective date of the merger. Such an Employee shall be eligible to
actively participate in this Plan in accordance with Section 3.4.
<PAGE> 127
If a Participant's employment is terminated and he is thereafter
reemployed before incurring a Break in Service Year, he shall be
eligible again to actively participate in the Plan as of the date of
his reemployment. In the event such Participant does incur a Break in
Service Year, he shall be eligible again to actively participate in
this Plan retroactive to his date of reemployment after he has again
satisfied the eligibility requirement of Section 3.1(a).
4. SECTION 4.11(a)(2) SHALL BE AMENDED IN ITS ENTIRETY TO READ AS
FOLLOWS:
(2) The Average Contribution Percentage for Highly Compensated
Employees who are eligible to participate for the Plan Year shall not
exceed the Average Contribution Percentage for Nonhighly Compensated
Employees who are eligible to participate for the Plan Year multiplied
by two (2), and the Average Contribution Percentage for such Highly
Compensated Employees shall not exceed the Averge Contribution
Percentage for such Nonhighly Compensated Employees by more than two
percentage points or such lesser amount as the Secretary of Treasury
shall prescribe by regulations in accordance with Code Section
401(m)(9) to prevent the multiple use of this alternative limitation
with respect to any Highly Compensated Employees, which regulations
are incorporated herein by reference. Any such restriction on the
multiple use of the alternative limit shall apply to all affected
Highly Compensated Employees and shall be implemented pursuant to
uniform rules adopted by the Committee.
5. SECTION 4.13(a)(4) SHALL BE AMENDED IN ITS ENTIRETY TO READ AS
FOLLOWS:
(4) amounts described in Code Sections 415(l)(2) and
419(A)(d)(3).
6. SECTION 4.13(a)(B) SHALL BE AMENDED IN ITS ENTIRETY TO READ AS
FOLLOWS:
(B) any amount otherwise treated as an Annual Addition under Code
Section 415(l)(2).
7. SECTION 8.3 SHALL BE AMENDED THROUGH THE ADDITION OF THE FOLLOWING:
To the extent any Employer securities held by the Plan are not
readily tradable on an established securities market, valuation of
such securities shall be
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made by an independent appraiser who meets requirements similar to the
requirements of the regulations prescribed under Code Section
170(a)(1).
8. SECTION 9.7(a)(1) OF THE PLAN SHALL BE AMENDED IN ITS ENTIRETY TO READ
AS FOLLOWS:
(1) If the vested portion of a Participant's Plan Account has
ever exceeded $3,500, no distribution shall be made to such
Participant pursuant to Section 9.1, 9.2, 9.7(c)(2), or 9.9 prior to
the date the Participant attains the age of sixty-five (65) without
written consent of the Participant; and
9. SECTION 9.7 OF THE PLAN SHALL BE AMENDED THROUGH THE ADDITION OF A NEW
SUBSECTION (e) THERETO, WHICH SHALL READ AS FOLLOWS:
(e) Distribution hereunder must begin not later than the sixtieth
(60th) day after the close of the Plan Year in which occurs the latest
of (a) the Participant's termination of employment, (b) the
Participant's attainment of age sixty-five (65), or (c) the tenth
(10th) anniversary of the date the Participant first became a
Participant, unless (1) the Participant elects a later date by
submitting to the Company a written statement signed by the
Participant which describes the benefit and the date on which payment
of such benefit shall commence, so long as such election does not
violate the incidental benefit rule prescribed by the Code; or (2) if
the amount of the payment required to commence on the date determined
hereinabove cannot be ascertained by such date, or if it is not
possible to make such payment on such date because the Company has
been unable to locate the Participant after making reasonable efforts
to do so, a payment retroactive to such date may be made no later than
sixty (60) days after the earliest date on which the amount of such
payment can be ascertained under the Plan or the date on which the
Participant is located, whichever is applicable. For purposes of this
subsection, the failure of a Participant to consent to a distribution
shall be deemed an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
10. SECTION 9.8 OF THE PLAN SHALL BE AMENDED THROUGH THE ADDITION OF THE
FOLLOWING LANGUAGE AT THE END THEREOF:
The distribution requirements of Code Section 409(o) shall be met
by the Plan, to the extent applicable.
