<PAGE> 1
As filed with the Securities and Exchange Commission on March 7, 1997.
REGISTRATION NO. 333-21175
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
MCN CORPORATION
MCN Financing II
MCN Financing III
MCN Financing IV
(Exact Name of Registrant as
Specified in Its Charter)
Michigan
Delaware
Delaware
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
38-2820658
38-6668275
38-3334051
38-3334052
(I.R.S. Employer
Identification No.)
------------------------
500 Griswold Street, Detroit, Michigan 48226, (313) 256-5500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------
DANIEL L. SCHIFFER, ESQ.
Senior Vice President, General Counsel and Secretary
MCN CORPORATION
500 Griswold Street, Detroit, Michigan 48226, (313) 256-5500
(Name, Address, Including Zip Code, and Telephone Number, Area Code, of Agent
for Service for Each Registrant)
Copies to:
JOHN W. OSBORN, ESQ.
VINCENT J. PISANO, ESQ.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-2718
WILLIAM S. LAMB, ESQ.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019-5389
(212) 424-8000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement. If the only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, check the following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [X]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains four forms of prospectus: (i) a
prospectus supplement covering Trust Originated Preferred Securities(SM)
("TOPrS(SM)") to be issued by MCN Financing II and guaranteed to the extent set
forth therein by MCN Corporation, doing business as MCN Energy Group Inc. (ii) a
prospectus supplement covering preferred securities ("Capital Securities") to be
issued by MCN Financing IV and guaranteed to the extent set forth therein by MCN
Energy Group Inc., (iii) a prospectus supplement covering FELINE PRIDES(SM),
consisting of Income PRIDES and Growth PRIDES, both of which are referred to as
"Stock Purchase Units" in the base prospectus, to be issued by MCN Energy Group
Inc., and (iv) a base prospectus for MCN Energy Group Inc., MCN Financing II,
MCN Financing III and MCN Financing IV.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 7, 1997
PROSPECTUS SUPPLEMENT
- ----------------------------------
(TO PROSPECTUS DATED , 1997)
6,000,000 PREFERRED SECURITIES
MCN FINANCING II
% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPRS(SM)")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
MCN ENERGY GROUP INC. LOGO
The % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial interests in the assets
of MCN Financing II, a statutory business trust formed under the laws of the
State of Delaware ("MCN Financing" or the "Trust"). MCN Corporation, a Michigan
corporation, doing business as MCN Energy Group Inc., ("MCN" or the "Company"),
will directly or indirectly own all the common securities (the "Common
Securities" and, together with the Preferred Securities, the "Trust Securities")
representing common undivided beneficial interests in the assets of MCN
Financing. MCN Financing exists for the sole purpose of issuing the Preferred
Securities and Common Securities and investing the proceeds thereof in an
equivalent amount of % Junior Subordinated Debentures due 2037 (the "Junior
Subordinated Debentures") of MCN. The Junior Subordinated Debentures and the
Preferred Securities in respect of which this Prospectus Supplement is being
delivered shall be referred to herein as the "Offered Securities." The Junior
Subordinated Debentures when issued will be unsecured obligations of MCN and
will be subordinate and junior in right to certain other indebtedness of the
Company, as described herein, and pari passu in right of payment with MCN's
other junior subordinated debentures. Upon an event of default under the
Declaration (as defined herein), the holders of Preferred Securities will have a
preference over the holders of the Common Securities with respect to payments in
respect of distributions and payments upon redemption, liquidation and
otherwise.
(Continued on next page.)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-7 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF
DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
Application will be made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "New York Stock Exchange") under the symbol " ."
If so approved, trading of the Preferred Securities on the New York Stock
Exchange is expected to commence within a 30-day period after the initial
delivery of the Preferred Securities. See "Underwriting."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================================================
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security...................... $25.00 (3) $25.00
- -----------------------------------------------------------------------------------------------------------------------
Total....................................... $150,000,000 (3) $150,000,000
=======================================================================================================================
</TABLE>
(1) Plus accrued distributions, if any, from , 1997.
(2) MCN Financing and MCN have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Junior Subordinated Debentures, MCN has
agreed to pay to the Underwriters as compensation (the "Underwriters'
Compensation") for their arranging the investment therein of such proceeds
$ per Preferred Security (or $ in the aggregate); provided, that
such compensation for sales of 10,000 or more Preferred Securities to a
single purchaser will be $ per Preferred Security. Therefore, to the
extent of such sales, the actual amount of Underwriters' Compensation will
be less than the aggregate amount specified in the preceding sentence. See
"Underwriting."
(4) Expenses of the offering which are payable by MCN are estimated to be
$ .
------------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company, on or about ,
1997.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is , 1997.
(SM)"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE> 4
(Continued from previous page)
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing , 1997 ("distributions"). The payment of
distributions out of moneys held by MCN Financing and payments on liquidation of
MCN Financing or the redemption of Preferred Securities, as set forth below, are
guaranteed by MCN (the "Guarantee") to the extent described herein and under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. The Guarantee covers payments of distributions and other payments on
the Preferred Securities only if and to the extent that MCN has made a payment
of interest or principal or other payments on the Junior Subordinated Debentures
held by MCN Financing as its sole asset. The Guarantee, when taken together with
MCN's obligations under the Junior Subordinated Debentures and the Indenture (as
defined below) and its obligations under the Declaration (as defined below),
including its obligations to pay costs, expenses, debts and liabilities of MCN
Financing (other than with respect to the Trust Securities), provides a full and
unconditional guarantee of amounts due on the Preferred Securities. See "Risk
Factors -- Rights Under the Guarantee" herein. The obligations of MCN under the
Guarantee are subordinate and junior in right of payment to all other
liabilities of MCN (other than any guarantee, now existing or hereafter entered
into, by the Company in respect of any preferred or preference stock of any
subsidiary of the Company, which ranks pari passu with the Guarantee) and pari
passu with the most senior preferred stock issued, from time to time, if any, by
MCN. The obligations of MCN under the Junior Subordinated Debentures are
subordinate and junior in right of payment to all present and future Senior
Indebtedness (as defined herein) of MCN, which aggregated approximately $1,673
million at December 31, 1996, and rank pari passu with other junior subordinated
debentures issued by MCN and with MCN's other general unsecured creditors. The
Junior Subordinated Debentures purchased by MCN Financing may be subsequently
distributed pro rata to holders of the Preferred Securities and Common
Securities in connection with the dissolution of MCN Financing, upon the
occurrence of certain events.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment date and other payment dates on the Junior Subordinated
Debentures, which will be the sole assets of MCN Financing. As a result, if
principal or interest is not paid on the Junior Subordinated Debentures, no
amounts will be paid on the Preferred Securities. If MCN does not make principal
or interest payments on the Junior Subordinated Debentures, MCN Financing will
not have sufficient funds to make distributions on the Preferred Securities, in
which event, the Guarantee will not apply to such distributions until MCN
Financing has sufficient funds available therefor.
MCN has the right to defer payments of interest on the Junior Subordinated
Debentures by extending the interest payment period on the Junior Subordinated
Debentures at any time for up to 20 consecutive quarters (each, an "Extension
Period"), provided that such Extension Period may not extend beyond the maturity
of the Junior Subordinated Debentures. If interest payments are so deferred,
distributions on the Preferred Securities will also be deferred. During such
Extension Period, distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at an annual rate of % per annum
compounded quarterly, and during any Extension Period, holders of Preferred
Securities will be required to include deferred interest income in their gross
income for United States federal income tax purposes in advance of receipt of
the cash distributions with respect to such deferred interest payments. There
could be multiple Extension Periods of varying lengths throughout the term of
the Junior Subordinated Debentures. See "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period," "Risk Factors -- Option
to Extend Interest Payment Period" and "United States Federal Income Taxation --
Interest Income and Original Issue Discount."
The Junior Subordinated Debentures are redeemable by MCN, in whole or in
part, from time to time, on or after , 2002, or at any time in
certain circumstances upon the occurrence of a Tax Event (as defined herein). If
MCN redeems Junior Subordinated Debentures, MCN Financing must redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debentures so redeemed at $25 per
Preferred Security plus accrued and unpaid distributions thereon (the
"Redemption Price") to the date fixed for redemption. See "Description of the
Preferred Securities -- Mandatory Redemption." The Preferred Securities will be
redeemed upon maturity of the Junior Subordinated Debentures. The Junior
Subordinated Debentures mature on , 2037. In addition, upon the
occurrence of a Special Event (as defined herein), unless the Junior
Subordinated Debentures are redeemed in the limited circumstances described
herein, MCN Financing shall be dissolved, with the result that the Junior
Subordinated Debentures will be distributed to the holders of the Preferred
Securities, on a pro rata basis, in lieu of any cash distribution. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution." In the case of the occurrence of a Special Event that is a Tax
Event, MCN will have the right in certain circumstances to redeem the Junior
Subordinated Debentures, which would result in the redemption by MCN Financing
of Trust Securities in the same amount on a pro rata basis. If the Junior
Subordinated Debentures are distributed to the holders of the Preferred
Securities, MCN will use its best efforts to have the Junior Subordinated
Debentures listed on the New York Stock Exchange or on such other exchange as
the Preferred Securities are then listed. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution" and "Description of the
Junior Subordinated Debentures."
In the event of the involuntary or voluntary dissolution, winding up or
termination of MCN Financing, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, winding up or
termination the Junior Subordinated Debentures are distributed to the holders of
the Preferred Securities. See "Description of the Preferred Securities --
Liquidation Distribution Upon Dissolution."
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING THE PURCHASE OF SECURITIES TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE> 5
MCN ENERGY GROUP INC.
SELECTED HISTORICAL FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS(1)
Operating Revenues............................ $1,997,268 $1,495,232 $1,473,633 $1,420,754 $1,395,341
Operating Income.............................. $ 211,293 $ 188,229 $ 147,914 $ 138,694 $ 120,744
Net income from:
Continuing Operations....................... $ 112,569 $ 93,169 $ 74,598 $ 70,173 $ 54,537
Discontinued Operations..................... 37,771 3,587 3,170 2,617 2,581
---------- ---------- ---------- ---------- ----------
Total.................................. $ 150,340 $ 96,756 $ 77,768 $ 72,790 $ 57,118
========== ========== ========== ========== ==========
Earnings Per Share from:
Continuing Operations....................... $ 1.68 $ 1.44 $ 1.26 $ 1.20 $ 1.00
Discontinued Operations..................... .57 0.05 0.05 0.04 0.05
---------- ---------- ---------- ---------- ----------
Total.................................. $ 2.25 $ 1.49 $ 1.31 $ 1.24 $ 1.05
========== ========== ========== ========== ==========
Average Number of Common Shares Outstanding
(000's)..................................... 66,944 64,743 59,394 58,642 54,216
GAS DISTRIBUTION (MMCF)(2)
Gas sales................................... 220,958 209,816 204,384 205,372 203,110
End user transportation..................... 146,895 145,761 140,020 128,643 129,722
Intermediate transportation................. 527,510 374,428 322,969 302,662 209,360
---------- ---------- ---------- ---------- ----------
Total.................................. 895,363 730,005 667,373 636,677 542,192
========== ========== ========== ========== ==========
Customers................................... 1,183,443 1,172,613 1,154,545 1,141,986 1,130,165
DIVERSIFIED ENERGY(2)
Exploration & Production
Gas Production (MMcf)..................... 57,202 31,420 16,513 2,307 --
Oil Production (Mbbl)..................... 1,086 388 85 -- --
Gas and Oil Production (MMcf
Equivalent)............................ 63,718 33,748 17,023 2,307 --
Pipelines & Processing (MMcf)(3)
Gas Processed............................. 44,223 14,588 1,942 -- --
Transportation............................ 86,391 4,994 1,194 294 --
Energy Marketing and Power Generation (MMcf)
Gas Sales................................. 218,952 170,668 142,352 122,782 112,263
Exchange Gas Deliveries................... 22,586 16,462 13,301 10,016 2,443
---------- ---------- ---------- ---------- ----------
241,538 187,130 155,653 132,798 114,706
========== ========== ========== ========== ==========
CAPITAL INVESTMENTS(4)
Gas Distribution.............................. $ 215,318 $ 241,494 $ 153,059 $ 143,120 $ 130,776
Diversified Energy............................ 552,866 385,114 196,030 60,925 34,608
MCN's Share of Joint Ventures................. 16,056 52,850 40,422 36,502 31,203
Discontinued Operations(1).................... 6,508 9,380 12,458 5,064 5,484
---------- ---------- ---------- ---------- ----------
Total.................................. $ 790,748 $ 688,838 $ 401,969 $ 245,611 $ 202,071
========== ========== ========== ========== ==========
TOTAL ASSETS.................................... $3,633,404 $2,898,640 $2,240,973 $1,881,900 $1,648,989
========== ========== ========== ========== ==========
</TABLE>
(continued on next page)
S-3
<PAGE> 6
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(5)................................ $1,252,040 $ 993,407 $ 685,519 $ 494,821 $ 379,811
========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED STOCK OF
SUBSIDIARY(5)................................. $ -- $ -- $ 2,618 $ 5,618 $ 9,000
========== ========== ========== ========== ==========
MCN-OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARIES HOLDING SOLELY
SUBORDINATED DEBENTURES OF MCN................ $ 173,809 $ 96,449 $ 96,349 $ -- $ --
========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of period)........ $ 28.875 $ 23.25 $ 18.00 $ 17.38 $ 15.44
Dividends Paid Per Share...................... $ .9400 $ .9000 $ .8675 $ .8450 $ .8250
</TABLE>
- ---------------
MMcf -- One million cubic feet.
Mbbl -- Thousands of barrels
(1) In June 1996, MCN sold its computer operations subsidiary, The Genix Group,
Inc. ("Genix"). Accordingly, Genix has been accounted for as a discontinued
operation.
(2) Includes intercompany volumes.
(3) Includes MCN's share of joint ventures.
(4) Capital investments represent consolidated capital expenditures,
acquisitions, and MCN's share of capital expenditures made by joint
ventures, less the minority partners' share of consolidated capital
expenditures.
(5) Excludes current requirements. Long-term debt includes a $100 million term
loan, due 2000, of MCNIC Oil & Gas Company, a wholly-owned subsidiary of
MCNIC, with recourse to MCN limited to certain events, including the
realization of tax credits and performance under swap contracts.
S-4
<PAGE> 7
MCN ENERGY GROUP INC.
In January 1997, MCN Corporation began doing business under the name MCN
Energy Group Inc. (MCN). The formal corporate name change is subject to
shareholder approval to be sought at the Company's 1997 Annual Shareholders'
Meeting. The name change reflects the Company's evolution during the past five
years from a natural gas distribution company into a new, diversified energy
company. MCN Energy Group Inc. will retain its current New York Stock Exchange
symbol of "MCN".
As of December 31, 1996, MCN was a $3.6 billion (assets) diversified energy
holding company with natural gas markets and investments in various regions in
North America and internationally. MCN's strategy is to aggressively invest in a
diverse portfolio of domestic and international energy-related projects. MCN's
intent is:
- to invest in a portfolio of projects including investments in
exploration and production, power generation, gas gathering and
processing systems, and gas storage;
- to continue to market natural gas to large-volume users and utilities;
and
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion.
Accordingly, MCN's capital investments could exceed $3.0 billion by the
year 2000. This expected level of investment will increase capital requirements
materially in excess of internally generated funds and require the issuance of
additional debt and equity securities. MCN's capital requirements and general
market conditions will affect the timing and amount of future issuances. As it
expands its business, MCN's capitalization objective is to maintain its solid
investment-grade credit ratings through a strong balance sheet.
MCN operates through two major business groups, Diversified Energy and Gas
Distribution.
DIVERSIFIED ENERGY, operating through MCN Investment Corporation (MCNIC),
is an integrated energy group with investments in exploration and production,
gas gathering and processing, gas storage fields and electric power generation.
It also markets natural gas to large-volume users and utilities. For the twelve
months ended December 31, 1996, operating revenues for this segment exceeded
$700 million and, at December 31, 1996, total assets exceeded $1.5 billion,
including investments in joint ventures. For the twelve month period ended
December 31, 1996, MCNIC invested approximately $575 million in various
projects, of which approximately $400 million was for exploration and production
projects. Expanding domestic and international opportunities should enable MCNIC
to continue to grow its markets and increase its asset-based investments.
At December 31, 1996, MCNIC owned 1,138 billion cubic feet (Bcf) of proved
gas reserves, and proved oil reserves totaled 17.2 million barrels, or the
equivalent of another 103 Bcf of natural gas. The number of producing oil and
gas wells totaled 2,890 at December 31, 1996.
GAS DISTRIBUTION, operating principally through Michigan Consolidated Gas
Company, operates the largest natural gas distribution and intrastate
transmission system in Michigan and one of the largest in the United States. For
the twelve months ended December 31, 1996, operating revenues for this segment
were approximately $1.3 billion. In addition, at December 31, 1996, the segment
had total assets of approximately $2.1 billion. Gas Distribution serves
approximately 1.2 million customers in more than 500 communities throughout
Michigan with gas sales and transportation markets of about 900 Bcf. Gas
Distribution continues to increase its markets by reaching customers in new
communities, offering new services to current customers and expanding its
intrastate gas transportation network.
The mailing address of MCN's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226, and its telephone number is (313) 256-5500.
S-5
<PAGE> 8
MCN FINANCING II
MCN Financing is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of March 6, 1996 (as amended by
the Amendment to Declaration of Trust, dated May 29, 1996), executed by MCN, as
sponsor (the "Sponsor"), and the trustees of MCN Financing (the "MCN Trustees")
and (ii) the filing of a certificate of trust with the Secretary of State of the
State of Delaware on March 6, 1996. Such declaration will be amended and
restated in its entirety (as so amended and restated, the "Declaration")
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus Supplement and the accompanying Prospectus form a part.
The Declaration will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities. See
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." MCN will directly or indirectly acquire Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of MCN Financing. MCN Financing exists for the exclusive purposes of (i) issuing
the Trust Securities representing undivided beneficial interests in the assets
of the Trust, (ii) investing the gross proceeds of the Trust Securities in the
Junior Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto. MCN Financing has a term of approximately
forty-five (45) years, but may terminate earlier as provided in the Declaration.
Pursuant to the Declaration, the number of MCN Trustees will initially be
three. Two of the MCN Trustees (the "Regular Trustees") will be persons who are
employees or officers of or who are affiliated with MCN. The third trustee will
be a financial institution that is unaffiliated with MCN, which trustee will
serve as institutional trustee under the Declaration and as indenture trustee
for the purposes of compliance with the provisions of the Trust Indenture Act
(the "Institutional Trustee"). Initially, Wilmington Trust Company, a Delaware
banking corporation, will be the Institutional Trustee until removed or replaced
by the holder of the Common Securities. For the purpose of compliance with the
provisions of the Trust Indenture Act, Wilmington Trust Company will also act as
trustee (the "Guarantee Trustee") under the Guarantee and as Delaware Trustee
for the purposes of the Trust Act (as defined herein), until removed or replaced
by the holder of the Common Securities. See "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus. See "Description of the
Preferred Securities -- Voting Rights."
The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and the
Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined herein) as the holder of the Junior
Subordinated Debentures. In addition, the Institutional Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Junior
Subordinated Debentures for the benefit of the holders of the Trust Securities.
The Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Preferred Securities. MCN, as
the direct or indirect holder of all the Common Securities, will have the right
to appoint, remove or replace any MCN Trustee and to increase or decrease the
number of MCN Trustees; provided, that the number of MCN Trustees shall be at
least three, a majority of which shall be Regular Trustees. MCN will pay all
fees and expenses related to MCN Financing and the offering of the Trust
Securities. See "Description of the Junior Subordinated Debentures --
Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
The trustee in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890. The
principal place of business of the Trust shall be c/o MCN Energy Group Inc., 500
Griswold Street, Detroit, Michigan 48226, and its telephone number is (313)
256-5500.