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<PAGE> 129
11. SECTION 9.9(a) OF THE PLAN SHALL BE AMENDED IN ITS ENTIRETY TO READ AS
FOLLOWS:
(a) Normal Form. Notwithstanding any provision of the Plan,
other than the final paragraph of section 9.7(a), if a distribution is
to be made under section 9.1(a) or (c) and the Participant has a Fixed
Income fund account and at least one Hour of Employment prior to May
31, 1988, then unless the Participant or legal representative shall
make an election in the manner prescribed in section 9.9(b), the value
of such account (exclusive of the portion thereof attributable to
diversification elections under section 14.5) shall be distributed by
the purchase of an immediately payable single premium annuity contract
providing for monthly payments during the Participant's lifetime and,
if the Participant is married on the date payment of his benefit
commences and his spouse shall survive him, for monthly payments
during the remainder of such spouse's lifetime, each such payment to
such spouse being equal to one-half of the monthly payment received by
the Participant, commencing no later than March 1 of the calendar year
following the calendar year of the Participant's termination of
employment, and delivery of such contract to the Participant within a
reasonable time after the Participant's termination of employment.
If a distribution is to be made under section 9.1(b) because of a
Participant's death and the Participant had a Fixed Income fund
account at the time of his death and at least one Hour of Employment
prior to May 31, 1988, then unless the Participant had made or the
Participant's spouse or beneficiary, as the case may be, makes an
election at the time and in the manner prescribed in section 9.9(b),
the value of the Participant's Fixed Income fund account (exclusive of
the portion thereof attributable to diversification elections under
section 14.5) shall be distributed by purchase of an immediately
payable single premium annuity contract providing for monthly payments
to the Participant's spouse, or, if the Participant was not married on
the day of his death, to his beneficiary during such person's
lifetime, commencing no later than March 1 of the calendar year
following the calendar year of the Participant's death and delivery of
such contract to such person within a reasonable time after the date
of Participant's death.
12. THE SECOND PARAGRAPH OF SECTION 9.9(b) SHALL BE AMENDED THROUGH THE
ADDITION OF THE FOLLOWING AT THE END THEREOF:
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In all cases, such notice shall be provided no less than thirty
(30) days and no more than ninety (90) days prior to the annuity
starting date.
13. A NEW SECTION 9.15 SHALL BE ADDED TO THE PLAN WHICH SHALL READ AS
FOLLOWS:
Notwithstanding anything herein to the contrary, a Participant's
Salary Reduction contributions shall not be distributed prior to the
Employee's retirement, death, disability, termination of employment,
or hardship, except that a distribution of such amounts may be made,
in accordance with Code Section 401(k)(10), upon
(a) termination of the Plan without establishment of another
defined contribution plan other than an employee stock ownership plan
(as defined in Code Section 4975(e) or 409) or a simplified employee
pension plan (as defined in Code Section 408(k));
(b) the disposition by MCN Corporation or the Company to an
unrelated corporation of substantially all of the assets (as defined
in Code Section 409(e)(2)) used in the trade or business if the
Company continues to maintain the Plan after the disposition, but only
with respect to employees who continue employment with the corporation
acquiring such assets; or
(c) the disposition by MCN Corporation or the Company to an
unrelated entity of its interest in a subsidiary (within the meaning
of Code Section 409(d)(3)) if the Company continues to maintain the
Plan, but only with respect to employees who continue employment with
such subsidiary.
14. SECTION 13.2(e)(1) SHALL BE REVISED IN ITS ENTIRETY AS FOLLOWS:
(1) Is one of the fifty (50) (or if fewer, the greater of three
(3) or ten percent (10%) of all Employees) officers of the Employer
who had the largest Compensation in the five-year period ending on the
last day of the current Plan Year, but only if such officer's
Compensation exceeds one-half of the dollar limitation of Code Section
415(b)(1)(A) for the calendar year in which the Determination Date
falls.
15. SECTION 13.3(b) OF THE PLAN SHALL BE AMENDED THROUGH THE ADDITION OF A
NEW PARAGRAPH (e) THERETO, WHICH SHALL READ AS FOLLOWS:
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(E) The account balances and accrued benefits of a Participant
(1) who is not a Key Employee but who was a Key Employee in a prior
year or (2) who has not been credited with at least one Hour of
Service with any Employer at any time during the five-year period
ending on the Determination Date will be disregarded.
16. SECTION 13.4(c) SHALL BE AMENDED THROUGH THE ADDITION OF THE FOLLOWING
AT THE END OF THE FIRST PARAGRAPH THEREOF:
Salary Reduction contributions will not be treated as Employer
contributions for purposes of satisfying the minimum allocation, but
will be included for purposes of determining whether a Key Employee
has received an Employer contribution of at least three percent (3%).
17. Other than as provided herein, the Plan shall remain unchanged.
IN WITNESS WHEREOF, this Amendment has been executed as of this _____ day
of __________, 1994.
MICHIGAN CONSOLIDATED GAS COMPANY
By /s/ Susan K. McNish
--------------------------
Its General Counsel & Secretary
---------------------------
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<PAGE> 132
SECOND AMENDMENT TO THE
1989 AMENDMENT AND RESTATEMENT OF THE
MICHCON SAVINGS AND STOCK OWNERSHIP PLAN
WHEREAS, Michigan Consolidated Gas Company (the "Company") has previously
established the MichCon Savings and Stock Ownership Plan (the "Plan"), which was
most recently amended and restated effective January 1, 1989;
WHEREAS, FURTHER, pursuant to Section 11.1 of the Plan, the Company has
reserved the right to amend the Plan from time to time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective January 1,
1995, except as otherwise provided below:
1. The first paragraph of Section 2.1(r) is amended in its entirety as
follows:
(r) "Eligible Compensation" means the regular basic salary or wage
paid to an Employee by the Employer before any payroll deduction for taxes
or any other purpose, and before any Salary Reduction allotment or
cafeteria plan election, but excluding merit, incentive and other similar
payments made in the form of a lump sum, bonuses, awards, shift
differentials, deferred compensation, severance payments, differential
payments made by reason of the Employee's entry into Military Service, all
amounts paid for work in excess of 40 hours in any one week, all overtime
or other premium paid for work in excess of a maximum number of hours in
any one day, for work on holidays or for any other reason, payments for
so-called fringe benefits such as Employer contributions to this Plan or
any pension or retirement plan, increased wages or salary resulting from
temporary promotion, upgrading or transfer, of whatever duration, to a
higher paid job or classification, and any other premium, auxiliary, or
special pay of any sort whatsoever.
2. Section 2.1(t) is amended in its entirety as follows:
(t) "Employee" means an individual who is an employee of the Company
or an Affiliated Company, but shall not include an individual who enters
into a formal or informal independent contractor agreement with the Company
or is otherwise treated as an independent contractor under the payroll
practices of the Company.
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<PAGE> 133
3. Section 3.7 is amended by adding the following at the end thereof:
Notwithstanding anything herein to the contrary, Hours of Employment
shall be credited hereunder at all times in compliance with the
requirements of the Family and Medical Leave Act.
4. Section 4.1(a)(3) is amended in its entirety as follows, effective
March 1, 1995:
(3) On and after September 1, 1993 (and prior to March 1, 1995 in the
case of a Participant who is a Nonhighly Compensated Employee), 15 percent
of his Compensation Rate, in incremental percentages of 1 percent, or
5. A new subsection (4) is added to Section 4.1(a) and reads as follows,
effective March 1,1995:
(4) On and after March 1, 1995, for a Participant who is a Nonhighly
Compensated Employee, 20 percent of his Compensation Rate, in incremental
percentages of 1 percent.
6. A new subsection (4) is added to Section 4.1(b) and reads as follows,
effective March 1, 1995:
(4) effective March 1, 1995 for Participants who are Nonhighly
Compensated Employees, 20 percent, in incremental percentages of 1 percent
of the Participant's prevailing Compensation Rate.
7. The third paragraph of Section 4.2 is amended in its entirety as
follows, effective July 1, 1995:
For periods beginning on or after July 1, 1995, effective as of the
first pay period following the date on which a Participant has completed 23
Years of Service or as of July 1, 1995, if later, 6 percent shall be
substituted for 4 percent in each place that it appears in the first
paragraph of this section 4.2.
8. Section 4.3(a)(1)(B) is amended in its entirety as follows:
(B) for periods beginning on or after July 1, 1995, the 4 percent
shall be increased to 6 percent for Participants who have completed 23
Years of Service.