S-6
<PAGE> 9
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE, AND JUNIOR SUBORDINATED
DEBENTURES
MCN's obligations under the Guarantee are subordinate and junior in right
of payment to all liabilities of MCN (other than any guarantee, now existing or
hereafter entered into by the Company in respect of any preferred or preference
stock of any subsidiary of the Company, which ranks pari passu with the
Guarantee) and pari passu with the most senior preferred stock issued, from time
to time, if any, by MCN. The obligations of MCN under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all present and
future Senior Indebtedness of MCN and pari passu with the other junior
subordinated debentures issued by MCN, and obligations to or rights of MCN's
other general unsecured creditors. No payment of principal of (including
redemption payments, if any), premium, if any, or interest on the Junior
Subordinated Debentures may be made if (i) any Senior Indebtedness of MCN is not
paid when due and any applicable grace period with respect to such default has
ended with such default not having been cured or waived or ceasing to exist, or
(ii) the maturity of any Senior Indebtedness has been accelerated because of a
default. As of December 31, 1996, Senior Indebtedness aggregated approximately
$1,673 million. There are no terms in the Preferred Securities, the Junior
Subordinated Debentures or the Guarantee that limit MCN's ability to incur
additional indebtedness, including indebtedness that ranks senior to the Junior
Subordinated Debentures and the Guarantee. See "Description of the Preferred
Securities Guarantees -- Status of the Preferred Securities Guarantees" and
"Description of the Junior Subordinated Debentures" in the accompanying
Prospectus, and "Description of the Junior Subordinated Debentures --
Subordination" herein.
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Guarantee Trustee will act as indenture trustee under the Guarantee for
the purposes of compliance with the provisions of the Trust Indenture Act. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent the Trust has funds available
therefor, (ii) the Redemption Price, including all accrued and unpaid
distributions with respect to Preferred Securities called for redemption by the
Trust, to the extent the Trust has funds available therefor, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated
Debentures to the holders of Preferred Securities or a redemption of all the
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities to the date
of the payment, to the extent the Trust has funds available therefor, or (b) the
amount of assets of the Trust remaining available for distribution to holders of
the Preferred Securities in liquidation of the Trust. The holders of a majority
in liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Guarantee. Notwithstanding the foregoing,
if the Company has failed to make a payment under the Guarantee, any holder of
Preferred Securities may institute a legal proceeding directly against MCN to
enforce its rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If MCN were to default on its obligation to pay amounts payable on the
Junior Subordinated Debentures, the Trust would lack available funds for the
payment of distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, holders of the Preferred Securities would rely on the enforcement (1)
by the Institutional Trustee of its rights as registered holder of the Junior
Subordinated Debentures against MCN pursuant to the terms of the Junior
Subordinated Debentures or (2) by such holder of its right
S-7
<PAGE> 10
against MCN to enforce payments on Junior Subordinated Debentures. See
"Description of the Preferred Securities Guarantees" and "Description of the
Subordinated Debt Securities" in the accompanying Prospectus. The Declaration
provides that each holder of Preferred Securities, by acceptance thereof, agrees
to the provisions of the Guarantee, including the subordination provisions
thereof, and the Indenture (as such term is defined in "Description of Junior
Subordinated Debentures" herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debentures against MCN. In addition, the holders of a majority in
liquidation amount of the Preferred Securities will have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Institutional Trustee or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as a holder of the Junior Subordinated Debentures. The Subordinated Debt
Securities Indenture provides that the Debt Trustee (as defined herein) shall
give holders of the Junior Subordinated Debentures notice of all uncured
defaults or events of default within 30 days after occurrence. However, except
in the case of a default or an event of default in payment on the Junior
Subordinated Debentures, the Debt Trustee is protected in withholding such
notice if its officers or directors in good faith determine that withholding of
such notice is in the interest of the holders.
If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debentures, a holder of Preferred Securities may institute a legal
proceeding directly against MCN to enforce the Institutional Trustee's rights
under the Junior Subordinated Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of MCN to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, the
redemption date), then a holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder directly of the principal
of or interest on the Junior Subordinated Debentures having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities of such
holder (a "Direct Action") on or after the respective due date specified in the
Junior Subordinated Debentures. In connection with such Direct Action, MCN will
be subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by MCN to such holder of Preferred
Securities in such Direct Action. The holders of Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures. See "Description of the Junior Subordinated
Debentures -- Indenture Events of Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
MCN has the right under the Indenture to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period at any
time, and from time to time, on the Junior Subordinated Debentures. As a
consequence of such an extension, quarterly distributions on the Preferred
Securities would be deferred (but despite such deferral would continue to accrue
with interest thereon compounded quarterly) by MCN Financing during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Debentures is limited to a period not
exceeding 20 consecutive quarters; provided that such Extension Period may not
extend beyond the maturity of the Junior Subordinated Debentures. In the event
that MCN exercises this right to defer interest payments, then (a) MCN shall not
declare or pay dividends on, or make a distribution with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of shares of MCN Common
Stock in connection with the satisfaction by MCN of its obligations under any
employee benefit plans or the satisfaction by MCN of its obligations pursuant to
any contract or security outstanding on the date of such exercise requiring MCN
to purchase shares of MCN Common Stock, (ii) as a result of a reclassification
of MCN capital stock or the exchange or conversion of one class or series of
MCN's capital stock for another class or series of MCN capital stock or (iii)
the
S-8
<PAGE> 11
purchase of fractional interests in shares of MCN's capital stock pursuant to
the conversion or exchange provisions of such MCN capital stock or the security
being converted or exchanged (or make any guarantee payments with respect to the
foregoing), (b) MCN shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by MCN that rank pari passu with or junior to the
Junior Subordinated Debentures, including other junior subordinated debentures
issued by MCN, and (c) MCN shall not make any guarantee payments with respect to
the foregoing (other than pursuant to the Preferred Securities Guarantee). Prior
to the termination of any such extension period, MCN may further extend the
interest payment period; provided, that such Extension Period, together with all
such previous and further extensions thereof, may not exceed 20 consecutive
quarters or extend beyond the maturity date of the Junior Subordinated
Debenture. Upon the termination of any Extension Period and the payment of all
amounts then due, MCN may commence a new Extension Period, subject to the above
requirements. See "Description of the Preferred Securities -- Distributions" and
"Description of the Junior Subordinated Debentures -- Option to Extend Interest
Payment Period."
MCN believes that the likelihood that it will exercise its rights to defer
payments of interest is remote and that, therefore, the Junior Subordinated
Debentures should not be considered to be issued with original issue discount
("OID") unless it actually exercises such deferral right. There is no assurance
that the Internal Revenue Service (the "IRS") will agree with such position. See
"United States Federal Income Taxation -- Interest Income and Original Issue
Discount."
Should MCN exercise its right to defer payments of interest by extending
the interest payment period, each holder of Preferred Securities will accrue
income (as OID) in respect of the deferred interest allocable to its Preferred
Securities for United States federal income tax purposes, which will be
allocated but not distributed, to holders of record of Preferred Securities. As
a result, each such holder of Preferred Securities will recognize income for
United States federal income tax purposes in advance of the receipt of cash and
will not receive the cash from MCN Financing related to such income if such
holder disposes of its Preferred Securities prior to the record date for the
date on which distributions of such amounts are made. MCN has no current
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Junior Subordinated Debentures. However, should
MCN determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be affected. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of MCN's right
to defer interest payments, the market price of the Preferred Securities (which
represent an undivided beneficial interest in the Junior Subordinated
Debentures) may be more volatile than the market prices of other securities that
are not subject to such deferrals. See "United States Federal Income Taxation --
Interest Income and Original Issue Discount."
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed certain changes to federal income tax law
that would, among other things, deny corporate issuers a deduction for interest
in respect of certain debt obligations, such as the Junior Subordinated
Debentures, issued on or after the date of first Congressional committee action.
The proposed legislation, if enacted in its current form, would not apply to the
Junior Subordinated Debentures if they are issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the ability
of MCN to deduct the interest payable on the Junior Subordinated Debentures.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event (as defined herein), MCN Financing
shall be dissolved, except in the limited circumstance described below, with the
result that the Junior Subordinated Debentures would be distributed to the
holders of the Trust Securities in connection with the liquidation of the Trust.
In the case
S-9
<PAGE> 12
of a Special Event that is a Tax Event, in certain circumstances, MCN shall have
the right to redeem the Junior Subordinated Debentures, in whole or in part, in
lieu of a distribution of the Junior Subordinated Debentures by the Trust; in
which event the Trust will redeem the Trust Securities on a pro rata basis to
the same extent as the Junior Subordinated Debentures are redeemed by MCN. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of MCN Financing would not
be a taxable event to holders of the Preferred Securities. If however, MCN
Financing is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of dissolution of MCN
Financing, the distribution of Junior Subordinated Debentures may constitute a
taxable event to the holder of Preferred Securities. Upon the occurrence of a
Tax Event, a dissolution of MCN Financing in which holders of the Preferred
Securities receive cash would be a taxable event to such holders. See "United
States Federal Income Taxation -- Receipt of Junior Subordinated Debentures or
Cash Upon Liquidation of MCN Financing."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that a holder of Preferred Securities may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Junior Subordinated
Debentures upon the occurrence of a Special Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein and in the
accompanying Prospectus. See "Description of the Preferred Securities -- Special
Event Redemption or Distribution" and "Description of the Junior Subordinated
Debentures -- General."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, MCN Trustees, which voting rights are vested exclusively
in the holder of the Common Securities. See "Description of the Preferred
Securities -- Voting Rights."
TRADING PRICE
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who uses the accrual method of accounting for
tax purposes (and a cash method holder, if the Junior Subordinated Debentures
are treated as issued with OID) and who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income (i.e., interest or,
possibly, OID), and to add such amount to his adjusted tax basis in his pro rata
share of the underlying Subordinated Debt Securities deemed disposed of. To the
extent the selling price is less than the holder's adjusted tax basis (which
will include all accrued but unpaid interest), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"United States Federal Income Taxation -- Interest and Original Issue Discount"
and "-- Sales of Preferred Securities."
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<PAGE> 13
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends
for MCN on a historical basis for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
MCN(1)(2)(3)................................................ 2.28 2.55 2.70 3.15 2.82
</TABLE>
- -------------------------
(1) MCN has authority to issue up to 25,000,000 shares of preferred stock, no
par value, however, there are currently no shares outstanding and MCN
currently does not have a preferred stock dividend obligation. Therefore,
the Ratio of Combined Earnings to Fixed Charges and Preferred Stock
Dividends is equal to the Ratio of Earnings to Fixed Charges and is not
disclosed separately.
(2) The Ratio of Earnings to Fixed Charges is based on earnings from operations.
"Earnings" consist of the pre-tax income of majority-owned and 50%-owned
companies adjusted to include any income actually received from less than
50%-owned companies, plus fixed charges, less interest capitalized during
the period for nonutility companies and less the preferred stock dividend
requirements of MichCon included in fixed charges but not deducted in the
determination of pre-tax income. "Fixed Charges" represent (a) interest
(whether expensed or capitalized), (b) amortization of debt discount,
premium and expense, (c) an estimate of interest implicit in rentals, and
(d) in the case of MCN, the preferred securities dividend requirements of
subsidiaries (MichCon, MCN Michigan Limited Partnership and MCN Financing
I), increased to reflect the pre-tax earnings requirement for MichCon.
(3) In June 1996, MCN sold its computer operations subsidiary, Genix. For
purposes of calculating the Ratio of Earnings to Fixed Charges, Genix has
been classified as a discontinued operation and is therefore excluded from
the ratio for all periods presented.
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<PAGE> 14
CAPITALIZATION
The following table sets forth the unaudited summary capitalization at
December 31, 1996 of the Company and its consolidated subsidiaries on a
historical basis and on a pro forma basis after giving effect to the sale by the
Company of the 6,000,000 Preferred Securities offered hereby and the application
of the net proceeds therefrom. See "Use of Proceeds". The table should be read
in conjunction with MCN's consolidated financial statements and notes thereto
and other financial data incorporated by reference herein. See "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
----------------------------
ACTUAL AS ADJUSTED(1)
------ --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-Term Debt (includes notes payable and current portion
of long-term debt and capital leases)..................... $ 420,873 $
========== ==========
Long-Term Debt (including capital leases)(2)................ $1,252,040 $
MCN-obligated mandatorily redeemable preferred securities of
subsidiaries holding solely subordinated debentures of
MCN(3).................................................... 173,809
Common Stockholders' Equity................................. 784,568
---------- ----------
Total Capitalization........................................ $2,210,417 $
========== ==========
</TABLE>
- -------------------------
(1) Adjusted for the sale of 6,000,000 Preferred Securities, the application of
the estimated net proceeds to the purchase of Junior Subordinated Debentures
of MCN and the application by MCN of the estimated net proceeds of Junior
Subordinated Debentures for the purposes set out under "Use of Proceeds".
(2) Includes a $100 million term loan, due 2000, of MCNIC Oil & Gas Company, a
wholly-owned subsidiary of MCN Investment, with recourse to MCN limited to
certain events, including the realization of tax credits and performance
under swap contracts.
(3) The sole assets of the subsidiaries are as follows: MCN Financing I --
8 5/8% junior subordinated debentures of MCN due 2036 with a principal
amount of $82,474,250; MCN Michigan Limited Partnership -- 9 3/8%
subordinated deferrable interest debt securities of MCN due 2024 with a
principal amount of $101,100,000; and MCN Financing II -- % junior
subordinated debentures of MCN due 2037 with a principal amount of
approximately $ . Upon redemption of such debt, the preferred
securities of such subsidiaries will be mandatorily redeemable.
ACCOUNTING TREATMENT
The financial statements of MCN Financing will be reflected in MCN's
consolidated financial statements with the $150,000,000 Preferred Securities
shown as MCN-obligated mandatorily redeemable preferred securities of
subsidiaries holding solely subordinated debentures of MCN. The financial
statement footnotes of MCN will reflect that the sole asset of MCN Financing
will be approximately $154,650,000 principal amount of % Junior Subordinated
Debentures due , 2037 of MCN. See "Capitalization."
USE OF PROCEEDS
All of the proceeds from the sale of the Preferred Securities will be
invested by MCN Financing in Junior Subordinated Debentures of MCN issued
pursuant to the Indenture described herein and ultimately will be used by MCN
for general corporate purposes, including capital expenditures, investment in
subsidiaries, working capital and repayment of debt.
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<PAGE> 15
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, Wilmington Trust Company, an
independent trustee, will act as indenture trustee for the Preferred Securities
under the Declaration for purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the Preferred Securities will include those
stated in the Declaration and those made part of the Declaration by the Trust
Indenture Act. The following summary of the material terms and provisions of the
Preferred Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration, a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement is a part, the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned, directly or
indirectly, by MCN. The Common Securities rank pari passu, and payments will be
made thereon on a pro rata basis, with the Preferred Securities, except that
upon the occurrence and during the continuance of a Declaration Event of
Default, the rights of the holders of the Common Securities to receive payment
of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. The Declaration does not permit the issuance by the Trust of any
securities other than the Trust Securities or the incurrence of any indebtedness
by the Trust. Pursuant to the Declaration, the Institutional Trustee will own
the Junior Subordinated Debentures purchased by the Trust for the benefit of the
holders of the Trust Securities. The payment of distributions out of money held
by the Trust, and payments upon redemption of the Preferred Securities or
liquidation of the Trust, are guaranteed by MCN to the extent described under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. The Guarantee, when taken together with MCN's obligations under the
Junior Subordinated Debentures and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provides a full and unconditional guarantee of amounts due on the Preferred
Securities. The Guarantee will be held by Wilmington Trust Company, the
Guarantee Trustee, for the benefit of the holders of the Preferred Securities.
The Guarantee does not cover payment of distributions when the Trust does not
have sufficient available funds to pay such distributions. In such event, the
remedy of a holder of Preferred Securities is to vote to direct the
Institutional Trustee to enforce the Institutional Trustee's rights under the
Junior Subordinated Debentures (except in the limited circumstances in which the
holder may take Direct Action). See "Description of the Preferred Securities --
Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one payment period will bear interest
thereon at the rate per annum of % thereof compounded quarterly. The term
"distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1997, and will be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing ,
1997, when, as and if funds are available for payment. Distributions will be
made by the Institutional Trustee, except as otherwise described below.
MCN has the right under the Indenture to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period from
time to time on the Junior Subordinated Debentures, which right, if exercised,
would defer quarterly distributions on the Preferred Securities (though such
distributions would continue to accrue with interest since interest would
continue to accrue on the Junior Subordinated Debentures) during any such
extended interest payment period. Such right to extend the
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<PAGE> 16
interest payment period for the Junior Subordinated Debentures is limited to a
period not exceeding 20 consecutive quarters nor extending beyond the maturity
date of the Junior Subordinated Debenture. In the event that MCN exercises this
right, then (a) MCN shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock (other than (i) purchases or
acquisitions of shares of MCN's Common Stock in connection with the satisfaction
by MCN of its obligations under any employee benefit plans or the satisfaction
by MCN of its obligations pursuant to any contract or security outstanding on
the date of such exercise requiring MCN to purchase shares of MCN's Common
Stock, (ii) as a result of a reclassification of MCN's capital stock or the
exchange or conversion of one class or series of MCN's capital stock for another
class or series of MCN capital stock or (iii) the purchase of fractional
interests in shares of MCN's capital stock pursuant to the conversion or
exchange provisions of such MCN's capital stock or the security being converted
or exchanged) or make any guarantee payments with respect to the foregoing, (b)
MCN shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) issued by
MCN that rank pari passu with or junior to such Junior Subordinated Debentures,
including other junior subordinated debentures issued by MCN, and (c) MCN shall
not make any guarantee payments with respect to the foregoing (other than
pursuant to the Preferred Securities Guarantee). Prior to the termination of any
such Extension Period, MCN may further extend the interest payment period;
provided, that such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarters or extend
beyond the maturity date of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, MCN
may select a new Extension Period, subject to the above requirements. See
"Description of the Junior Subordinated Debentures -- Interest" and "-- Option
to Extend Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to holders of record of
the Preferred Securities as they appear on the books and records of the Trust on
the record date next following the termination of such deferral period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from MCN on the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures." The payment of
distributions out of moneys held by the Trust is guaranteed by MCN to the extent
set forth under "Description of the Preferred Securities Guarantees" in the
accompanying Prospectus.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day prior to the relevant payment dates. Such
distributions will be paid through the Institutional Trustee which will hold
amounts received in respect of the Junior Subordinated Debentures in the
Property Account for the benefit of the holders of the Trust Securities. Subject
to any applicable laws and regulations and the provisions of the Declaration,
each such payment will be made as described under "Book-Entry Only Issuance --
The Depository Trust Company" below. In the event that the Preferred Securities
do not continue to remain in book-entry only form, the Regular Trustee shall
have the right to select relevant record dates, which shall be more than one
Business Day but less than 60 Business Days prior to the relevant payment dates.
In the event that any date on which distributions are to be made on the
Preferred Securities is not a Business Day, then payment of the distributions
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such record date. A "Business Day"
shall mean any day other than Saturday, Sunday or any other day on which banking
institutions in New York City (in the State of New York) are permitted or
required by any applicable law to close.
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MANDATORY REDEMPTION
The Junior Subordinated Debentures will mature on , 2037.
Moreover, the Junior Subordinated Debentures are redeemable, (i) in whole or in
part, at any time after , 2002, at the option of MCN, or (ii) in
whole but not in part at any time prior to , 2002, at the option
of MCN upon the occurrence and continuation of a Tax Event. Upon the repayment
of the Junior Subordinated Debentures, whether at maturity or upon redemption,
the proceeds from such repayment or payment shall simultaneously be applied to
redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Junior Subordinated Debentures so repaid or
redeemed at the Redemption Price; provided, that holders of Trust Securities
shall be given not less than 30 nor more than 60 days notice of such redemption,
except in the case of payments upon maturity. See "Description of the Junior
Subordinated Debentures -- Optional Redemption." In the event that fewer than
all of the outstanding Preferred Securities are to be redeemed, the Preferred
Securities will be redeemed pro rata as described under "Book-Entry Only
Issuance -- The Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after such date), which change or amendment, in
the case of (a) or (b) becomes effective on or after the date of this Prospectus
Supplement, there is more than an insubstantial risk that (i) the Trust would be
subject to United States federal income tax with respect to income accrued or
received on the Junior Subordinated Debentures, (ii) interest payable to the
Trust on the Junior Subordinated Debentures would not be deductible by MCN for
United States federal income tax purposes or (iii) the Trust would be subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
1940 Act (as defined herein) to the effect that, as a result of the occurrence
of a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus
Supplement, there is more than an insubstantial risk that the Trust is or will
be considered an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act").