9. A new subsection (d) is added to Section 4.3 and reads as follows:
(d) Longevity Contributions. Effective April 1, 1995, within a
reasonable time after April 1 of each Plan Year (each a "Measurement Date")
each
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<PAGE> 134
Employer shall contribute to the ESOP Account of each of its
participating Employees on active payroll as of such Measurement Date
who has at least 30 Years of Service as of such Measurement Date,
twenty-five (25) shares of MCN stock (or an equivalent value
determined by the Committee in a nondiscriminatory manner, which may
be used to purchase MCN Stock).
10. The second paragraph of subsection 4.13(b) is amended in its entirety
as follows, effective January 1, 1996:
Code section 415 shall be applied in such manner as to maximize the
permissible contributions and benefits thereunder and, in determining the
permissible amount of contributions under the Plan, any grandfathering
provisions heretofore or hereafter adopted pursuant to Code section 415
shall be applicable. For purposes of applying the limitations set forth in
Code section 415(e), this Plan shall be the primary plan and any required
reductions shall be made from the MichCon Retirement Plan (or other
applicable defined benefit plan of the Employer).
11. Subsection 6.1(a) is amended in its entirety as follows:
(a) The Employer contributions made pursuant to section 4.3(a), (c),
and (d) shall be invested in the MCN Stock Fund (through each Participant's
ESOP Account), which fund is described in Article VII.
12. Subsection 8.1(c) is amended in its entirety as follows:
(c) an ESOP Account attributable to Employer contributions under
section 4.3(a), (c) and (d), and
13. Subsection 8.5(a) is amended in its entirety as follows:
(a) the value of his ESOP Account attributable to Employer
contributions on his behalf under section 4.3(a), (c) and (d) and shares of
MCN Stock allocated to his ESOP Account under section 14.4(d); and
14. Section 9.7(a)(ii) is amended in its entirety as follows:
(ii) such former Participant may upon 30 days' prior notice to the
Committee receive a partial distribution rather than a total distribution,
of the vested portion of his Account, but not more frequently than (1)
three times in any calendar year (during the period beginning January 1,
1995 and ending June 30, 1995) or (2) four times per year (effective July
1, 1995), and
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<PAGE> 135
15. Section 14.2(a) is amended in its entirety as follows:
(a) the Employer contributions under section 4.3(a), (c) and (d)
hereof made on behalf of such Participant;
16. Other than as provided herein, the Plan shall remain unchanged.
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<PAGE> 136
IN WITNESS WHEREOF, this Amendment has been executed as of this 27th day
of December, 1995.
MICHIGAN CONSOLIDATED GAS COMPANY
By /s/ Susan K. McNish
-----------------------------------
Its Secretary and General Counsel
----------------------------------
5
<PAGE> 137
THIRD AMENDMENT TO THE
1989 AMENDMENT AND RESTATEMENT OF THE
MICHCON SAVINGS AND STOCK OWNERSHIP PLAN
WHEREAS, Michigan Consolidated Gas Company (the "Company") has previously
established the MichCon Savings and Stock Ownership Plan (the "Plan"), which was
most recently restated effective January 1, 1989;
WHEREAS, FURTHER, pursuant to Section 11.1 of the Plan, the Company has
reserved the right to amend the Plan from time to time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective January 1,
1996 except as otherwise provided below:
1. Section 2.1(aaa) is hereby amended in its entirety as follows:
"Valuation Date" means each business day on which the New York Stock
Exchange shall be open for buisness.
2. Section 4.5(a) shall be clarified by adding the following at the end
thereof, effective January 1, 1995:
Former Employees who are Participants and who receive an eligible rollover
distribution from another plan sponsored by an Employer may make rollover
contributions in accordance with this section.
3. Section 9.10(g) shall be amended in its entirety as follows:
(g) Amounts of principal and interest received on a loan shall be credited
to the Participant's account and the outstanding loan balance shall be
considered an investment of the assets of the account. Payment of
principal and interest related to loans made from a Participant's ESOP
Account shall be credited to such Participant's ESOP Account. Payment of
principal and interest related to loans made from a Participant's Savings
Plan Account shall be credited to the Participant's Investment Plan Account
and shall be invested in the investment funds in the same proportions as
the investment election then in effect by the Participant under Article VI.