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Trust
shall, except in the limited circumstances described below, be dissolved with
the result that the Junior Subordinated Debentures with an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Trust Securities, would be
distributed to the holders of the Trust Securities in liquidation of such
holders' interests in the Trust on a pro rata basis within 90 days following the
occurrence, of such Special Event; provided, however, that in the case of the
occurrence of a Tax Event, that such dissolution and distribution shall be
conditioned on (i) the Regular Trustees' receipt of an opinion of nationally
recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published revenue rulings of
the Internal Revenue Service, to the effect that the holders of the Trust
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of such dissolution and distribution of Junior
Subordinated Debentures and (ii) MCN being unable to avoid such Tax Event within
such 90 day period by taking some ministerial action or pursuing some other
reasonable measure that will have no adverse effect on the Trust, MCN or the
holders of the Trust Securities. Furthermore, if after receipt of a Dissolution
Tax Opinion by the Regular Trustee (i) MCN has received an opinion (a
"Redemption Tax Opinion") of
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nationally recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk that MCN
would be precluded from deducting the interest on the Junior Subordinated
Debentures for United States federal income tax purposes, even after the Junior
Subordinated Debentures were distributed to the holders of Trust Securities in
liquidation of such holders' interests in the Trust as described above, or (ii)
the Regular Trustees shall have been informed by such tax counsel that it cannot
deliver a No Recognition Opinion to the Trust, MCN shall have the right, upon
not less than 30 nor more than 60 days notice, to redeem the Junior Subordinated
Debentures, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption, Trust Securities
with an aggregate liquidation amount equal to the aggregate principal amount of
the Junior Subordinated Debentures so redeemed shall be redeemed by the Trust at
the Redemption Price on a pro rata basis; provided, however, that if at the time
there is available to MCN or the Trust the opportunity to eliminate, within such
90 day period, the Tax Event by taking some ministerial action, such as filing a
form or making an election or pursuing some other similar reasonable measure
that has no adverse effect on the Trust, MCN or the holders of the Trust
Securities, MCN or the Trust will pursue such measure in lieu of redemption.
If the Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, MCN will use its best efforts to cause the Junior
Subordinated Debentures to be listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debentures upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding, (ii) the Depositary or its nominee, as the record holder of
the Preferred Securities, will receive a registered global certificate or
certificates representing the Junior Subordinated Debentures to be delivered
upon such distribution, and (iii) any certificates representing Preferred
Securities not held by the Depositary or its nominee will be deemed to represent
Junior Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on such Preferred Securities until such certificates are
presented to MCN or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that an investor may receive if a
dissolution and liquidation of the Trust were to occur, may trade at a discount
to the price that the investor paid to purchase the Preferred Securities offered
hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that MCN has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Debentures, the Trust will
irrevocably deposit with the Depositary funds sufficient to pay the applicable
Redemption Price and will give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. See "Book-Entry Only Issuance -- The Depository Trust Company." If
notice of redemption shall have been given and funds deposited as required,
then, immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a
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Business Day (without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by the Trust, or by MCN
pursuant to the Guarantee, distributions on such Preferred Securities will
continue to accrue at the then applicable rate from the original redemption date
to the date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed pro rata as
described below under "Book-Entry Only Issuance -- The Depository Trust
Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), MCN or its subsidiaries may at any time,
and from time to time, purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Preferred Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment, unless, in connection with such Liquidation, Junior Subordinated
Debentures in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, the Preferred Securities have been distributed on a pro rata basis to the
holders of the Preferred Securities in exchange for such Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Preferred Securities, except that
if a Declaration Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the Common Securities with regard to
such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on July 26,
2041, the expiration of the term of the Trust, (ii) upon the bankruptcy of MCN
or the holder of the Common Securities, (iii) upon the filing of a certificate
of dissolution or its equivalent with respect to MCN, the filing of a
certificate of cancellation with respect to the Trust after obtaining the
consent of the holders of at least a majority in liquidation amount of the Trust
Securities effected thereby voting together as a single class to file such
certificate of cancellation, or the revocation of the charter of MCN and the
expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) upon the distribution of Junior Subordinated Debentures upon the
occurrence of a Special Event, (v) upon the entry of a decree of a judicial
dissolution of the holder of the Common Securities, MCN or the Trust, or (vi)
upon the redemption of all the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture. If a
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Declaration Event of Default with respect to the Preferred Securities is waived
by holders of Preferred Securities, such waiver will also constitute the waiver
of such Declaration Event of Default with respect to the Common Securities for
all purposes under the Declaration, without any further act, vote or consent of
the holders of the Common Securities. If the Institutional Trustee fails to
enforce its rights under the Junior Subordinated Debentures, any holder of
Preferred Securities may institute a legal proceeding against MCN to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures without
first proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of MCN
to pay interest or principal on the Junior Subordinated Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
the redemption date), then a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such holder directly of the
principal of or interest on the Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debentures. In connection with such Direct Action, MCN will
be subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by MCN to such holder of Preferred
Securities in such Direct Action. The holders of Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures. See "Effect of Obligations under the Junior
Subordinated Debentures and the Guarantee."
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. MCN and the Trust are
each required to file annually with the Institutional Trustee an officer's
certificate as to its compliance with all conditions and covenants under the
Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act and the Trust Indenture Act
and under "Description of the Preferred Securities Guarantees -- Modification of
the Preferred Securities Guarantees; Assignment" in the accompanying Prospectus,
and as otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debentures, to (i) exercise the
remedies available under the Indenture with respect to the Junior Subordinated
Debentures, (ii) waive any past Indenture Event of Default that is waivable
under Section 513 of the Indenture (as defined herein), (iii) exercise any right
to rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures for which such consent shall be required; provided,
however, that, where a consent or action under the Indenture would require the
consent or act of holders of more than a majority in principal amount of the
Junior Subordinated Debentures (a "Super-Majority") affected thereby, only the
holders of at least such Super-Majority in aggregate liquidation amount of the
Preferred Securities may direct the Institutional Trustee to give such consent
or take such action. If the Institutional Trustee fails to enforce its rights
under the Junior Subordinated Debentures or the Declaration, a record holder of
Preferred Securities may, after such holder's written request to the
Institutional Trustee to enforce such rights, institute a legal proceeding
directly against MCN to enforce the Institutional Trustee's rights under the
Junior Subordinated Debentures or the Declaration without first instituting any
legal proceeding against the Institutional Trustee or any other person or
entity. The Institutional Trustee shall notify all holders of the Preferred
Securities of any notice of default received from the Debt Trustee (as defined
herein) with respect to the Junior Subordinated Debentures. Such
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notice shall state that such Indenture Event of Default also constitutes a
Declaration Event of Default. Except with respect to directing the time, method
and place of conducting a proceeding for a remedy, the Institutional Trustee
shall not take any of the actions described in clauses (i), (ii) or (iii) above
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Junior Subordinated
Debentures outstanding. The Institutional Trustee shall be under no obligation
to take any such action in accordance with the directions of the holders of the
Trust Securities unless the Institutional Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Trust to redeem
and cancel Preferred Securities or distribute Junior Subordinated Debentures in
accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by MCN or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, MCN, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or
remove the MCN Trustees, who may be appointed, removed or replaced solely by MCN
as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee or the Delaware
Trustee), provided that, if any proposed amendment provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Trust Securities, whether by
way of amendment to the Declaration or otherwise or (ii) the dissolution,
winding-up or termination of the Trust other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote
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on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of at least a majority in liquidation amount
of the Trust Securities affected thereby; provided, that, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a majority in liquidation
amount of such class of Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of the Trust under the Trust Securities
or (y) substitutes for the Preferred Securities other securities having
substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities rank the same as the Trust
Securities rank with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) MCN expressly acknowledges a trustee of such
successor entity possessing the same powers and duties as the Institutional
Trustee as the holder of the Junior Subordinated Debentures, (iii) the Preferred
Securities or any Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or with another organization on which the Preferred Securities are then
listed or quoted, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any Successor Securities) to
be downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation or replacement, MCN has
received an opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that, (A) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such successor
entity will be required to register as an investment company under the 1940 Act
and (C) following such merger, consolidation, amalgamation or replacement, the
Trust (or the successor entity) will continue to be classified as a grantor
trust for United States federal income tax purposes, and (viii) MCN guarantees
the obligations of such successor entity under the Successor Securities at least
to the extent provided by the Guarantee and the Common Securities Guarantee (as
described in the accompanying Prospectus). Notwithstanding the foregoing, the
Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for United States federal
income tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co.
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(DTC's nominee). One or more fully-registered global Preferred Securities
certificates, representing the total aggregate number of Preferred Securities,
will be issued and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others, such as securities brokers and
dealers, banks and trust companies that clear transactions through or maintain a
direct or indirect custodial relationship with a Direct Participant either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Preferred Securities, except in the event that
use of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Preferred Securities represented thereby for all
purposes under the Declaration and the Preferred Securities. No beneficial owner
of an interest in a Global Certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures, in addition to those
provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Preferred Securities (including the presentation of
Preferred Securities for exchange as described below) only at the direction of
one or more Participants to whose account the DTC's interests in the Global
Certificates are credited and only in respect of such portion of the aggregate
liquidation amount of Preferred Securities as to which such participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Preferred Securities, DTC will exchange the Global
Certificates for Certificated Securities, which it will distribute to its
Participants.
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Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices in respect of the Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Preferred
Securities are being redeemed, DTC will determine the amount of the interest of
each Participant to be redeemed in accordance with its procedures. Although
voting with respect to the Preferred Securities is limited, in those cases where
a vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities. Under its usual procedures, DTC would mail an
Omnibus Proxy to the Trust as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co. consenting or voting rights to those Direct
Participants to whose accounts the Preferred Securities are credited on the
record date (identified in a listing attached to the Omnibus Proxy). MCN and the
Trust believe that the arrangements among DTC, Direct and Indirect Participants,
and Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a holder
of a beneficial interest in the Trust.
Distribution payments on the Preferred Securities will be made to DTC in
immediately available funds. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the account of customers in
bearer form or registered in "street name," and such payments will be the
responsibility of such Participant and not of DTC, the Trust or MCN, subject to
any statutory or regulatory requirements to the contrary that may be in effect
from time to time. Payment of distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interest in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company, the Trust
nor any Trustee will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
the DTC. DTC may discontinue providing its services as securities depositary
with respect to the Preferred Securities at any time by giving reasonable notice
to the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates are required to be
printed and delivered to holders. Additionally, the Regular Trustees (with the
consent of the Company) may decide to discontinue use of the system of
book-entry transfers through DTC (or any successor depositary) with respect to
the Preferred Securities. In that event, certificates for the Preferred
Securities will be printed and delivered to holders. In each of the above
circumstances, the Company will appoint a paying agent with respect to the
Preferred Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that MCN and MCN Financing believe to be
reliable, but neither MCN nor MCN Financing takes responsibility for the
accuracy thereof.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payments in respect of the Preferred Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution dates or, in the case of certificated
securities, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the register of holders
of the Preferred Securities. The Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Regular Trustees. In the event
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that Wilmington Trust Company shall no longer be the Paying Agent, the Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company).
The Institutional Trustee will act as registrar, transfer agent and paying
agent for the Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or the Company may require) in respect of any tax or
other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The holders of Preferred Securities will not be required to
offer such indemnity in the event such holders, by exercising their voting
rights, direct the Institutional Trustee to take any action it is empowered to
take under the Declaration following a Declaration Event of Default. The
Institutional Trustee also serves as trustee under the Guarantee.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
United States federal income tax purposes. MCN is authorized and directed to
conduct its affairs so that the Junior Subordinated Debentures will be treated
as indebtedness of MCN for United States federal income tax purposes. In this
connection, MCN and the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Trust or the
certificate of incorporation of MCN, that each of MCN and the Regular Trustees
determine in their discretion to be necessary or desirable to achieve such end,
as long as such action does not adversely affect the interests of the holders of
the Preferred Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Pursuant to the Guarantee, MCN will irrevocably and unconditionally agree,
to the extent set forth therein, to pay in full, to the holders of the Preferred
Securities issued by the Trust, the Guarantee Payments (as defined in the
accompanying Prospectus)(except to the extent paid by the Trust), as and when
due, regardless of any defense, right of set-off or counterclaim which the Trust
may have or assert. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Preferred Securities or by causing the Trust to pay such amounts to
such holders. The Guarantee will be qualified as an indenture under the Trust
Indenture Act. Wilmington Trust Company will act as indenture trustee under the
Guarantee. The terms of the Guarantee will be those set forth in such Guarantee
and those made part of such Guarantee by the Trust Indenture Act. The Guarantee
will be held by the Guarantee Trustee for the benefit of the holders of the
Preferred Securities. Notwithstanding the
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foregoing, if the Company has failed to make a payment under the Guarantee, any
holder of Preferred Securities may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding directly against the Trust, the Guarantee Trustee or any
other person or entity. A summary description of the Guarantee appears in the
accompanying Prospectus under the caption "Description of the Preferred
Securities Guarantees."
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Junior Subordinated
Debentures set forth in the accompanying Prospectus under the caption
"Particular Terms of the Subordinated Debt Securities." The following
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the description in the accompanying Prospectus
and the Subordinated Debt Securities Indenture, dated as of September 1, 1994
(as supplemented by the First Supplemental Indenture, dated April 17, 1996, and
the Second Supplemental Indenture, dated July 24, 1996; as so supplemented, the
"Base Indenture") between MCN and NBD Bank, N.A. (now known as NBD Bank, a
Michigan banking corporation), as Trustee (the "Debt Trustee"), as supplemented
by a Supplemental Indenture, dated as of , 1997 (the Base Indenture,
as so supplemented, is hereinafter referred to as the "Indenture"), the form of
which is incorporated by reference as an Exhibit to the Registration Statement
of which this Prospectus Supplement and the accompanying Prospectus form a part.
Certain capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Junior Subordinated Debentures may
be distributed to the holders of the Trust Securities in liquidation of the
Trust. See "Description of the Preferred Securities -- Special Event Redemption
or Distribution."
If the Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, MCN will use its best efforts to have the Junior
Subordinated Debentures listed on the New York Stock Exchange or on such other
national securities exchange or similar organization on which the Preferred
Securities are then listed or quoted.
GENERAL
The Junior Subordinated Debentures will be issued as unsecured debt under
the Indenture. The Junior Subordinated Debentures will be limited in aggregate
principal amount to approximately $154,650,000, such amount being the sum of the
aggregate stated liquidation of the Preferred Securities and the capital
contributed by MCN in exchange for the Common Securities (the "MCN Payment").
The Junior Subordinated Debentures are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and Additional
Interest (as defined herein), if any, on , 2037.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, such Junior
Subordinated Debentures will initially be issued as a Global Security (as
defined herein). As described herein, under certain limited circumstances,
Junior Subordinated Debentures may be issued in certificated form in exchange
for a Global Security. See "--Book-Entry and Settlement" below. In the event
that Junior Subordinated Debentures are issued in certificated form, such Junior
Subordinated Debentures will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Junior Subordinated Debentures issued as a Global Security will be
made to DTC, a successor depositary or, in the event that no depositary is used,
to a Paying Agent for the Junior Subordinated Debentures. In the event Junior
Subordinated Debentures are issued in certificated form, principal and interest
will be payable, the transfer of the Junior Subordinated Debentures will be
registrable and Junior Subordinated Debentures will be exchangeable for Junior
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Subordinated Debentures of other denominations of a like aggregate principal
amount at the corporate trust office of the Institutional Trustee in Wilmington,
Delaware; provided, that at the option of MCN payment of interest may be made by
check mailed to the address of the holder entitled thereto or by wire transfer
to an account appropriately designated by the holder entitled thereto.
Notwithstanding the foregoing, so long as the holder of any Junior Subordinated
Debentures is the Property Trustee, the payment of principal and interest on the
Junior Subordinated Debentures held by the Property Trustee will be made at such
place and to such account as may be designated by the Property Trustee.
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction involving MCN.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all Senior Indebtedness of MCN
and pari passu with MCN trade creditors and other junior subordinated debentures
issued by MCN. No payment of principal (including redemption and sinking fund
payments), premium, if any, or interest on the Junior Subordinated Debentures
may be made (i) if any Senior Indebtedness of MCN is not paid when due, (ii) any
applicable grace period with respect to such default has ended and such default
has not been cured or waived or ceased to exist, or (iii) if the maturity of any
Senior Indebtedness of MCN has been accelerated because of a default. Upon any
distribution of assets of MCN to creditors upon any dissolution, winding-up,
liquidation or reorganization, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due or to become due on all Senior Indebtedness of
MCN must be paid in full before the holders of Junior Subordinated Debentures
are entitled to receive or retain any payment. Upon satisfaction of all claims
of all Senior Indebtedness then outstanding, the rights of the holders of the
Junior Subordinated Debentures will be subrogated to the rights of the holders
of Indebtedness of MCN to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Junior Subordinated Debentures are
paid in full.
The term "Senior Indebtedness" means the principal of and premium, if any,
and interest on the following, whether outstanding on the date of execution of
the Subordinated Debt Securities Indenture or thereafter incurred or created:
(i) indebtedness of MCN for money borrowed by MCN (including purchase money
obligations with an original maturity in excess of one year) or evidenced by
debentures (other than the Subordinated Debt Securities), notes, bankers'
acceptances or other corporate debt securities or similar instruments issued by
MCN; (ii) obligations with respect to letters of credit; (iii) indebtedness of
MCN constituting a guarantee of indebtedness of others of the type referred to
in the preceding clauses (i) and (ii); or (iv) renewals, extensions or
refundings of any of the indebtedness referred to in the preceding clauses (i),
(ii) and (iii) unless, in the case of any particular indebtedness, renewal,
extension or refunding, under the express provisions of the instrument creating
or evidencing the same, or pursuant to which the same is outstanding, such
indebtedness or such renewal extension or refunding thereof is not superior in
right of payment to the Subordinated Debt Securities. In November 1994, MCN
issued approximately $101 million of Series A Subordinated Deferrable Interest
Debt Securities to MCN Michigan Limited Partnership that rank pari passu with
the Junior Subordinated Debentures and in July 1996, MCN issued approximately
$82 million of junior subordinated debentures due 2036 (the "8 5/8% Debentures")
to MCN Financing I that also rank pari passu with the Junior Subordinated
Debentures.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by MCN. As of December 31, 1996, Senior Indebtedness of MCN
aggregated approximately $1,673 million.
OPTIONAL REDEMPTION
MCN shall have the right to redeem the Junior Subordinated Debentures, in
whole or in part, from time to time, on or after , 2002, or at any
time in certain circumstances upon the occurrence of a Special Event as
described under "Description of the Preferred Securities -- Special Event
Redemption or
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Distribution," upon not less than 30 nor more than 60 days notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date. If a partial redemption of the Preferred Securities resulting
from a partial redemption of the Junior Subordinated Debentures would result in
the delisting of the Preferred Securities by such exchange on which the
Preferred Securities are then listed, MCN may only redeem the Junior
Subordinated Debentures in whole.
INTEREST
Each Junior Subordinated Debenture shall bear interest at the rate of
% per annum from the original date of issuance, payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year (each an
"Interest Payment Date"), commencing , 1997, to the person in whose
name such Junior Subordinated Debenture is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Junior Subordinated Debentures shall not
continue to remain in book-entry only form, MCN shall have the right to select
record dates, which shall be more than one Business Day but less than 60
Business Days prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed,
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed certain changes to federal income tax law
that would, among other things, deny corporate issuers a deduction for interest
in respect of certain debt obligations, such as the Junior Subordinated
Debentures, issued on or after the date of first Congressional committee action.
The proposed legislation, if enacted in its current form, would not apply to the
Junior Subordinated Debentures if they are issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the ability
of MCN to deduct the interest payable on the Junior Subordinated Debentures.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
MCN shall have the right at any time, and from time to time, during the
term of the Junior Subordinated Debentures to defer payments of interest by
extending the interest payment period for a period not exceeding 20 consecutive
quarters or extending beyond the maturity of the Junior Subordinated Debentures,
at the end of which Extension Period, MCN shall pay all interest then accrued
and unpaid (including any Additional Interest, as herein defined) together with
interest thereon compounded quarterly at the rate specified for the Junior
Subordinated Debentures to the extent permitted by applicable law ("Compound
Interest"); provided, that during any such Extension Period, (a) MCN shall not
declare or pay dividends on, make any distribution with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to any of its
capital stock (other than (i) purchases or acquisitions of shares of MCN Common
Stock in connection with the satisfaction by MCN of its obligations under any
employee benefit plans or the satisfaction by MCN of its obligations pursuant to
any contract or security outstanding on the date of such election requiring MCN
to purchase shares of MCN Common Stock, (ii) as a result of a reclassification
of MCN capital stock or the exchange or conversion of one class or series of
MCN's capital stock for another class or series of MCN capital stock or (iii)
the purchase of fractional interests in shares of MCN's capital stock pursuant
to the
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conversion or exchange provisions of such MCN capital stock or the security
being converted or exchanged) or make any guarantee payments with respect to the
foregoing, (b) MCN shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by MCN that rank pari passu with or junior to the Junior
Subordinated Debentures, including other junior subordinated debentures issued
by MCN, and (c) MCN shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Preferred Securities Guarantee). Prior to
the termination of any such Extension Period, MCN may further defer payments of
interest by extending the interest payment period; provided, however, that, such
Extension Period, including all such previous and further extensions, may not
exceed 20 consecutive quarters or extend beyond the maturity of the Junior
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, MCN may commence a new Extension Period,
subject to the terms set forth in this section. No interest during an Extension
Period, except at the end thereof, shall be due and payable. MCN has no present
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Junior Subordinated Debentures. If the
Institutional Trustee shall be the sole holder of the Junior Subordinated
Debentures, MCN shall give the Regular Trustees and the Institutional Trustee
notice of its selection of such Extension Period one Business Day prior to the
earlier of (i) the date distributions on the Preferred Securities are payable or
(ii) the date the Regular Trustees are required to give notice to the New York
Stock Exchange (or other applicable self-regulatory organization) or to holders
of the Preferred Securities of the record date or the date such distribution is
payable. The Regular Trustees shall give notice of MCN's selection of such
Extension Period to the holders of the Preferred Securities. If the
Institutional Trustee shall not be the sole holder of the Junior Subordinated
Debentures, MCN shall give the holders of the Junior Subordinated Debentures
notice of its selection of such Extension Period ten Business Days prior to the
earlier of (i) the Interest Payment Date or (ii) the date upon which MCN is
required to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Junior Subordinated
Debentures of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, MCN will pay as additional interest ("Additional Interest") on the
Junior Subordinated Debentures such additional amounts as shall be required so
that the net amounts received and retained by the Trust after paying any such
taxes, duties, assessments or other governmental charges will be not less than
the amounts the Trust would have received had no such taxes, duties, assessments
or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debentures, will
have the right to declare the principal of and the interest on the Junior
Subordinated Debentures (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debentures. See "Particular Terms of the
Subordinated Debt Securities -- Events of Default and Notice Thereof" in the
accompanying Prospectus for a description of the Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders of
Preferred Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debentures. See "Description of the Preferred Securities --
Declaration Events of Default" and "-- Voting Rights." Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of MCN to pay interest or principal on the Junior
Subordinated Debentures on the date such interest or principal is otherwise
payable, MCN acknowledges that then a holder of Preferred Securities may
institute a Direct Action for payment on or after the respective due date
specified in the Junior Subordinated Debentures. Notwithstanding any payments
made to such holder of Preferred Securities by MCN in connection with a Direct
Action, MCN shall remain obligated to pay the principal of or interest on the
Junior Subordinated Debt Securities held by MCN
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Financing or the Institutional Trustee of MCN Financing, and MCN shall be
subrogated to the rights of the holder of such Preferred Securities with respect
to payments on the Preferred Securities to the extent of any payments made by
the Company to such holder in any Direct Action. The holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust as
a result of the occurrence of a Special Event, the Junior Subordinated
Debentures will be issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the Depositary or its nominee.
Except under the limited circumstances described below, Junior Subordinated
Debentures represented by the Global Security will not be exchangeable for, and
will not otherwise be issuable as, Junior Subordinated Debentures in definitive
form. The Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depositary for the Junior Subordinated Debentures. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." As of the date of this Prospectus Supplement, the
description therein of DTC's book-entry system and DTC's practices as they
relate to purchases, transfers, notices and payments with respect to the
Preferred Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by MCN. MCN may appoint a
successor to DTC or any successor depositary in the event DTC or such successor
depositary is unable or unwilling to continue as a depositary for the Global
Securities.
None of MCN, the Trust, the Institutional Trustee, any paying agent or any
other agent of MCN or the Debt Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a Global Security for such Junior Subordinated
Debentures or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the depositary notifies MCN that it is unwilling or unable to continue as
a depositary for such Global Security and no successor depositary shall have
been appointed, (ii) the depositary, at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the depositary is required to be
so registered to act as such depositary and no successor depositary shall have
been appointed, (iii) MCN, in its sole discretion, determines that such Global
Security shall be so exchangeable or (iv) there shall have occurred an Event of
Default with respect to such Junior Subordinated Debentures. Any Global Security
that is exchangeable pursuant to the preceding sentence shall
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be exchangeable for Junior Subordinated Debentures registered in such names as
the Depositary shall direct. It is expected that such instructions will be based
upon directions received by the Depositary from its Participants with respect to
ownership of beneficial interests in such Global Security.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
MCN will pay all fees and expenses related to (i) the offering of the Trust
Securities and the Junior Subordinated Debentures, (ii) the organization,
maintenance and dissolution of the Trust, (iii) the retention of the MCN
Trustees and (iv) the enforcement by the Institutional Trustee of the rights of
the holders of the Preferred Securities. The payment of such fees and expenses
will be fully and unconditionally guaranteed by MCN.
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EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, invest the proceeds from such issuance and sale in the Junior
Subordinated Debentures and engage in only those other activities necessary or
incidental thereto.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) MCN
shall pay all, and the Trust shall not be obligated to pay, directly or
indirectly, all costs, expenses, debt, and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration further provides
that the MCN Trustees shall not take or cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes of
the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by MCN as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If MCN does not make interest payments on the Junior Subordinated
Debentures purchased by the Trust, it is expected that the Trust will not have
sufficient funds to pay distributions on the Preferred Securities. The Guarantee
does not apply to any payment of distributions unless and until the Trust has
sufficient funds for the payment of such distributions. The Guarantee covers the
payment of distributions and other payments on the Preferred Securities only if
and to the extent that MCN has made a payment of interest or principal on the
Junior Subordinated Debentures held by the Trust as its sole asset.
If MCN fails to make interest or other payments on the Junior Subordinated
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Book-Entry
Only Issuance -- The Depository Trust Company" and "-- Voting Rights," may
direct the Institutional Trustee to enforce its rights under the Junior
Subordinated Debentures. If the Institutional Trustee fails to enforce its
rights under the Junior Subordinated Debentures, a holder of Preferred
Securities may institute a legal proceeding against MCN to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures without
first instituting any legal proceeding against the Institutional Trustee or any
other person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of MCN to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable, then a
holder of Preferred Securities may directly institute a proceeding against the
Company for payment. MCN, under the Guarantee, acknowledges that the Guarantee
Trustee shall enforce the Guarantee on behalf of the holders of the Preferred
Securities. If MCN fails to make payments under the Guarantee, the Guarantee
provides a mechanism whereby the holders of the Preferred Securities may direct
the Guarantee Trustee to enforce its rights thereunder. Notwithstanding the
foregoing, if the Company has failed to make a payment under the Guarantee, any
holder of Preferred Securities may institute a legal proceeding directly against
MCN to enforce its rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee, or any other person or
entity.
The Guarantee, when taken together with MCN's obligations under the Junior
Subordinated Debentures and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provide a full and unconditional guarantee of amounts due on the Preferred
Securities. See "Description of the Preferred Securities Guarantees -- General"
in the accompanying Prospectus.
S-30
<PAGE> 33
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets by holders who purchase the Preferred
Securities upon original issuance ("Initial Holders"). It does not deal with
special classes of holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, or persons that will hold the
Preferred Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to persons that have a functional currency other than the
U.S. Dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Preferred Securities. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures,
Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to MCN and the
Trust ("Special Tax Counsel"), will render its opinion generally to the effect
that, under then current law and assuming full compliance with the terms of the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Junior Subordinated Debentures held
by the Trust will be classified for United States federal income tax purposes as
indebtedness of MCN.
CLASSIFICATION OF MCN FINANCING
In connection with the issuance of the Preferred Securities, Special Tax
Counsel will render its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Declaration and the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Preferred Securities generally will be considered the
owner of an undivided interest in the Junior Subordinated Debentures, and each
holder will be required to include in its gross income any interest (or OID)
accrued with respect to its allocable share of those Junior Subordinated
Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations, a debt instrument will be
deemed to be issued with OID if there is more than a remote contingency that
periodic stated interest payments due on the instrument will not be timely paid.
Because the exercise by MCN of its option to defer the payment of stated
interest on the Junior Subordinated Debentures would, among other things,
prevent MCN from declaring dividends on any of its capital stock, MCN believes
that the likelihood of its exercising the option is remote within the meaning of
such regulations. As a result, MCN intends to take the position, based upon the
advice of Special Tax Counsel, that the Junior Subordinated Debentures will not
be issued with OID. Accordingly, based upon this position and except as set
forth below, stated interest on the Junior Subordinated Debentures generally
will be taxable to a holder of Preferred Securities as ordinary income at the
time it is paid or accrued in accordance with such holder's regular method of
tax accounting.
If, however, MCN exercises its right to defer payments of interest on the
Junior Subordinated Debentures, the Junior Subordinated Debentures will become
OID instruments at that time and, consequently, a holder of the Preferred
Securities will be required to include such holder's pro rata share of such
S-31
<PAGE> 34
OID in income on an economic accrual basis before the receipt of cash
attributable to the interest, regardless of such holder's regular method of tax
accounting, and actual distributions of stated interest will not be separately
reported as taxable income. Thereafter, the Junior Subordinated Debentures will
be taxed as OID instruments for as long as they remain outstanding. The amount
of OID that will accrue in any month will approximately equal the amount of the
interest that accrues on the Junior Subordinated Debentures in that month at the
stated interest rate. Any amount of OID included in a holder's gross income
(whether or not during an Extension Period) with respect to a Preferred Security
will increase such holder's tax basis in such Preferred Security, and the amount
of actual distributions received by a holder in respect of such accrued OID will
reduce the tax basis of such Preferred Security.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully that the
stated interest on the Junior Subordinated Debentures was OID regardless of
whether MCN exercised its option to defer payments of interest on such debt
instruments, a holder of Preferred Securities would be required to include such
OID in income on a daily economic accrual basis as described above.
Because income on the Preferred Securities will constitute interest (or
OID), corporate holders of Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Preferred Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Preferred Securities other than Initial Holders may be
considered to have acquired their undivided interests in the Junior Subordinated
Debentures with market discount or acquisition premium as such phrases are
defined for United States federal income tax purposes. Such holders are advised
to consult their tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the Preferred Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF MCN
FINANCING
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution," Junior
Subordinated Debentures may be distributed to holders in exchange for the
Preferred Securities and in liquidation of the Trust. Under current law, such a
distribution, for United States federal income tax purposes, would be treated as
a non-taxable event to each holder, and each holder would receive an aggregate
tax basis in the Junior Subordinated Debentures equal to such holder's aggregate
tax basis in its Preferred Securities. A holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Preferred Securities were held by such holder.
Under certain circumstances described herein (see "Description of the
Preferred Securities -- Special Event Redemption or Distribution"), the Junior
Subordinated Debentures may be redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their Preferred Securities.
Under current law, such a redemption of the Junior Subordinated Debentures
would, for United States federal income tax purposes, constitute a taxable
disposition of the redeemed Preferred Securities, and a holder could recognize
gain or loss as if it sold such redeemed Preferred Securities for cash. See " --
Sales of Preferred Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities (including a redemption of
Preferred Securities by MCN) will recognize gain or loss equal to the difference
between its adjusted tax basis in the Preferred Securities and the amount
realized on the sale or redemption of such Preferred Securities (except to the
extent of any amount received in respect of accrued but unpaid interest not
previously included in income). A holder's adjusted tax basis in the Preferred
Securities generally will be its initial purchase price (increased by any OID
previously includible in such holder's gross income to the date of disposition
and decreased by payments received on the Preferred Securities in respect of any
such accrued OID). Such gain or loss generally will be a capital gain or
S-32
<PAGE> 35
loss and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law: (i) payments by the
Trust or any of its paying agents to any holder of a Preferred Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the
Preferred Security does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of MCN entitled to vote, (b)
the beneficial owner of the Preferred Security is not a controlled foreign
corporation that is related to MCN through stock ownership, and (c) either (A)
the beneficial owner of the Preferred Security certifies to the Trust or its
agent, under penalties of perjury, that it is not a United States holder and
provides its name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and holds the
Preferred Security in such capacity, certifies to the Trust or its agent, under
penalties of perjury, that such statement has been received from the beneficial
owner by it or by a Financial Institution between it and the beneficial owner
and furnishes the Trust or its agent with a copy thereof; and (ii) a United
States Alien Holder of a Preferred Security will not be subject to United States
federal withholding tax on any gain realized upon the sale or other disposition
of a Preferred Security.
On April 22, 1996, the IRS proposed regulations (the "Proposed
Regulations"), which, if adopted in their current form, could affect the
procedures to be followed by a United States Alien Holder in establishing such
United States Alien Holder's status as a United States Alien for the purposes of
the withholding rules (including the back-up withholding rules referred to
below). The Proposed Regulations, if adopted in their present form, generally
would be effective for payments made after December 31, 1997. Prospective
investors should consult their tax advisors concerning the potential adoption of
such Proposed Regulations and the potential effect on their ownership of the
Preferred Securities.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Preferred
Securities will be reported to holders on Forms 1099, which forms should be
mailed to holders of Preferred Securities by January 31 following each calendar
year.
The Trust will be obligated to report annually to Cede & Co., as holder of
record of the Preferred Securities, the interest or OID related to the Junior
Subordinated Debentures that accrued during the year. The Trust currently
intends to report such information on Form 1099 prior to January 31 following
each calendar year even though the Trust is not legally required to report to
record holders until April 15 following each calendar year. The Underwriters (as
defined herein) have indicated to the Trust that, to the extent that they hold
Preferred Securities as nominees for beneficial holders, they currently expect
to report to such beneficial holders on Forms 1099 by January 31 following each
calendar year. Under current law, holders of Preferred Securities who hold as
nominees for beneficial holders will not have any obligation to report
information regarding the beneficial holders to the Trust. The Trust, moreover,
will not have any obligation to report to beneficial holders who are not also
record holders. Thus, beneficial holders of Preferred Securities who hold their
respective Preferred Securities through the Underwriters will receive Forms 1099
reflecting the income on their respective Preferred Securities from such nominee
holders rather than the Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld
S-33
<PAGE> 36
amounts will be allowed as a credit against the holder's United States federal
income tax, provided the required information is provided to the IRS.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed certain changes to federal income tax law
that would, among other things, deny corporate issuers a deduction for interest
in respect of certain debt obligations, such as the Junior Subordinated
Debentures, issued on or after the date of first Congressional committee action.
The proposed legislation, if enacted in its current form, would not apply to the
Junior Subordinated Debentures if they are issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the ability
of MCN to deduct the interest payable on the Junior Subordinated Debentures.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
S-34
<PAGE> 37
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and
are acting as representatives (the "Representatives"), have
severally agreed to purchase the number of Preferred Securities set forth
opposite its name below. In the Underwriting Agreement, the several Underwriters
have agreed, subject to the terms and conditions set forth therein, to purchase
all the Preferred Securities offered hereby if any of the Preferred Securities
are purchased. In the event of default by an Underwriter, the Underwriting
Agreement provides that, in certain circumstances, the purchase commitments of
the nondefaulting Underwriters may be increased or the Underwriting Agreement
may be terminated.
<TABLE>
<CAPTION>
Number of
Preferred
Underwriters Securities
------------ ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
---------
Total.......................................... 6,000,000
=========
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus Supplement, and in part to certain securities dealers at
such price less a concession not in excess of $ per Preferred Security,
provided that such concession for sales of 10,000 or more Preferred Securities
to any single purchaser will be $ per Preferred Security. The Underwriters
may allow, and such dealers may reallow, a discount not in excess of $ per
Preferred Security to certain other brokers and dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures of MCN,
the Underwriting Agreement provides that MCN will agree to pay as compensation
("Underwriters' Compensation") to the Underwriters for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (same day) funds of $ per Preferred Security (or $ in the
aggregate) for the accounts of the several Underwriters, provided that such
compensation for sales of 10,000 or more Preferred Securities to any single
purchaser will be $ per Preferred Security. Therefore, to the extent of such
sales, the actual amount of Underwriters' Compensation will be less than the
aggregate amount specified in the preceding sentence.
During a period of 30 days from the date of the Prospectus Supplement,
neither the Trust nor MCN will, without the prior written consent of the
Representatives, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any Preferred Securities, any security
convertible into or exchangeable into or exercisable for Preferred Securities or
the Junior Subordinated Debentures or any debt securities substantially similar
to the Junior Subordinated Debentures or any equity securities substantially
similar to the Preferred Securities (except for the Junior Subordinated
Debentures and the Preferred Securities offered hereby).
S-35
<PAGE> 38
Until the distribution of the Preferred Securities is completed, rules of
the Commission may limit the ability of the Underwriters and any selling group
members to bid for and purchase the Preferred Securities. As an exception to
these rules, the Representatives are permitted to engage in certain transactions
that stabilize the price of the Preferred Securities. Such transactions consist
of bids or purchases for the purpose of pegging, fixing or maintaining the price
of the Preferred Securities.
If the Underwriters create a short position in the Preferred Securities in
connection with the Offering, i.e., if they sell more Preferred Securities than
are set forth on the cover page of this Prospectus, the Representatives may
reduce that short position by purchasing Preferred Securities in the open
market.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
Preferred Securities in the open market to reduce the Underwriters' short
position or to stabilize the price of the Preferred Securities, they may reclaim
the amount of the selling concession from the Underwriters and any selling group
members who sold those Preferred Securities as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Trust, MCN nor any of the Underwriters makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Preferred Securities.
In addition, neither the Trust, MCN nor any of the Underwriters makes any
representation that the Representatives will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Application will be made to list the Preferred Securities on the NYSE under
the symbol " ". Trading of the Preferred Securities on the New York Stock
Exchange is expected to commence within a 30 day period after the initial
delivery of the Preferred Securities. The Representatives have advised the Trust
that they intend to make a market in the Preferred Securities prior to the
commencement of trading on the New York Stock Exchange. The Representatives will
have no obligation to make a market in the Preferred Securities, however, and
may cease market making activities, if commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
MCN and the Trust have agreed to indemnify the Underwriters against, or
contribute to payments that the Underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, MCN and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
The validity of the Indenture, the Guarantee and the Junior Subordinated
Debentures and certain matters relating thereto will be passed upon on behalf of
MCN by Daniel L. Schiffer, Senior Vice President, General Counsel and Secretary
of MCN. Certain matters of Delaware law relating to the validity of the
Preferred Securities will be passed upon on behalf of the Trust by Skadden,
Arps, Slate, Meagher & Flom (Delaware), special Delaware counsel to the Trust.