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<PAGE> 138
4. Section 10.1(a) shall be amended in its entirety as follows:
(a) The Company shall appoint a Committee consisting of at least three
members which shall be known as the Master Trust, Retirement and Savings
Plan Committee (the "Committee") and which shall be responsible (except for
duties specifically vested in the Trustee) for the administration of the
provisions of the Plan.
5. A new Section 15.9 shall be added to the plan, effective October 12, 1996,
which shall read as follows:
15.9 USERRA Rights. Notwithstanding any provision of the Plan to the
contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Code Section
414(u), to the extent applicable. Loan repayments will be suspended under
this Plan as permitted under Code Section 414(u).
6. A new Article XVI shall be added to the plan, effective as of January 1,
1996 provided that a favorable private letter ruling in connection with this
addition is received from the Internal Revenue Service on or before January 31,
1997, and which is otherwise effective on January 1 of the year in which such
favorable private letter ruling is received, which such Article XVI shall read
as follows:
Article XVI. Redesignation of ESOP
This Article XVI designates that part of the non-ESOP portion of the plan
which is invested in the MCN Stock Fund becomes part of the ESOP portion of
the Plan. This Article XVI also sets forth certain provisions regarding
the operation of the ESOP portion of the Plan, such provisions to supersede
any contrary provisions of the Plan.
Except as specifically provided in this Article XVI, the provisions of this
Article XVI, including the redesignation of the ESOP portion of the Plan
described herein, shall not affect any beneficiary designations or any
other applicable agreements, elections, or consents that Participants,
spouses, or beneficiaries validly executed under the terms of the Plan
before the execution date of the Plan amendment which first adopts this
Article XVI, and such designations, agreements, elections and consents
shall continue to apply in the same manner as they did prior to such
amendment.
The ESOP, as set forth in this Article XVI, is intended to meet with
requirements of an employee stock ownership plan, as defined in Section
4975(e)(7) of the Code and the accompanying regulations, and Section
407(d)(6) of ERISA. As provided below, the ESOP is designed to invest
primarily in qualifying employer securities of MCN Corporation.
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<PAGE> 139
16.1 REDESIGNATION OF ESOP PORTION OF PLAN. Effective as of January 1, 1996,
the ESOP portion of the Plan shall consist of the ESOP Account of each
Participant plus the remaining part of each Participant's Plan Account that is
invested in the MCN Stock Fund. The put option provisions of Section 14.6 shall
apply to the entire ESOP portion of the Plan. However, only a Participant's
ESOP Account shall be subject to the restrictions described in the first
sentence of Section 6.3.
16.2 ALLOCATION OF SAVINGS PLAN ACCOUNT BALANCES TO ESOP PORTION OF PLAN.
On and after January 1, 1996, all amounts contributed, transferred or
designated as allocable to the Savings Plan Account of any Participant shall be
treated as part of the ESOP portion of the Plan to the extent the Participant
has directed the investment of such amounts in the MCN Stock Fund in accordance
with Article VI of the Plan.
16.3 DISTRIBUTION OF DIVIDENDS ON MCN STOCK. At the direction of the
Committee exercised in its sole discretion, the Trustee will, after dividends
are paid on MCN Stock held in the Trust, but in no event later than 90 days
following the end of the Plan Year in which such dividends are paid (to the
extent such dividends are not used to make payment on an exempt loan as
provided for in section 14.4(c) of the Plan), either (i) distribute to
Participants such portion of the dividends attributable to the interests in MCN
Stock held in their Plan Accounts (or, if so determined by the Committee,
their ESOP Accounts) as described below or, (ii) arrange to have such
dividends distributed directly to Participants by the Employer, or (iii)
arrange to have such dividends distributed to Participants by a dividend
disbursement agent selected by the Committee, which may be the Employer's
payroll department. In its sole discretion, the Committee may direct the
Trustee to have such dividends distributed only to Participants who elect to
receive such dividend distributions in accordance with procedures established
by the Committee (which such procedures may apply to all Participants, solely
to Participants described in (a) below, or solely to Participants not described
in (a) below). Further, in its sole discretion, the Committee may establish
procedures that would permit Participants to elect to have dividends
distributed to them in a single sum rather than over periods that might
otherwise be determined by the Committee to correspond with Employer payroll
practices.