Certain United States federal income taxation matters will be passed upon for
MCN and MCN Financing by Skadden, Arps, Slate, Meagher & Flom LLP, special tax
counsel to MCN and MCN Financing. Certain legal matters will be passed upon for
the Underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., New York, New York.
Mr. Schiffer is a full-time employee and officer of MCN and owns 23,941 shares
of MCN as of February 26, 1997. LeBoeuf, Lamb, Greene & MacRae, L.L.P. from time
to time renders legal services to MCN.
S-36
<PAGE> 39
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY MCN CORPORATION, MCN FINANCING II OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF MCN CORPORATION OR MCN FINANCING II SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Selected Historical Financial
Information.............................. S-3
MCN Energy Group Inc....................... S-5
MCN Financing II........................... S-6
Risk Factors............................... S-7
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.... S-11
Capitalization............................. S-12
Accounting Treatment....................... S-12
Use of Proceeds............................ S-12
Description of the Preferred Securities.... S-13
Description of the Guarantee............... S-23
Description of the Junior Subordinated
Debentures............................... S-24
Effect of Obligations Under the Junior
Subordinated Debentures and the
Guarantee................................ S-30
United States Federal Income Taxation...... S-31
Underwriting............................... S-35
Legal Matters.............................. S-36
PROSPECTUS
Available Information...................... 3
Incorporation of Certain Documents by
Reference................................ 4
MCN Energy Group Inc....................... 5
The MCN Trusts............................. 5
Use of Proceeds............................ 6
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.... 7
Description of MCN Debt Securities......... 8
Particular Terms of the Senior Debt
Securities............................... 12
Particular Terms of the Subordinated Debt
Securities............................... 16
Description of MCN Capital Stock........... 20
Description of the MCN Trust Preferred
Securities............................... 23
Description of the Preferred Securities
Guarantees............................... 25
Effect of Obligations Under the
Subordinated Debt Securities and the
Guarantee................................ 27
Description of Stock Purchase Contracts and
Stock Purchase Units..................... 28
Plan of Distribution....................... 29
Validity of Securities..................... 30
Experts.................................... 30
</TABLE>
======================================================
======================================================
6,000,000 PREFERRED SECURITIES
MCN ENERGY GROUP INC. LOGO
MCN FINANCING II
% TRUST ORIGINATED
PREFERRED SECURITIES(SM)
("TOPRS(SM)")
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
MCN ENERGY
GROUP INC.
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
, 1997
======================================================
<PAGE> 40
SUBJECT TO COMPLETION, DATED MARCH 7, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
$ ,000,000
% CAPITAL SECURITIES
MCN FINANCING IV
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
GUARANTEED TO EXTENT SET FORTH HEREIN BY
[MCN ENERGY GROUP INC. LOGO]
The % Capital Securities (the "Capital Securities") offered hereby
represent preferred undivided beneficial interests in the assets of MCN
Financing IV, a statutory business trust formed under the laws of the State of
Delaware ("MCN Financing" or the "Trust"). MCN Corporation, a Michigan
corporation, doing business as MCN Energy Group Inc. ("MCN" or the "Company"),
will directly or indirectly own all the common securities (the "Common
Securities" and, together with the Capital Securities, the "Trust Securities")
representing common undivided beneficial interests in the assets of MCN
Financing. MCN Financing exists for the sole purpose of issuing the Capital
Securities and Common Securities and investing the proceeds thereof in an
equivalent amount of % Junior Subordinated Debentures due 2037 (the "Junior
Subordinated Debentures") of MCN. The Junior Subordinated Debentures and the
Capital Securities in respect of which this Prospectus Supplement is being
delivered shall be referred to herein as the "Offered Securities." The Junior
Subordinated Debentures, when issued, will be unsecured obligations of MCN and
will be subordinate and junior in right to certain other indebtedness of the
Company, as described herein, and pari passu in right of payment with MCN's
other junior subordinated debentures. Upon an event of a default under the
Declaration (as defined herein), the holders of Capital Securities will have a
preference over the holders of the Common Securities with respect to payments in
respect of distributions and payments upon redemption, liquidation and
otherwise.
(Continued on next page.)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-8 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE CAPITAL SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF
DISTRIBUTIONS ON THE CAPITAL SECURITIES MAY BE DEFERRED AND THE RELATED UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=============================================================================================================
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Capital Security.............. $1,000 (3) $
- -------------------------------------------------------------------------------------------------------------
Total............................. $ (3) $
=============================================================================================================
</TABLE>
(1) Plus accrued distributions, if any, from , 1997.
(2) MCN Financing and MCN have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Capital Securities
will be invested in the Junior Subordinated Debentures, MCN has agreed to
pay to the Underwriters as compensation (the "Underwriters' Compensation")
for their arranging the investment therein of such proceeds $ per
Capital Security (or $ in the aggregate). See "Underwriting."
(4) Expenses of the offering which are payable by MCN are estimated to be
$ .
------------------------
The Capital Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Capital Securities will be made only in book-entry form
through the facilities of The Depository Trust Company, on or about
, 1997.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is , 1997.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 41
(Continued from previous page)
Holders of the Capital Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $1,000
per Capital Security, accruing from the date of original issuance and payable
semi-annually in arrears on and of each year,
commencing , 1997 ("distributions"). The payment of distributions
out of moneys held by MCN Financing and payments on liquidation of MCN Financing
or the redemption of Capital Securities, as set forth below, are guaranteed by
MCN (the "Guarantee") to the extent described herein and under "Description of
the Preferred Securities Guarantees" in the accompanying Prospectus. The
Guarantee covers payments of distributions and other payments on the Capital
Securities only if and to the extent that MCN has made a payment of interest or
principal or other payments on the Junior Subordinated Debentures held by MCN
Financing as its sole asset. The Guarantee, when taken together with MCN's
obligations under the Junior Subordinated Debentures and the Indenture (as
defined below) and its obligations under the Declaration (as defined below),
including its obligations to pay costs, expenses, debts and liabilities of MCN
Financing (other than with respect to the Trust Securities), provides a full and
unconditional guarantee of amounts due on the Capital Securities. See "Risk
Factors -- Rights Under the Guarantee" herein. The obligations of MCN under the
Guarantee are subordinate and junior in right of payment to all other
liabilities of MCN (other than any guarantee, now existing or hereafter entered
into, by the Company in respect of any preferred or preference stock of any
subsidiary of the Company, which ranks pari passu with the Guarantee) and pari
passu with the most senior preferred stock issued, from time to time, if any, by
MCN. The obligations of MCN under the Junior Subordinated Debentures are
subordinate and junior in right of payment to all present and future Senior
Indebtedness (as defined herein) of MCN, which aggregated approximately $1,673
million at December 31, 1996, and rank pari passu with other junior subordinated
debentures issued by MCN, and with MCN's other general unsecured creditors. The
Junior Subordinated Debentures purchased by MCN Financing may be subsequently
distributed pro rata to holders of the Capital Securities and Common Securities
in connection with the dissolution of MCN Financing, upon the occurrence of
certain events.
The distribution rate and the distribution payment date and other payment
dates for the Capital Securities will correspond to the interest rate and
interest payment date and other payment dates on the Junior Subordinated
Debentures, which will be the sole assets of MCN Financing. As a result, if
principal or interest is not paid on the Junior Subordinated Debentures, no
amounts will be paid on the Capital Securities. If MCN does not make principal
or interest payments on the Junior Subordinated Debentures, MCN Financing will
not have sufficient funds to make distributions on the Capital Securities, in
which event, the Guarantee will not apply to such distributions until MCN
Financing has sufficient funds available therefor.
MCN has the right to defer payments of interest on the Junior Subordinated
Debentures by extending the interest payment period on the Junior Subordinated
Debentures at any time for up to 10 consecutive semi-annual periods (each, an
"Extension Period") provided that such Extension Period may not extend beyond
the maturity of the Junior Subordinated Debentures. If interest payments are so
deferred, distributions on the Capital Securities will also be deferred. During
such Extension Period, distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at an annual rate of %
per annum compounded semi-annually, and during any Extension Period, holders of
Capital Securities will be required to include deferred interest income in their
gross income for United States federal income tax purposes in advance of receipt
of the cash distributions with respect to such deferred interest payments. There
could be multiple Extension Periods of varying lengths throughout the term of
the Junior Subordinated Debentures. See "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period." See "Risk Factors --
Option to Extend Interest Payment Period" and "United States Federal Income
Taxation -- Interest Income and Original Issue Discount."
The Junior Subordinated Debentures are redeemable by MCN (i) at any time
prior to , 2007, in whole but not in part, upon the occurrence and
continuation of a Tax Event (as defined herein), at a redemption price equal to
the greater of (a) 100% of the principal amount thereof or (b) the sum, as
determined by a Quotation Agent (as defined herein), of the present values of
the principal amount and premium payable as part of the redemption price with
respect to an optional redemption of such Junior Subordinated Debentures on
, 2007, together with scheduled payments of interest from the
redemption date to , 2007, in each case discounted to the redemption
date on a semi-annual basis (assuming a 360-day year consisting of 30-day
months) at the Adjusted Treasury Rate (as defined herein), or (ii) on or after
, 2007, in whole or in part, at a redemption price equal to %
of the principal amount thereof on , 2007, declining ratably on each
thereafter to 100% on or after , 2017, plus, in
either case, accrued interest thereon to the date of redemption. If MCN redeems
Junior Subordinated Debentures, the Trust must redeem Trust Securities on a pro
rata basis having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debentures so redeemed at a
redemption price per Trust Security equal to the redemption price per $1,000
principal
S-2
<PAGE> 42
amount of the Junior Subordinated Debentures plus accrued and unpaid
distributions thereon (the "Redemption Price") to the date fixed for redemption.
See "Description of the Capital Securities -- Mandatory Redemption." The Trust
Securities will also be redeemed upon maturity of the Junior Subordinated
Debentures. MCN will also have the right at any time to liquidate the Trust and
cause the Junior Subordinated Debentures to be distributed to the holders of the
Trust Securities.
The Capital Securities will be represented by global Capital Securities
registered in the name of the nominee of The Depository Trust Company ("DTC").
Interests in the global Capital Securities will be shown on, and transfers
thereof will be effected only through, records maintained by DTC and its
participants. Except as provided herein, Capital Securities in definitive form
will not be issued. Settlement for the Capital Securities will be made in
immediately available funds. The Capital Securities will trade in DTC's Same-Day
Funds Settlement System, and secondary market trading activity for the Capital
Securities will therefore settle in immediately available funds. See
"Description of Capital Securities -- Book-Entry Only Issuance -- The Depository
Trust Company."
In the event of the involuntary or voluntary dissolution, winding up or
termination of MCN Financing, the holders of the Capital Securities will be
entitled to receive for each Capital Security a liquidation amount of $1,000
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless, in connection with such dissolution, winding up or
termination the Junior Subordinated Debentures are distributed to the holders of
the Trust Securities. See "Description of the Capital Securities -- Liquidation
Distribution Upon Dissolution."
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING THE PURCHASE OF SECURITIES TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
S-3
<PAGE> 43
MCN ENERGY GROUP INC.
SELECTED HISTORICAL FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS(1)
Operating Revenues............................ $1,997,268 $1,495,232 $1,473,633 $1,420,754 $1,395,341
Operating Income.............................. $ 211,293 $ 188,229 $ 147,914 $ 138,694 $ 120,744
Net income from:
Continuing Operations....................... $ 112,569 $ 93,169 $ 74,598 $ 70,173 $ 54,537
Discontinued Operations..................... 37,771 3,587 3,170 2,617 2,581
---------- ---------- ---------- ---------- ----------
Total.................................. $ 150,340 $ 96,756 $ 77,768 $ 72,790 $ 57,118
========== ========== ========== ========== ==========
Earnings Per Share from:
Continuing Operations....................... $ 1.68 $ 1.44 $ 1.26 $ 1.20 $ 1.00
Discontinued Operations..................... .57 0.05 0.05 0.04 0.05
---------- ---------- ---------- ---------- ----------
Total.................................. $ 2.25 $ 1.49 $ 1.31 $ 1.24 $ 1.05
========== ========== ========== ========== ==========
Average Number of Common Shares
Outstanding (000's)......................... 66,944 64,743 59,394 58,642 54,216
GAS DISTRIBUTION (MMCF)(2)
Gas sales................................... 220,958 209,816 204,384 205,372 203,110
End user transportation..................... 146,895 145,761 140,020 128,643 129,722
Intermediate transportation................. 527,510 374,428 322,969 302,662 209,360
---------- ---------- ---------- ---------- ----------
Total.................................. 895,363 730,005 667,373 636,677 542,192
========== ========== ========== ========== ==========
Customers................................... 1,183,443 1,172,613 1,154,545 1,141,986 1,130,165
DIVERSIFIED ENERGY(2)
Exploration & Production
Gas Production (MMcf)..................... 57,202 31,420 16,513 2,307 --
Oil Production (Mbbl)..................... 1,086 388 85 -- --
Gas and Oil Production (MMcf
Equivalent)............................ 63,718 33,748 17,023 2,307 --
Pipelines & Processing (MMcf)(3)
Gas Processed............................. 44,223 14,588 1,942 -- --
Transportation............................ 86,391 4,994 1,194 294 --
Energy Marketing and Power Generation (MMcf)
Gas Sales................................. 218,952 170,668 142,352 122,782 112,263
Exchange Gas Deliveries................... 22,586 16,462 13,301 10,016 2,443
---------- ---------- ---------- ---------- ----------
241,538 187,130 155,653 132,798 114,706
========== ========== ========== ========== ==========
CAPITAL INVESTMENTS(4)
Gas Distribution.............................. $ 215,318 $ 241,494 $ 153,059 $ 143,120 $ 130,776
Diversified Energy............................ 552,866 385,114 196,030 60,925 34,608
MCN's Share of Joint Ventures................. 16,056 52,850 40,422 36,502 31,203
Discontinued Operations(1).................... 6,508 9,380 12,458 5,064 5,484
---------- ---------- ---------- ---------- ----------
Total.................................. $ 790,748 $ 688,838 $ 401,969 $ 245,611 $ 202,071
========== ========== ========== ========== ==========
TOTAL ASSETS.................................... $3,633,404 $2,898,640 $2,240,973 $1,881,900 $1,648,989
========== ========== ========== ========== ==========
</TABLE>
(continued on next page)
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<PAGE> 44
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(5)................................ $1,252,040 $ 993,407 $ 685,519 $ 494,821 $ 379,811
========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED STOCK OF
SUBSIDIARY(5)................................. $ -- $ -- $ 2,618 $ 5,618 $ 9,000
========== ========== ========== ========== ==========
MCN-OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARIES HOLDING SOLELY
SUBORDINATED DEBENTURES OF MCN................ $ 173,809 $ 96,449 $ 96,349 $ -- $ --
========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of period)........ $ 28.875 $ 23.25 $ 18.00 $ 17.38 $ 15.44
Dividends Paid Per Share...................... $ .9400 $ .9000 $ .8675 $ .8450 $ .8250
</TABLE>
- ---------------
MMcf -- One million cubic feet.
Mbbl -- Thousands of barrels
(1) In June 1996, MCN sold its computer operations subsidiary, The Genix Group,
Inc. ("Genix"). Accordingly, Genix has been accounted for as a discontinued
operation.
(2) Includes intercompany volumes.
(3) Includes MCN's share of joint ventures.
(4) Capital investments represent consolidated capital expenditures,
acquisitions, and MCN's share of capital expenditures made by joint
ventures, less the minority partners' share of consolidated capital
expenditures.
(5) Excludes current requirements. Long-term debt includes a $100 million term
loan, due 2000, of MCNIC Oil & Gas Company, a wholly-owned subsidiary of
MCNIC, with recourse to MCN Corporation limited to certain events, including
the realization of tax credits and performance under swap contracts.
S-5
<PAGE> 45
MCN ENERGY GROUP INC.
In January 1997, MCN Corporation began doing business under the name MCN
Energy Group Inc. (MCN). The formal corporate name change is subject to
shareholder approval to be sought at the Company's 1997 Annual Shareholders'
Meeting. The name change reflects the Company's evolution during the past five
years from a natural gas distribution company into a new, diversified energy
company. MCN Energy Group Inc. will retain its current New York Stock Exchange
symbol of "MCN".
As of December 31, 1996, MCN was a $3.6 billion (assets) diversified energy
holding company with natural gas markets and investments in various regions in
North America and internationally. MCN's strategy is to aggressively invest in a
diverse portfolio of domestic and international energy-related projects. MCN's
intent is:
- to invest in a portfolio of projects including investments in
exploration and production, power generation, gas gathering and
processing systems, and gas storage;
- to continue to market natural gas to large-volume users and utilities;
and
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion.
Accordingly, MCN's capital investments could exceed $3.0 billion by the
year 2000. This expected level of investment will increase capital requirements
materially in excess of internally generated funds and require the issuance of
additional debt and equity securities. MCN's capital requirements and general
market conditions will affect the timing and amount of future issuances. As it
expands its business, MCN's capitalization objective is to maintain its solid
investment-grade credit ratings through a strong balance sheet.
MCN operates through two major business groups, Diversified Energy and Gas
Distribution.
DIVERSIFIED ENERGY, operating through MCN Investment Corporation (MCNIC),
is an integrated energy group with investments in exploration and production,
gas gathering and processing, gas storage fields and electric power generation.
It also markets natural gas to large-volume users and utilities. For the twelve
months ended December 31, 1996, operating revenues for this segment exceeded
$700 million and, at December 31, 1996, total assets exceeded $1.5 billion,
including investments in joint ventures. For the twelve month period ended
December 31, 1996, MCNIC invested approximately $575 million in various
projects, of which approximately $400 million was for exploration and production
projects. Expanding domestic and international opportunities should enable MCNIC
to continue to grow its markets and increase its asset-based investments.
At December 31, 1996, MCNIC owned 1,138 billion cubic feet (Bcf) of proved
gas reserves, and proved oil reserves totaled 17.2 million barrels, or the
equivalent of another 103 Bcf of natural gas. The number of producing oil and
gas wells totaled 2,890 at December 31, 1996.
GAS DISTRIBUTION, operating principally through Michigan Consolidated Gas
Company, operates the largest natural gas distribution and intrastate
transmission system in Michigan and one of the largest in the United States. For
the twelve months ended December 31, 1996, operating revenues for this segment
were approximately $1.3 billion. In addition, at December 31, 1996, the segment
had total assets of approximately $2.1 billion. Gas Distribution serves
approximately 1.2 million customers in more than 500 communities throughout
Michigan with gas sales and transportation markets of about 900 Bcf. Gas
Distribution continues to increase its markets by reaching customers in new
communities, offering new services to current customers and expanding its
intrastate gas transportation network.
The mailing address of MCN's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226, and its telephone number is (313) 256-5500.
S-6
<PAGE> 46
MCN FINANCING IV
MCN Financing is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of February 3, 1997 executed by
MCN, as sponsor (the "Sponsor"), and the trustees of MCN Financing (the "MCN
Trustees") and (ii) the filing of a certificate of trust with the Secretary of
State of the State of Delaware on February 3, 1997. Such declaration will be
amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part. The Declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of
the Capital Securities, the purchasers thereof will own all of the Capital
Securities. See "Description of the Capital Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." MCN will directly or indirectly
acquire Common Securities in an aggregate liquidation amount equal to 3% of the
total capital of MCN Financing. MCN Financing exists for the exclusive purposes
of (i) issuing the Trust Securities representing undivided beneficial interests
in the assets of the Trust, (ii) investing the gross proceeds of the Trust
Securities in the Junior Subordinated Debentures and (iii) engaging in only
those other activities necessary or incidental thereto. MCN Financing has a term
of approximately forty-five (45) years, but may terminate earlier as provided in
the Declaration.
Pursuant to the Declaration, the number of MCN Trustees will initially be
three. Two of the MCN Trustees (the "Regular Trustees") will be persons who are
employees or officers of or who are affiliated with MCN. The third trustee will
be a financial institution that is unaffiliated with MCN, which trustee will
serve as institutional trustee under the Declaration and as indenture trustee
for the purposes of compliance with the provisions of the Trust Indenture Act
(the "Institutional Trustee"). Initially, Wilmington Trust Company, a Delaware
banking corporation, will be the Institutional Trustee until removed or replaced
by the holder of the Common Securities. For the purpose of compliance with the
provisions of the Trust Indenture Act, Wilmington Trust Company will also act as
trustee (the "Guarantee Trustee") under the Guarantee and as Delaware Trustee
for the purposes of the Trust Act (as defined herein), until removed or replaced
by the holder of the Common Securities. See "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus. See "Description of the
Capital Securities -- Voting Rights."
The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and the
Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined herein) as the holder of the Junior
Subordinated Debentures. In addition, the Institutional Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Junior
Subordinated Debentures for the benefit of the holders of the Trust Securities.
The Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Capital Securities. MCN, as the
direct or indirect holder of all the Common Securities, will have the right to
appoint, remove or replace any MCN Trustee and to increase or decrease the
number of MCN Trustees; provided, that the number of MCN Trustees shall be at
least three, a majority of which shall be Regular Trustees. MCN will pay all
fees and expenses related to MCN Financing and the offering of the Trust
Securities. See "Description of the Junior Subordinated Debentures --
Miscellaneous."
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Capital Securities."
The trustee in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890. The
principal place of business of the Trust shall be c/o MCN Energy Group Inc., 500
Griswold Street, Detroit, Michigan 48226, and its telephone number is (313)
256-5500.
S-7
<PAGE> 47
RISK FACTORS
Prospective purchasers of Capital Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE, AND JUNIOR SUBORDINATED
DEBENTURES
MCN's obligations under the Guarantee are subordinate and junior in right
of payment to all liabilities of MCN (other than any guarantee, now existing or
hereafter entered into, by the Company in respect of any preferred or preference
stock of any subsidiary of the Company, which ranks pari passu) and pari passu
with the most senior preferred stock issued, from time to time, if any, by MCN.
The obligations of MCN under the Junior Subordinated Debentures are subordinate
and junior in right of payment to all present and future Senior Indebtedness of
MCN and pari passu with the other junior subordinated debentures issued by MCN,
and obligations to or rights of MCN's other general unsecured creditors. No
payment of principal of (including redemption payments, if any), premium, if
any, or interest on the Junior Subordinated Debentures may be made if (i) any
Senior Indebtedness of MCN is not paid when due and any applicable grace period
with respect to such default has ended with such default not having been cured
or waived or ceasing to exist, or (ii) the maturity of any Senior Indebtedness
has been accelerated because of a default. As of December 31, 1996, Senior
Indebtedness aggregated approximately $1,673 million. There are no terms in the
Capital Securities, the Junior Subordinated Debentures or the Guarantee that
limit MCN's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Junior Subordinated Debentures and the Guarantee. See
"Description of the Preferred Securities Guarantees -- Status of the Preferred
Securities Guarantees" and "Description of the Junior Subordinated Debentures"
in the accompanying Prospectus, and "Description of the Junior Subordinated
Debentures -- Subordination" herein.
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Guarantee Trustee will act as indenture trustee under the Guarantee for
the purposes of compliance with the provisions of the Trust Indenture Act. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Capital Securities.
The Guarantee guarantees to the holders of the Capital Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Capital Securities, to the extent the Trust has funds available therefor,
(ii) the Redemption Price, including all accrued and unpaid distributions with
respect to Capital Securities called for redemption by the Trust, to the extent
the Trust has funds available therefor, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Junior Subordinated Debentures to the
holders of Capital Securities or a redemption of all the Capital Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on the Capital Securities to the date of the payment, to
the extent the Trust has funds available therefor, or (b) the amount of assets
of the Trust remaining available for distribution to holders of the Capital
Securities in liquidation of the Trust. The holders of a majority in liquidation
amount of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. Notwithstanding the foregoing, if the
Company has failed to make a payment under the Guarantee, any holder of Capital
Securities may institute a legal proceeding directly against MCN to enforce its
rights under the Guarantee without first instituting a legal proceeding against
the Trust, the Guarantee Trustee or any other person or entity. If MCN were to
default on its obligation to pay amounts payable on the Junior Subordinated
Debentures, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Capital Securities or
otherwise, and, in such event, holders of the Capital Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, holders of
the Capital Securities would rely on the enforcement (1) by the Institutional
Trustee of its rights as registered holder of the Junior Subordinated Debentures
against MCN pursuant to the terms of the Junior Subordinated Debentures or (2)
by such holder of its right against MCN
S-8
<PAGE> 48
to enforce payments on Junior Subordinated Debentures. See "Description of the
Preferred Securities Guarantees" and "Description of the Subordinated Debt
Securities" in the accompanying Prospectus. The Declaration provides that each
holder of Capital Securities, by acceptance thereof, agrees to the provisions of
the Guarantee, including the subordination provisions thereof, and the Indenture
(as such term is defined in "Description of Junior Subordinated Debentures"
herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Capital Securities would rely on the enforcement
by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debentures against MCN. In addition, the holders of a majority in
liquidation amount of the Capital Securities will have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Institutional Trustee or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as a holder of the Junior Subordinated Debentures. The Subordinated Debt
Securities Indenture provides that the Debt Trustee (as defined herein) shall
give holders of the Junior Subordinated Debentures notice of all uncured
defaults or events of default within 30 days after occurrence. However, except
in the case of a default or an event of default in payment on the Junior
Subordinated Debentures, the Debt Trustee is protected in withholding such
notice if its officers or directors in good faith determine that withholding of
such notice is in the interest of the holders.
If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debentures, a holder of Capital Securities may institute a legal
proceeding directly against MCN to enforce the Institutional Trustee's rights
under the Junior Subordinated Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of MCN to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, the
redemption date), then a holder of Capital Securities may directly institute a
proceeding for enforcement of payment to such holder directly of the principal
of or interest on the Junior Subordinated Debentures having a principal amount
equal to the aggregate liquidation amount of the Capital Securities of such
holder (a "Direct Action") on or after the respective due date specified in the
Junior Subordinated Debentures. In connection with such Direct Action, MCN will
be subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment made by MCN to such holder of Capital
Securities in such Direct Action. The holders of Capital Securities will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures. See "Description of the Junior Subordinated
Debentures -- Indenture Events of Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
MCN has the right under the Indenture to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period at any
time, and from time to time, on the Junior Subordinated Debentures. As a
consequence of such an extension, semi-annual distributions on the Capital
Securities would be deferred (but despite such deferral would continue to accrue
with interest thereon compounded semi-annually) by MCN Financing during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Debentures is limited to a period not
exceeding 10 consecutive semi-periods; provided that such Extension Period may
not extend beyond the maturity of the Junior Subordinated Debentures. In the
event that MCN exercises this right to defer interest payments, then (a) MCN
shall not declare or pay dividends on, or make a distribution with respect to,
or redeem, purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of shares of
MCN Common Stock in connection with the satisfaction by MCN of its obligations
under any employee benefit plans or the satisfaction by MCN of its obligations
pursuant to any contract or security outstanding on the date of such exercise
requiring MCN to purchase shares of MCN Common Stock, (ii) as a result of a
reclassification of MCN capital stock or the exchange or conversion of one class
or series of MCN's capital stock for another class or series of MCN capital
stock or
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<PAGE> 49
(iii) the purchase of fractional interests in shares of MCN's capital stock
pursuant to the conversion or exchange provisions of such MCN capital stock or
the security being converted or exchanged (or make any guarantee payments with
respect to the foregoing)), (b) MCN shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by MCN that rank pari passu with or
junior to the Junior Subordinated Debentures, including the other junior
subordinated debentures issued by MCN, and (c) MCN shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Capital
Securities Guarantee). Prior to the termination of any such extension period,
MCN may further extend the interest payment period; provided, that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 10 consecutive semi-annual periods or extend beyond the
maturity date of the Junior Subordinated Debenture. Upon the termination of any
Extension Period and the payment of all amounts then due, MCN may commence a new
Extension Period, subject to the above requirements. See "Description of the
Capital Securities -- Distributions" and "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period."
MCN believes that the likelihood that it will exercise its right to defer
payments of interest is remote and that, therefore, the Junior Subordinated
Debentures should not be considered to be issued with original issue discount
("OID") unless it actually exercises such deferral right. There is no assurance
that the Internal Revenue Service (the "IRS") will agree with such position. See
"United States Federal Income Taxation -- Interest Income and Original Issue
Discount."
Should MCN exercise its right to defer payments of interest by extending
the interest payment period, each holder of Capital Securities will accrue
income (as OID) in respect of the deferred interest allocable to its Capital
Securities for United States federal income tax purposes, which will be
allocated but not distributed, to holders of record of Capital Securities. As a
result, each such holder of Capital Securities will recognize income for United
States federal income tax purposes in advance of the receipt of cash and will
not receive the cash from MCN Financing related to such income if such holder
disposes of its Capital Securities prior to the record date for the date on
which distributions of such amounts are made. MCN has no current intention of
exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Debentures. However, should MCN
determine to exercise such right in the future, the market price of the Capital
Securities is likely to be affected. A holder that disposes of its Capital
Securities during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Capital
Securities. In addition, as a result of the existence of MCN's right to defer
interest payments, the market price of the Capital Securities (which represent
an undivided beneficial interest in the Junior Subordinated Debentures) may be
more volatile than the market prices of other securities that are not subject to
such deferrals. See "United States Federal Income Taxation -- Interest Income
and Original Issue Discount."
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed certain changes to federal income tax law
that would, among other things, deny corporate issuers a deduction for interest
in respect of certain debt obligations, such as the Junior Subordinated
Debentures, issued on or after the date of first Congressional committee action.
The proposed legislation, if enacted in its current form, would not apply to the
Junior Subordinated Debentures if they are issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the ability
of MCN to deduct the interest payable on the Junior Subordinated Debentures.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"Description of the Capital Securities -- Special Event Redemption or
Distribution."
REDEMPTION OR DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
MCN will have the right at any time to terminate the Trust and, after
satisfaction of claims of creditors as provided by applicable law, to cause the
Junior Subordinated Debentures to be distributed to the holders of
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<PAGE> 50
the Trust Securities in connection with the liquidation of the Trust. In certain
circumstances, (i) prior to 2007 upon the occurrence of a Tax Event (as defined
herein) MCN shall have the right to redeem the Junior Subordinated Debentures,
in whole but not in part and (ii) subsequent to , 2007, MCN shall
have the right to redeem the Junior Subordinated Debentures, in whole or in
part. In either such event, the Trust will redeem the Trust Securities on a pro
rata basis to the same extent as the Junior Subordinated Debentures are redeemed
by MCN. See "Description of the Capital Securities -- Mandatory Redemption."
Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures to the holders of Trust Securities upon the
dissolution of MCN Financing would not be a taxable event to holders of the
Capital Securities. If, however, MCN Financing is characterized for United
States federal income tax purposes as an association taxable as a corporation at
the time of dissolution of MCN Financing, the distribution of Junior
Subordinated Debentures may constitute a taxable event to holders of Capital
Securities. Upon the occurrence of a Tax Event, a dissolution of MCN Financing
in which holders of the Trust Securities receive cash would be a taxable event
to such holders. See "United States Federal Income Taxation -- Receipt of
Subordinated Debt Securities or Cash Upon Liquidation of MCN Financing."
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Capital Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Capital Securities or the Junior Subordinated
Debentures may trade at a discount to the price that the investor paid to
purchase the Capital Securities offered hereby. Because holders of Capital
Securities may receive Junior Subordinated Debentures, prospective purchasers of
Capital Securities are also making an investment decision with regard to the
Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein and in the
accompanying Prospectus. See "Description of the Capital Securities -- Mandatory
Redemption" and "Description of the Junior Subordinated Debentures."
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights and will not
be entitled to vote to appoint, remove or replace, or to increase or decrease
the number of, MCN Trustees, which voting rights are vested exclusively in the
holder of the Common Securities. See "Description of the Capital Securities --
Voting Rights."
TRADING PRICE
The Capital Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who uses the accrual method of accounting for
tax purposes (and a cash method holder, if the Junior Subordinated Debentures
are treated as issued with OID) and who disposes of his Capital Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income (i.e., interest or,
possibly, OID), and to add such amount to his adjusted tax basis in his pro rata
share of the underlying Subordinated Debt Securities deemed disposed of. To the
extent the selling price is less than the holder's adjusted tax basis (which
will include all accrued but unpaid interest), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"United States Federal Income Taxation -- Interest and Original Issue Discount"
and "-- Sales of Capital Securities."
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<PAGE> 51
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends
for MCN on a historical basis for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
MCN(1)(2)(3)................................................ 2.28 2.55 2.70 3.15 2.82
</TABLE>
- -------------------------
(1) MCN has authority to issue up to 25,000,000 shares of preferred stock, no
par value, however, there are currently no shares outstanding and MCN
currently does not have a preferred stock dividend obligation. Therefore,
the Ratio of Combined Earnings to Fixed Charges and Preferred Stock
Dividends is equal to the Ratio of Earnings to Fixed Charges and is not
disclosed separately.
(2) The Ratio of Earnings to Fixed Charges is based on earnings from operations.
"Earnings" consist of the pre-tax income of majority-owned and 50%-owned
companies adjusted to include any income actually received from less than
50%-owned companies, plus fixed charges, less interest capitalized during
the period for nonutility companies and less the preferred stock dividend
requirements of MichCon included in fixed charges but not deducted in the
determination of pre-tax income. "Fixed Charges" represent (a) interest
(whether expensed or capitalized), (b) amortization of debt discount,
premium and expense, (c) an estimate of interest implicit in rentals, and
(d) in the case of MCN, the preferred securities dividend requirements of
subsidiaries (MichCon, MCN Michigan Limited Partnership and MCN Financing
I), increased to reflect the pre-tax earnings requirement for MichCon.
(3) In June 1996, MCN sold its computer operations subsidiary, Genix. For
purposes of calculating the Ratio of Earnings to Fixed Charges, Genix has
been classified as a discontinued operation and is therefore excluded from
the ratio for all periods presented.
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<PAGE> 52
CAPITALIZATION
The following table sets forth the unaudited summary capitalization at
December 31, 1996 of the Company and its consolidated subsidiaries on a
historical basis and on a pro forma basis after giving effect to the sale by the
Company of the Capital Securities offered hereby and the application
of the net proceeds therefrom. See "Use of Proceeds". The table should be read
in conjunction with MCN's consolidated financial statements and notes thereto
and other financial data incorporated by reference herein. See "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
----------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-Term Debt (includes notes payable and current portion
of long-term debt and capital leases)..................... $ 420,873 $
========== ==========
Long-Term Debt (including capital leases)(2)................ $1,252,040 $
MCN-obligated mandatorily redeemable preferred securities of
subsidiaries holding solely subordinated debentures of
MCN(3).................................................... 173,809
Common Stockholders' Equity................................. 784,568
---------- ----------
Total Capitalization........................................ $2,210,417 $
========== ==========
</TABLE>
- -------------------------
(1) Adjusted for the sale of Capital Securities, the application of
the estimated net proceeds to the purchase of Junior Subordinated Debentures
of MCN and the application by MCN of the estimated net proceeds of Junior
Subordinated Debentures for the purposes set out under "Use of Proceeds".
(2) Includes a $100 million term loan, due 2000, of MCNIC Oil & Gas Company, a
wholly-owned subsidiary of MCN Investment, with recourse to MCN limited to
certain events, including the realization of tax credits and performance
under swap contracts.
(3) The sole assets of the subsidiaries are as follows: MCN Financing I --
8 5/8% junior subordinated debentures of MCN due 2036 with a principal
amount of $82,474,250; MCN Michigan Limited Partnership -- 9 3/8%
subordinated deferrable interest debt securities of MCN due 2024 with a
principal amount of $101,100,000; and MCN Financing IV -- % junior
subordinated debentures of MCN due 2037 with a principal amount of
approximately $ . Upon redemption of such debt, the preferred
securities of such subsidiaries will be mandatorily redeemable.
ACCOUNTING TREATMENT
The financial statements of MCN Financing will be reflected in MCN's
consolidated financial statements with the $ Capital Securities shown
as MCN-obligated mandatorily redeemable preferred securities of subsidiaries
holding solely subordinated debentures of MCN. The financial statement footnotes
of MCN will reflect that the sole asset of MCN Financing will be approximately
$ principal amount of % Junior Subordinated Debentures due
, 2037 of MCN. See "Capitalization."
USE OF PROCEEDS
All of the proceeds from the sale of the Capital Securities will be
invested by MCN Financing in Junior Subordinated Debentures of MCN issued
pursuant to the Indenture described herein and ultimately will be used by MCN
for general corporate purposes, including capital expenditures, investment in
subsidiaries, working capital and repayment of debt.
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<PAGE> 53
DESCRIPTION OF THE CAPITAL SECURITIES
The Capital Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, Wilmington Trust Company, an
independent trustee, will act as indenture trustee for the Capital Securities
under the Declaration for purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the Capital Securities will include those
stated in the Declaration and those made part of the Declaration by the Trust
Indenture Act. The following summary of the material terms and provisions of the
Capital Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration, a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement is a part, the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned, directly or
indirectly, by MCN. The Common Securities rank pari passu, and payments will be
made thereon on a pro rata basis, with the Capital Securities, except that upon
the occurrence and during the continuance of a Declaration Event of Default, the
rights of the holders of the Common Securities to receive payment of periodic
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Capital Securities. The
Declaration does not permit the issuance by the Trust of any securities other
than the Trust Securities or the incurrence of any indebtedness by the Trust.
Pursuant to the Declaration, the Institutional Trustee will own the Junior
Subordinated Debentures purchased by the Trust for the benefit of the holders of
the Trust Securities. The payment of distributions out of money held by the
Trust, and payments upon redemption of the Capital Securities or liquidation of
the Trust, are guaranteed by MCN to the extent described under "Description of
the Preferred Securities Guarantees" in the accompanying Prospectus. The
Guarantee, when taken together with MCN's obligations under the Junior
Subordinated Debentures and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provides a full and unconditional guarantee of amounts due on the Capital
Securities. The Guarantee will be held by Wilmington Trust Company, the
Guarantee Trustee, for the benefit of the holders of the Capital Securities. The
Guarantee does not cover payment of distributions when the Trust does not have
sufficient available funds to pay such distributions. In such event, the remedy
of a holder of Capital Securities is to vote to direct the Institutional Trustee
to enforce the Institutional Trustee's rights under the Junior Subordinated
Debentures except in the limited circumstances in which the holder may take
Direct Action. See "Description of the Capital Securities -- Voting Rights."
DISTRIBUTIONS
Distributions on the Capital Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $1,000 per Capital Security.
Distributions in arrears for more than one payment period will bear interest
thereon at the rate per annum of % thereof compounded semi-annually. The
term "distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Capital Securities will be cumulative, will accrue
from , 1997, and will be payable semi-annually in arrears on
and of each year, commencing , 1997,
when, as and if funds are available for payment. Distributions will be made by
the Institutional Trustee, except as otherwise described below.