The distribution of dividends on MCN Stock held in a Participant's Plan
Account (or, if so determined by the Committee, a Participant's ESOP Account )
shall be in the following amounts:
a. Participants who have terminated employment with the Employers
and all other nonemployees with Plan Account balances (such as QDRO
alternate payees and beneficiaries of deceased Participants) shall
receive distributions of all of the dividends paid on the MCN Stock
held in their Plan Accounts (or, if so determined by the Committee,
their ESOP Accounts), provided, however, that the aggregate amount of
such distributions to each such Participant or other individual shall
not exceed
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<PAGE> 140
$3,500 in any Plan Year (unless the Committee, in its sole
discretion, uniformly permits such Participants to elect to receive
such distributions without limitation).
b. Participants who are employees who participate in the MCN
Supplemental Savings Plan shall receive distributions of all of
the dividends paid on the MCN Stock held in their Plan Accounts
(or, if so determined by the Committee, their ESOP Accounts).
c. Each other Participant not described in (a) or (b) above shall
receive distributions equal to the amount of Additional
Allotments that he or she would be permitted to make under
Section 16.4 below, subject to the limitations of Section 16.5
below, unless such Participant affirmatively elects to receive a
distribution of 100% of the dividends paid on the MCN Stock held
in his or her Plan Account (or, if so determined by the
Committee, his or her ESOP Account).
For purposes of this Section 16.3, the ESOP portions of both the
MichCon Savings and Stock Ownership Plan and the MichCon Investment and Stock
Ownership Plan shall be considered in the aggregate for each Participant and
the payment of dividend amounts on MCN Stock held in the Plan Accounts (or, if
so determined by the Committee, the ESOP Accounts) under both plans shall not
exceed the limitations on distributions of dividends set forth in subsections
(a) and (c) above. In this regard, the limitations under subsections (a) and
(c) shall be allocated among the two plans for a Participant by multiplying
such limitation by a percentage derived by dividing the total of ESOP portion
under each plan by the total ESOP portions under both plans (or, if so
determined by the Committee, by dividing the total ESOP Account under each plan
by the total ESOP Account under both plans).
16.4 ADDITIONAL ALLOTMENTS. All active Employee-Participants will be deemed
to have elected to make additional Salary Reduction allotments similar to
those elected under Section 4.1 ("Additional Allotments") for each calendar
year unless they affirmatively elect (under procedures established by the
Committee) not to make such allotments at least 15 days prior to the scheduled
commencement of any distributions under Section 16.3 above (the "Election
Date"). The amount of Additional Allotments deemed to be elected under this
Section 16.4 shall be equal to the amount of ESOP dividends distributed to the
Participant under Section 16.3 above, but subject to applicable legal
limitations, including but not limited to the restrictions of Code Sections
402(g) and 415. Such restrictions shall be applied in the manner determined by
the Committee in its sole discretion . The amount of Additional Allotments
shall be calculated by the Committee utilizing uniform methodologies and
assumptions established by the Committee in its sole discretion.
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16.5 PROVISIONS FOR FURTHER REDUCTION OF ADDITIONAL ALLOTMENTS. A
Participant's Additional Allotments shall be further reduced as necessary below
the level described in Section 16.4 above so as to limit Additional Allotments
to an amount equal to or not exceeding:
a. The lesser of (i) the residual of a Participant's gross wages
less all deductions other than Additional Allotments or (ii) the
maximum further reduction permitted under applicable law.
b. Zero, in the event that the Participant does not make allotments
pursuant to Section 4.1 of the Plan at the time of any
distribution of dividends pursuant to Section 16.3 above.
c. Zero, in the event that the Participant's Plan Account is
invested in less than one share of MCN Stock immediately prior
to the distribution of dividends.
16.6 EMPLOYER CONTRIBUTIONS. Additional Allotments shall not be subject
to the limitations on Salary Reduction and Voluntary Deduction allotments
described in Section 4.1. In addition, Additional Allotments shall not be
treated as Salary Reduction or Voluntary Deduction allotments under Section 4.1
for the purposes of determining Employer contributions under 4.2 and 4.3 of the
Plan, and shall be disregarded for these purposes.
IN WITNESS WHEREOF, this Amendment has been executed as of this 23rd day of
December, 1996.
MICHIGAN CONSOLIDATED GAS COMPANY
By /s/ Susan K. McNish
---------------------------------------------
Its Vice President, General Counsel & Secretary
---------------------------------------------
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