MCN has the right under the Indenture to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period from
time to time on the Junior Subordinated Debentures, which right, if exercised,
would defer distributions on the Capital Securities (though such distributions
would continue to accrue with interest since interest would continue to accrue
on the Junior Subordinated Debentures) during any such extended interest payment
period. Such right to extend the
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<PAGE> 54
interest payment period for the Junior Subordinated Debentures is limited to a
period not exceeding 10 consecutive semi-annual periods or extending beyond the
maturity date of the Junior Subordinated Debenture. In the event that MCN
exercises this right, then (a) MCN shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of MCN's Common Stock in connection with the
satisfaction by MCN of its obligations under any employee benefit plans or the
satisfaction by MCN of its obligations pursuant to any contract or security
outstanding on the date of such exercise requiring MCN to purchase shares of
MCN's Common Stock, (ii) as a result of a reclassification of MCN's capital
stock or the exchange or conversion of one class or series of MCN's capital
stock for another class or series of MCN capital stock or (iii) the purchase of
fractional interests in shares of MCN's capital stock pursuant to the conversion
or exchange provisions of such MCN's capital stock or the security being
converted or exchanged) or make any guarantee payments with respect to the
foregoing, (b) MCN shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by MCN that rank pari passu with or junior to such Junior
Subordinated Debentures, including other junior subordinated debentures issued
by MCN and (c) MCN shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Capital Securities Guarantee). Prior to
the termination of any such Extension Period, MCN may further extend the
interest payment period; provided, that such Extension Period, together with all
such previous and further extensions thereof, may not exceed 10 consecutive
semi-annual periods or extend beyond the maturity date of the Junior
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, MCN may select a new Extension Period, subject
to the above requirements. See "Description of the Junior Subordinated
Debentures -- Interest" and "-- Option to Extend Interest Payment Period." If
distributions are deferred, the deferred distributions and accrued interest
thereon shall be paid to holders of record of the Capital Securities as they
appear on the books and records of the Trust on the record date next following
the termination of such deferral period.
Distributions on the Capital Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Capital Securities will be limited to
payments received from MCN on the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures." The payment of
distributions out of moneys held by the Trust is guaranteed by MCN to the extent
set forth under "Description of the Preferred Securities Guarantees" in the
accompanying Prospectus.
Distributions on the Capital Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which will be the or prior to the
relevant payment dates. Such distributions will be paid through the
Institutional Trustee which will hold amounts received in respect of the Junior
Subordinated Debentures in the Property Account for the benefit of the holders
of the Trust Securities. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment will be made as described under
"Book-Entry Only Issuance -- The Depository Trust Company" below. In the event
that any date on which distributions are to be made on the Capital Securities is
not a Business Day, then payment of the distributions payable on such date will
be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such record date. A "Business Day" shall mean any day other
than Saturday, Sunday or any other day on which banking institutions in New York
City (in the State of New York) are permitted or required by any applicable law
to close.
MANDATORY REDEMPTION
The Junior Subordinated Debentures will mature on , 2037.
Moreover, the Junior Subordinated Debentures are redeemable, (i) in whole or in
part, at any time on or after , 2007, at the option of MCN, or
(ii) in whole but not in part at any time prior to , 2007, at the
option of MCN upon the occurrence and continuation of a Tax Event. Upon the
repayment of the Junior Subordinated
S-15
<PAGE> 55
Debentures, whether at maturity or upon redemption, the proceeds from such
payment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Debentures so repaid or redeemed at the redemption price for
the Junior Subordinated Debentures; provided, that holders of Trust Securities
shall be given not less than 30 nor more than 60 days notice of such redemption,
except in the case of payments upon maturity. See "Description of the Junior
Subordinated Debentures -- Optional Redemption." In the event that fewer than
all of the outstanding Capital Securities are to be redeemed, the Capital
Securities will be redeemed pro rata as described under "-- Book-Entry Only
Issuance -- The Depository Trust Company" below.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all semi-annual distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Capital Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time, on
the redemption date, provided that MCN has paid to the Institutional Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Junior Subordinated Debentures, the Trust will irrevocably deposit with
the Depositary funds sufficient to pay the applicable Redemption Price and will
give the Depositary irrevocable instructions and authority to pay the Redemption
Price to the holders of the Capital Securities. See "-- Book-Entry Only Issuance
- -- The Depository Trust Company." If notice of redemption shall have been given
and funds deposited as required, then, immediately prior to the close of
business on the date of such deposit, distributions will cease to accrue and all
rights of holders of such Capital Securities so called for redemption will
cease, except the right of the holders of such Capital Securities to receive the
Redemption Price but without interest on such Redemption Price. In the event
that any date fixed for redemption of Capital Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Capital Securities is improperly withheld or refused and not paid
either by the Trust, or by MCN pursuant to the Guarantee, distributions on such
Capital Securities will continue to accrue at the then applicable rate from the
original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, the Capital Securities will be redeemed pro rata as described
below under "-- Book-Entry Only Issuance -- The Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), MCN or its subsidiaries may at any time,
and from time to time, purchase outstanding Capital Securities by tender, in the
open market or by private agreement.
DISTRIBUTION OF THE SUBORDINATED DEBT SECURITIES
MCN will have the right at any time to liquidate the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. As of the date of any distribution of Junior Subordinated Debentures
upon dissolution of the Trust, (i) the Capital Securities will no longer be
deemed to be outstanding, (ii) the Depositary (as defined herein) or its
nominee, as the record holder of the Capital Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution, and (iii) any
certificate representing Capital Securities not held by the Depositary or its
nominee will be deemed to represent Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical
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<PAGE> 56
to the distribution rate of, and accrued and unpaid interest equal to accrued
and unpaid distributions on such Capital Securities until such certificates are
presented to MCN or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities or the Junior
Subordinated Debentures may trade at a discount to the price that an investor
paid to purchase the Capital Securities offered hereby.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Capital Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $1,000 per
Capital Security plus accrued and unpaid distributions thereon to the date of
payment, unless, in connection with such Liquidation, Junior Subordinated
Debentures in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, the Capital Securities have been distributed on a pro rata basis to the
holders of the Capital Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Capital Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Capital Securities, except that if
a Declaration Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities with regard to
such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on February 3,
2042, the expiration of the term of the Trust, (ii) upon the bankruptcy of MCN
or the holder of the Common Securities, (iii) upon the filing of a certificate
of dissolution or its equivalent with respect to MCN, the filing of a
certificate of cancellation with respect to the Trust after obtaining the
consent of the holders of at least a majority in liquidation amount of the Trust
Securities affected thereby voting together as a single class to file such
certificate of cancellation, or the revocation of the charter of MCN and the
expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) upon the distribution of Junior Subordinated Debentures, (v) upon
the entry of a decree of a judicial dissolution of the holder of the Common
Securities, MCN or the Trust, or (vi) upon the redemption of all the Trust
Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Capital Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Capital Securities have been so cured, waived, or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely on
behalf of the holders of the Capital Securities and only the holders of the
Capital Securities will have the right to direct the Institutional Trustee with
respect to certain matters under the Declaration, and therefore the Indenture.
If a Declaration Event of Default with respect to the Capital Securities is
waived by holders of Capital Securities, such waiver will also constitute the
waiver of such Declaration Event of Default with respect to the Common
Securities for all purposes under the Declaration, without any further act, vote
or consent of the holders of the Common Securities. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debentures, any holder
of Capital Securities may institute a legal proceeding against MCN to enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures
without first proceeding against the Institutional Trustee or any other person
or entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of MCN
to pay interest or principal on
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<PAGE> 57
the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, the redemption date), then a
holder of Capital Securities may directly institute a proceeding for enforcement
of payment to such holder directly of the principal of or interest on the Junior
Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder on or after the
respective due date specified in the Junior Subordinated Debentures. In
connection with such Direct Action, MCN will be subrogated to the rights of such
holder of Capital Securities under the Declaration to the extent of any payment
made by MCN to such holder of Capital Securities in such Direct Action. The
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures. See
"Effect of Obligations under the Junior Subordinated Debentures and the
Guarantee."
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. MCN and the Trust are
each required to file annually with the Institutional Trustee an officer's
certificate as to its compliance with all conditions and covenants under the
Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act
and under "Description of the Preferred Securities Guarantees -- Modification of
the Preferred Securities Guarantees; Assignment" in the accompanying Prospectus,
and as otherwise required by law and the Declaration, the holders of the Capital
Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debentures, to (i) exercise the
remedies available under the Indenture with respect to the Junior Subordinated
Debentures, (ii) waive any past Indenture Event of Default that is waivable
under Section 513 of the Indenture (as defined herein), (iii) exercise any right
to rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures where such consent shall be required; provided, however,
that, where a consent or action under the Indenture would require the consent or
act of holders of more than a majority in principal amount of the Junior
Subordinated Debentures (a "Super-Majority") affected thereby, only the holders
of at least such Super-Majority in aggregate liquidation amount of the Capital
Securities may direct the Institutional Trustee to give such consent or take
such action. If the Institutional Trustee fails to enforce its rights under the
Junior Subordinated Debentures or the Declaration, a record holder of Preferred
Securities may, after such holder's written request to the Institutional Trustee
to enforce such rights, institute a legal proceeding directly against MCN to
enforce the Institutional Trustee's rights under the Junior Subordinated
Debentures or the Declaration without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. The
Institutional Trustee shall notify all holders of the Capital Securities of any
notice of default received from the Debt Trustee (as defined below) with respect
to the Junior Subordinated Debentures. Such notice shall state that such
Indenture Event of Default also constitutes a Declaration Event of Default.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of the
actions described in clauses (i), (ii) or (iii) above unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action, the Trust will not fail to be classified as a grantor trust for
United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment,
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modification or termination as directed by a majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at the
direction of the holders of at least the proportion in liquidation amount of the
Trust Securities which the relevant Super-Majority represents of the aggregate
principal amount of the Junior Subordinated Debentures outstanding. The
Institutional Trustee shall be under no obligation to take any such action in
accordance with the directions of the holders of the Trust Securities unless the
Institutional Trustee has obtained an opinion of tax counsel to the affect that
for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities may be
given at a separate meeting of holders of Capital Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be mailed to
each holder of record of Capital Securities. Each such notice will include a
statement setting forth the following information: (i) the date of such meeting
or the date by which such action is to be taken; (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Capital Securities will be required for the Trust to redeem
and cancel Capital Securities or distribute Junior Subordinated Debentures in
accordance with the Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned at such time by MCN or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, MCN, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Capital Securities were
not outstanding.
The procedures by which holders of Capital Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Capital Securities will have no rights to appoint or remove
the MCN Trustees, who may be appointed, removed or replaced solely by MCN as the
indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee or the Delaware
Trustee), provided that, if any proposed amendment provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Trust Securities, whether by
way of amendment to the Declaration or otherwise or (ii) the dissolution,
winding-up or termination of the Trust other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected thereby;
provided, that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Capital Securities or the Common Securities,
then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of a majority in liquidation amount of such class of Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
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MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of the Trust under the Trust Securities
or (y) substitutes for the Capital Securities other securities having
substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities rank the same as the Trust
Securities rank with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) MCN expressly acknowledges a trustee of such
successor entity possessing the same powers and duties as the Institutional
Trustee as the holder of the Junior Subordinated Debentures, (iii) the Capital
Securities or any Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or with another organization on which the Capital Securities are then
listed or quoted, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation or replacement, MCN has
received an opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that, (A) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such successor
entity will be required to register as an investment company under the 1940 Act
and (C) following such merger, consolidation, amalgamation or replacement, the
Trust (or the successor entity) will continue to be classified as a grantor
trust for United States federal income tax purposes, and (viii) MCN guarantees
the obligations of such successor entity under the Successor Securities at least
to the extent provided by the Guarantee and the Common Securities Guarantee (as
described in the accompanying Prospectus). Notwithstanding the foregoing, the
Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for United States federal
income tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Capital Securities. The Capital Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Capital Securities certificates,
representing the total aggregate number of Capital Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Capital
Securities as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts,
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<PAGE> 60
thereby eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others, such as securities brokers and dealers, banks and trust
companies that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Purchases of Capital Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
each Capital Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Capital Securities.
Transfers of ownership interests in the Capital Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Capital Securities, except in the event that
use of the book-entry system for the Capital Securities is discontinued.
To facilitate subsequent transfers, all the Capital Securities deposited by
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Capital Securities with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership of the Capital Securities.
DTC has no knowledge of the actual Beneficial Owners of the Capital Securities.
DTC's records reflect only the identity of the Direct Participants to whose
accounts such Capital Securities are credited, which may or may not be the
Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Capital Securities represented thereby for all
purposes under the Declaration and the Capital Securities. No beneficial owner
of an interest in a Global Certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures, in addition to those
provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Capital Securities (including the presentation of Capital
Securities for exchange as described below) only at the direction of one or more
Participants to whose account the DTC interests in the Global Certificates are
credited and only in respect of such portion of the aggregate liquidation amount
of Capital Securities as to which such Participant or Participants has or have
given such direction. However, if there is an Event of Default under the Capital
Securities, DTC will exchange the Global Certificates for Certificated
Securities, which it will distribute to its Participants.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Capital Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Capital Securities are
being redeemed, DTC will determine the amount of the interest of each
Participant to be redeemed in accordance with its procedures. Although voting
with respect to the Capital Securities is limited, in those cases where a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Capital Securities. Under its usual procedures, DTC would mail an Omnibus
Proxy to the Trust as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Participants to whose
accounts the Capital Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy). MCN and the Trust believe that the
arrangements among DTC, Direct and Indirect Participants, and Beneficial Owners
will enable the Beneficial
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Owners to exercise rights equivalent in substance to the rights that can be
directly exercised by a holder of a beneficial interest in the Trust.
Distributions on the Capital Securities held in book-entry form will be
made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with Securities held for
the account of customers in bearer form or registered in "street name," and such
payments will be the responsibility of such Participants and Indirect
Participants and not of DTC, the Trust or the Company, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust, disbursement of such
payments to Participants is the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners is the responsibility of Participants and
Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Capital Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company, the Trust
nor any Trustee will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depositary with
respect to the Capital Securities at any time by giving notice to the Trust.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Capital Security certificates are required to be printed and
delivered to holders. Additionally, the Regular Trustees (with the consent of
the Company) may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). In that event, certificates for the
Capital Securities will be printed and delivered. In each of the above
circumstances, the Company will appoint a paying agent with respect to the
Capital Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that MCN and MCN Financing believe to be
reliable, but neither MCN nor MCN Financing takes responsibility for the
accuracy thereof.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payments in respect of the Capital Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution dates or, in the case of certificated
securities, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the register of holders
of the Capital Securities. The Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Issuer Trustees. In the event
that Wilmington Trust Company shall no longer be the Paying Agent, the Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company).
The Institutional Trustee will act as registrar, transfer agent and paying
agent for the Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or the Company may require) in respect of any tax or
other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Capital Securities after such Capital Securities have been called
for redemption.
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<PAGE> 62
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at the
request of any holder of Capital Securities, unless offered reasonable indemnity
by such holder against the costs, expenses and liabilities which might be
incurred thereby. The holders of Capital Securities will not be required to
offer such indemnity in the event such holders, by exercising their voting
rights, direct the Institutional Trustee to take any action it is empowered to
take under the Declaration following a Declaration Event of Default. The
Institutional Trustee also serves as trustee under the Guarantee.
GOVERNING LAW
The Declaration and the Capital Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
United States federal income tax purposes. MCN is authorized and directed to
conduct its affairs so that the Junior Subordinated Debentures will be treated
as indebtedness of MCN for United States federal income tax purposes. In this
connection, MCN and the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Trust or the
certificate of incorporation of MCN, that each of MCN and the Regular Trustees
determine in their discretion to be necessary or desirable to achieve such end,
as long as such action does not adversely affect the interests of the holders of
the Capital Securities or vary the terms thereof.
Holders of the Capital Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Pursuant to the Guarantee, MCN will irrevocably and unconditionally agree,
to the extent set forth therein, to pay in full, to the holders of the Capital
Securities issued by the Trust, the Guarantee Payments (as defined in the
accompanying Prospectus)(except to the extent paid by the Trust), as and when
due, regardless of any defense, right of set-off or counterclaim which the Trust
may have or assert. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Capital Securities or by causing the Trust to pay such amounts to
such holders. The Guarantee will be qualified as an indenture under the Trust
Indenture Act. Wilmington Trust Company will act as indenture trustee under the
Guarantee. The terms of the Guarantee will be those set forth in such Guarantee
and those made part of such Guarantee by the Trust Indenture Act. The Guarantee
will be held by the Guarantee Trustee for the benefit of the holders of the
Capital Securities. Notwithstanding the foregoing, if the Company has failed to
make a payment under the Guarantee, any holder of Capital Securities may
institute a legal proceeding directly against the Company to enforce its rights
under the Guarantee without first instituting a legal proceeding directly
against the Trust, the Guarantee Trustee or any other person or entity. A
summary description of the Guarantee appears in the accompanying Prospectus
under the caption "Description of the Preferred Securities Guarantees."
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Junior Subordinated
Debentures set forth in the
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<PAGE> 63
accompanying Prospectus under the caption "Particular Terms of the Subordinated
Debt Securities." The following description does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the description
in the accompanying Prospectus and the Subordinated Debt Securities Indenture,
dated as of September 1, 1994 (as supplemented by the First Supplemental
Indenture, dated April 17, 1996 and the Second Supplemental Indenture dated July
24, 1996, as so supplemented, the "Base Indenture") between MCN and NBD Bank,
N.A., (now known as NBD Bank, a Michigan banking corporation) as Trustee (the
"Debt Trustee"), as supplemented by a Supplemental Indenture, dated as of
, 1997 (the Base Indenture, as so supplemented, is hereinafter
referred to as the "Indenture"), the form of which is incorporated by reference
as an Exhibit to the Registration Statement of which this Prospectus Supplement
and the accompanying Prospectus form a part. Certain capitalized terms used
herein are defined in the Indenture.
GENERAL
The Junior Subordinated Debentures will be issued as unsecured debt under
the Indenture. The Junior Subordinated Debentures will be limited in aggregate
principal amount to $ such amount being the sum of the aggregate
stated liquidation of the Capital Securities and the capital contributed by MCN
in exchange for the Common Securities (the "MCN Payment").
The Junior Subordinated Debentures are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and Additional
Interest (as defined herein), if any, on , 2037.
If Junior Subordinated Debentures are distributed to holders of Capital
Securities in liquidation of such holders' interests in the Trust, such Junior
Subordinated Debentures will initially be issued as a Global Security (as
defined herein). As described herein, under certain limited circumstances,
Junior Subordinated Debentures may be issued in certificated form in exchange
for a Global Security. See "-- Book-Entry and Settlement" below. In the event
that Junior Subordinated Debentures are issued in certificated form, such Junior
Subordinated Debentures will be in denominations of $1,000 and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Junior Subordinated Debentures issued as a Global Security
will be made to DTC, a successor depositary or, in the event that no depositary
is used, to a Paying Agent for the Junior Subordinated Debentures. In the event
Junior Subordinated Debentures are issued in certificated form, principal and
interest will be payable, the transfer of the Junior Subordinated Debentures
will be registrable and Junior Subordinated Debentures will be exchangeable for
Junior Subordinated Debentures of other denominations of a like aggregate
principal amount at the corporate trust office of the Institutional Trustee in
Wilmington, Delaware; provided, that at the option of MCN payment of interest
may be made by check mailed to the address of the holder entitled thereto or by
wire transfer to an account appropriately designated by the holder entitled
thereto. Notwithstanding the foregoing, so long as the holder of any Junior
Subordinated Debentures is the Institutional Trustee, the payment of principal
and interest on the Junior Subordinated Debentures held by the Institutional
Trustee will be made at such place and to such account as may be designated by
the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction involving MCN.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all Senior Indebtedness of MCN
and pari passu with MCN trade creditors and other junior subordinated debentures
issued by MCN. No payment of principal (including redemption and sinking fund
payments), premium, if any, or interest on the Junior Subordinated Debentures
may be made (i) if any Senior Indebtedness of MCN is not paid when due, (ii) any
applicable grace period with respect to such default has ended and such default
has not been cured or waived or ceased to exist, or (iii) if the maturity of any
Senior Indebtedness of MCN has been accelerated because of a default. Upon any
distribution of assets of MCN to
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creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all principal, premium, if any, and interest due or to become
due on all Senior Indebtedness of MCN must be paid in full before the holders of
Junior Subordinated Debentures are entitled to receive or retain any payment.
Upon satisfaction of all claims of all Senior Indebtedness then outstanding, the
rights of the holders of the Junior Subordinated Debentures will be subrogated
to the rights of the holders of Indebtedness of MCN to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Junior Subordinated Debentures are paid in full.
The term "Senior Indebtedness" means the principal of and premium, if any,
and interest on the following, whether outstanding on the date of execution of
the Subordinated Debt Securities Indenture or thereafter incurred or created:
(i) indebtedness of MCN for money borrowed by MCN (including purchase money
obligations with an original maturity in excess of one year) or evidenced by
debentures (other than the Subordinated Debt Securities), notes, bankers'
acceptances or other corporate debt securities or similar instruments issued by
MCN; (ii) obligations with respect to letters of credit; (iii) indebtedness of
MCN constituting a guarantee of indebtedness of others of the type referred to
in the preceding clauses (i) and (ii); or (iv) renewals, extensions or
refundings of any of the indebtedness referred to in the preceding clauses (i),
(ii) and (iii) unless, in the case of any particular indebtedness, renewal,
extension or refunding, under the express provisions of the instrument creating
or evidencing the same, or pursuant to which the same is outstanding, such
indebtedness or such renewal extension or refunding thereof is not superior in
right of payment to the Subordinated Debt Securities. In November 1994, MCN
issued approximately $101 million of Series A Subordinated Deferrable Interest
Debt Securities to MCN Michigan Limited Partnership that rank pari passu with
the Junior Subordinated Debentures and in July 1996, MCN issued approximately
$82 million of junior subordinated debentures due 2036 (the "8 5/8% Debentures")
to MCN Financing I that also rank pari passu with the Junior Subordinated
Debentures.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by MCN. As of December 31, 1996, Senior Indebtedness of MCN
aggregated approximately $1,673 million.
OPTIONAL REDEMPTION
The Junior Subordinated Debentures will be redeemable, in whole or in part,
at the option of MCN on or after , 2007, at a redemption price equal
to the percentage of the principal amount of the Junior Subordinated Debentures
specified below, plus, in each case, accrued interest thereon to the date of
redemption if redeemed during the 12-month period beginning of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2007........................................................
2008........................................................
2009........................................................
2010........................................................
2011........................................................
2012........................................................
2013........................................................
2014........................................................
2015........................................................
2016........................................................
2017 and thereafter.........................................
</TABLE>
If a Tax Event shall occur and be continuing, MCN may at its option redeem
the Junior Subordinated Debentures in whole (but not in part) at any time prior
to , 2007 and within 90 days of the occurrence of such Tax Event, at
a redemption price equal to the greater of (i) 100% of the principal amount of
such Junior Subordinated Debentures or (ii) the sum, as determined by a
Quotation Agent, of the present values of the principal amount and premium
payable as part of the redemption price with respect to an optional redemption
of such Junior Subordinated Debentures on , 2007, together with
scheduled
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payments of interest from the redemption date to , 2007 (the
"Remaining Life"), in each case discounted to the redemption date on a
semi-annual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate, plus, in each case, accrued interest thereon to the date
of redemption.
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
to the effect that, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws or any regulations thereunder of
the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to or change in an interpretation or application of
such laws or regulations by any legislative body, court, governmental agency or
regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after
such date), there is more than an insubstantial risk that interest payable to
the Trust on the Junior Subordinated Debentures would not be deductible by MCN
for United States federal income tax purposes.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15 (519)" or any successor publication which
is published weekly by the Federal Reserve Board and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Remaining Life (if no maturity is within three months before or after the
Remaining Life, yields for the two published maturities most closely
corresponding to the Remaining Life shall be determined and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month); or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date, in each case calculated on the third Business Day
preceding the redemption date, plus in each case (a) % if such redemption
date occurs on or prior to , 1998, and (b) % in all other
cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life of the Junior Subordinated Debentures to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity with the Remaining Life of the Junior Subordinated Debentures. If no
United States Treasury security has a maturity which is within a period from
three months before to three months after , 2007, the two most
closely corresponding United States Treasury securities shall be used as the
Comparable Treasury Issues, and the Adjusted Treasury Rate shall be interpolated
or extrapolated on a straight-line basis, rounding to the nearest month using
such securities.
"Quotation Agent" means the Reference Treasury Dealer appointed by the Debt
Trustee after consultation with MCN. "Reference Treasury Dealer" means: (i)
Merrill Lynch Government Securities, Inc. and its respective successors;
provided, however, that if the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), MCN
shall substitute therefor another Primary Treasury Dealer; and (ii) any other
Primary Treasury Dealer selected by the Debt Trustee after consultation with
MCN.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities"; or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (a) the
average of five Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest of such Reference
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Treasury Dealer Quotations, or (b) if the Debt Trustee obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
reference Treasury Dealer and any redemption date, the average, as determined by
the Debt Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Debt Trustee by such Reference Treasury Dealer at 5:00 p.m., New
York City time, on the third Business Day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless MCN defaults in
payment of the redemption price, on and after the redemption date interest
ceases to accrue on such Junior Subordinated Debentures called for redemption.
INTEREST
Each Junior Subordinated Debenture shall bear interest at the rate of
% per annum from the original date of issuance, payable semi-annually in
arrears on and of each year (each an "Interest
Payment Date"), commencing , 1997, to the person in whose name such
Junior Subordinated Debenture is registered, subject to certain exceptions, at
the close of business on the and next preceding
such Interest Payment Date. In the event that the Junior Subordinated Debentures
shall not continue to remain in book-entry only form, MCN shall have the right
to select record dates which shall be more than one Business Day but less than
60 Business Days prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full semi-annual period for which interest is
computed, will be computed on the basis of the actual number of days elapsed per
30-day month. In the event that any date on which interest is payable on the
Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, then such payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed certain changes to federal income tax law
that would, among other things, deny corporate issuers a deduction for interest
in respect of certain debt obligations, such as the Junior Subordinated
Debentures, issued on or after the date of first Congressional committee action.
The proposed legislation, if enacted in its current form, would not apply to the
Junior Subordinated Debentures if they are issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the ability
of MCN to deduct the interest payable on the Junior Subordinated Debentures.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"Description of the Capital Securities -- Special Event Redemption or
Distribution."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
MCN shall have the right at any time, and from time to time, during the
term of the Junior Subordinated Debentures to defer payments of interest by
extending the interest payment period for a period not exceeding 10 consecutive
semiannual periods or extending beyond the maturity of the Junior Subordinated
Debentures, at the end of which Extension Period, MCN shall pay all interest
then accrued and unpaid (including any Additional Interest, as herein defined)
together with interest thereon compounded semi-annually at the rate specified
for the Junior Subordinated Debentures to the extent permitted by applicable law
("Compound Interest"); provided, that during any such Extension Period, (a) MCN
shall not declare or pay dividends on,
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make any distribution with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to any of its capital stock (other than (i)
purchases or acquisitions of shares of MCN's Common Stock in connection with the
satisfaction by MCN of its obligations under any employee benefit plans or the
satisfaction by MCN of its obligations pursuant to any contract or security
outstanding on the date of such election requiring MCN to purchase shares of
MCN's Common Stock, (ii) as a result of a reclassification of MCN's capital
stock or the exchange or conversion of one class or series of MCN's capital
stock for another class or series of MCN's capital stock or (iii) the purchase
of fractional interests in shares of MCN's capital stock pursuant to the
conversion or exchange provisions of such MCN capital stock or the security
being converted or exchanged) or make any guarantee payments with respect to the
foregoing), (b) MCN shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by MCN that rank pari passu with or junior to the
Junior Subordinated Debentures, including other junior subordinated debentures
issued by MCN and (c) MCN shall not make any guarantee payments with respect to
the foregoing (other than pursuant to the Capital Securities Guarantee). Prior
to the termination of any such Extension Period, MCN may further defer payments
of interest by extending the interest payment period; provided, however, that,
such Extension Period, including all such previous and further extensions, may
not exceed 10 consecutive semi-annual periods or extend beyond the maturity of
the Junior Subordinated Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, MCN may commence a new Extension
Period, subject to the terms set forth in this section. No interest during an
Extension Period, except at the end thereof, shall be due and payable. MCN has
no present intention of exercising its right to defer payments of interest by
extending the interest payment period on the Junior Subordinated Debentures. If
the Institutional Trustee shall be the sole holder of the Junior Subordinated
Debentures, MCN shall give the Regular Trustees and the Institutional Trustee
notice of its selection of such Extension Period one Business Day prior to the
earlier of (i) the date distributions on the Capital Securities are payable or
(ii) the date the Regular Trustees are required to give notice to the New York
Stock Exchange (or other applicable self-regulatory organization) or to holders
of the Capital Securities of the record date or the date such distribution is
payable. The Regular Trustees shall give notice of MCN's selection of such
Extension Period to the holders of the Capital Securities. If the Institutional
Trustee shall not be the sole holder of the Junior Subordinated Debentures, MCN
shall give the holders of the Junior Subordinated Debentures notice of its
selection of such Extension Period ten Business Days prior to the earlier of (i)
the Interest Payment Date or (ii) the date upon which MCN is required to give
notice to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Junior Subordinated Debentures of the record
or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, MCN will pay as additional interest ("Additional Interest") on the
Junior Subordinated Debentures such additional amounts as shall be required so
that the net amounts received and retained by the Trust after paying any such
taxes, duties, assessments or other governmental charges will be not less than
the amounts the Trust would have received had no such taxes, duties, assessments
or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debentures, will
have the right to declare the principal of and the interest on the Junior
Subordinated Debentures (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debentures. See "Particular Terms of the
Subordinated Debt Securities -- Events of Default and Notice Thereof" in the
accompanying Prospectus for a description of the Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders of
Capital Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its
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rights as the holder of the Junior Subordinated Debentures. See "Description of
the Capital Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of MCN to pay interest
or principal on the Junior Subordinated Debentures on the date such interest or
principal is otherwise payable, MCN acknowledges that a holder of Capital
Securities may then institute a Direct Action for payment on or after the
respective due date specified in the Junior Subordinated Debentures.
Notwithstanding any payments made to such holder of Capital Securities by MCN in
connection with a Direct Action, MCN shall remain obligated to pay the principal
of or interest on the Junior Subordinated Debt Securities held by MCN Financing
or the Institutional Trustee of MCN Financing, and MCN shall be subrogated to
the rights of the holder of such Capital Securities with respect to payments on
the Capital Securities to the extent of any payments made by the Company to such
holder in any Direct Action. The holders of Capital Securities will not be able
to exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Capital Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust as
a result of the occurrence of a Tax Event, the Junior Subordinated Debentures
will be issued in the form of one or more global certificates (each a "Global
Security") registered in the name of the Depositary or its nominee. Except under
the limited circumstances described below, Junior Subordinated Debentures
represented by the Global Security will not be exchangeable for, and will not
otherwise be issuable as, Junior Subordinated Debentures in definitive form. The
Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of Capital
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depositary for the Junior Subordinated Debentures. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Capital Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." As of the date of this Prospectus Supplement, the
description therein of DTC's book-entry system and DTC's practices as they
relate to purchases, transfers, notices and payments with respect to the Capital
Securities apply in all material respects to any debt obligations represented by
one or more Global Securities held by MCN. MCN may appoint a successor to DTC or
any successor depositary in the event DTC or such successor depositary is unable
or unwilling to continue as a depositary for the Global Securities.
None of MCN, the Trust, the Institutional Trustee, any paying agent and any
other agent of MCN or the Debt Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a Global Security for such Junior Subordinated
Debentures or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the depositary notifies MCN that it is unwilling or
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unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) MCN, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Event of Default with respect to such Junior
Subordinated Debentures. Any Global Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Junior Subordinated Debentures
registered in such names as the Depositary shall direct. It is expected that
such instructions will be based upon directions received by the Depositary from
its Participants with respect to ownership of beneficial interests in such
Global Security.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
MCN will pay all fees and expenses related to (i) the offering of the Trust
Securities and the Junior Subordinated Debentures, (ii) the organization,
maintenance and dissolution of the Trust, (iii) the retention of the MCN
Trustees and (iv) the enforcement by the Institutional Trustee of the rights of
the holders of the Capital Securities. The payment of such fees and expenses
will be fully and unconditionally guaranteed by MCN.
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EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, to invest the proceeds from such issuance and sale in the Junior
Subordinated Debentures and engage in only those other activities necessary or
incidental thereto.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Capital Securities; (iii) MCN shall
pay all, and the Trust shall not be obligated to pay, directly or indirectly,
all costs, expenses, debt, and obligations of the Trust (other than with respect
to the Trust Securities); and (iv) the Declaration further provides that the MCN
Trustees shall not take or cause or permit the Trust to, among other things,
engage in any activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Capital Securities (to the extent funds therefor are
available) are guaranteed by MCN as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If MCN does not make interest payments on the Junior Subordinated
Debentures purchased by the Trust, it is expected that the Trust will not have
sufficient funds to pay distributions on the Capital Securities. The Guarantee
does not apply to any payment of distributions unless and until the Trust has
sufficient funds for the payment of such distributions. The Guarantee covers the
payment of distributions and other payments on the Capital Securities only if
and to the extent that MCN has made a payment of interest or principal on the
Junior Subordinated Debentures held by the Trust as its sole asset.
If MCN fails to make interest or other payments on the Junior Subordinated
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Capital Securities, using the
procedures described in "Description of the Capital Securities -- Book-Entry
Only Issuance -- The Depository Trust Company" and "-- Voting Rights," may
direct the Institutional Trustee to enforce its rights under the Junior
Subordinated Debentures. If the Institutional Trustee fails to enforce its
rights under the Junior Subordinated Debentures, a holder of Capital Securities
may institute a legal proceeding against MCN to enforce the Institutional
Trustee's rights under the Junior Subordinated Debentures without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of MCN to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable, then a
holder of Capital Securities may directly institute a proceeding against the
Company for payment. MCN, under the Guarantee, acknowledges that the Guarantee
Trustee shall enforce the Guarantee on behalf of the holders of the Capital
Securities. If MCN fails to make payments under the Guarantee, the Guarantee
provides a mechanism whereby the holders of the Capital Securities may direct
the Guarantee Trustee to enforce its rights thereunder. Notwithstanding the
foregoing, if the Company has failed to make a payment under the Guarantee, any
holder of Capital Securities may institute a legal proceeding directly against
MCN to enforce its rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee, or any other person or
entity.
The Guarantee, when taken together with MCN's obligations under the Junior
Subordinated Debentures and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provide a full and unconditional guarantee of amounts due on the Capital
Securities. See "Description of the Preferred Securities Guarantees -- General"
in the accompanying Prospectus.
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UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of Capital
Securities. Unless otherwise stated, this summary deals only with Capital
Securities held as capital assets by holders who purchase the Capital Securities
upon original issuance ("Initial Holders"). It does not deal with special
classes of holders such as banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, or persons that will hold the Capital
Securities as a position in a "straddle," as part of a "synthetic security" or
"hedge," as part of a "conversion transaction" or other integrated investment,
or as other than a capital asset. This summary also does not address the tax
consequences to persons that have a functional currency other than the U.S.
Dollar or the tax consequences to shareholders, partners or beneficiaries of a
holder of Capital Securities. Further, it does not include any description of
any alternative minimum tax consequences or the tax laws of any state or local
government or of any foreign government that may be applicable to the Capital
Securities. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures,
Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to MCN and the
Trust ("Special Tax Counsel"), will render its opinion generally to the effect
that, under then current law and assuming full compliance with the terms of the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Junior Subordinated Debentures held
by the Trust will be classified for United States federal income tax purposes as
indebtedness of MCN.
CLASSIFICATION OF MCN FINANCING
In connection with the issuance of the Capital Securities, Special Tax
Counsel will render its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Declaration and the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Capital Securities generally will be considered the
owner of an undivided interest in the Junior Subordinated Debentures, and each
holder will be required to include in its gross income any interest (or OID)
accrued with respect to its allocable share of those Junior Subordinated
Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations, a debt instrument will be
deemed to be issued with OID if there is more than a remote contingency that
periodic stated interest payments due on the instrument will not be timely paid.
Because the exercise by MCN of its option to defer the payment of stated
interest on the Junior Subordinated Debentures would, among other things,
prevent MCN from declaring dividends on any of its capital stock, MCN believes
that the likelihood of its exercising the option is remote within the meaning of
such regulations. As a result, MCN intends to take the position, based upon the
advice of Special Tax Counsel, that the Junior Subordinated Debentures will not
be issued with OID. Accordingly, based upon this position and except as set
forth below, stated interest on the Junior Subordinated Debentures generally
will be taxable to a holder of Capital Securities as ordinary income at the time
it is paid or accrued in accordance with such holder's regular method of tax
accounting.
If, however, MCN exercises its right to defer payments of interest on the
Junior Subordinated Debentures, the Junior Subordinated Debentures will become
OID instruments at that time and, consequently, a holder of the Capital
Securities will be required to include such holder's pro rata share of such OID
in income on an economic accrual basis before the receipt of cash attributable
to the interest, regardless of
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such holder's regular method of tax accounting, and actual distributions of
stated interest will not be separately reported as taxable income. Thereafter,
the Junior Subordinated Debentures will be taxed as OID instruments for as long
as they remain outstanding. The amount of OID that will accrue in any month will
approximately equal the amount of the interest that accrues on the Junior
Subordinated Debentures in that month at the stated interest rate. Any amount of
OID included in a holder's gross income (whether or not during an Extension
Period) with respect to a Capital Security will increase such holder's tax basis
in such Capital Security, and the amount of actual distributions received by a
holder in respect of such accrued OID will reduce the tax basis of such Capital
Security.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully that the
stated interest on the Junior Subordinated Debentures was OID regardless of
whether MCN exercised its option to defer payments of interest on such debt
instruments, a holder of Capital Securities would be required to include such
OID in income on a daily economic accrual basis as described above.
Because income on the Capital Securities will constitute interest (or OID),
corporate holders of Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Capital Securities other than Initial Holders may be considered
to have acquired their undivided interests in the Junior Subordinated Debentures
with market discount or acquisition premium as such phrases are defined for
United States federal income tax purposes. Such holders are advised to consult
their tax advisors as to the income tax consequences of the acquisition,
ownership and disposition of the Capital Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF MCN
FINANCING
Under certain circumstances, as described under the caption "Description of
the Capital Securities -- Special Event Redemption or Distribution," Junior
Subordinated Debentures may be distributed to holders in exchange for the
Capital Securities and in liquidation of the Trust. Under current law, such a
distribution, for United States federal income tax purposes, would be treated as
a non-taxable event to each holder, and each holder would receive an aggregate
tax basis in the Junior Subordinated Debentures equal to such holder's aggregate
tax basis in its Capital Securities. A holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Capital Securities were held by such holder.
Under certain circumstances described herein (see "Description of the
Capital Securities -- Special Event Redemption or Distribution"), the Junior
Subordinated Debentures may be redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their Capital Securities.
Under current law, such a redemption of the Junior Subordinated Debentures
would, for United States federal income tax purposes, constitute a taxable
disposition of the redeemed Capital Securities, and a holder could recognize
gain or loss as if it sold such redeemed Capital Securities for cash. See "--
Sales of Capital Securities."
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities (including a redemption of Capital
Securities by MCN) will recognize gain or loss equal to the difference between
its adjusted tax basis in the Capital Securities and the amount realized on the
sale or redemption of such Capital Securities (except to the extent of any
amount received in respect of accrued but unpaid interest not previously
included in income). A holder's adjusted tax basis in the Capital Securities
generally will be its initial purchase price (increased by any OID previously
includible in such holder's gross income to the date of disposition and
decreased by payments received on the Capital Securities in respect of any such
accrued OID). Such gain or loss generally will be a capital gain or loss and
generally will be a long-term capital gain or loss if the Capital Securities
have been held for more than
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one year. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law: (i) payments by the
Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the Capital
Security does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of MCN entitled to vote, (b) the
beneficial owner of the Capital Security is not a controlled foreign corporation
that is related to MCN through stock ownership, and (c) either (A) the
beneficial owner of the Capital Security certifies to the Trust or its agent,
under penalties of perjury, that it is not a United States holder and provides
its name and address or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "Financial Institution"), and holds the Capital
Security in such capacity, certifies to the Trust or its agent, under penalties
of perjury, that such statement has been received from the beneficial owner by
it or by a Financial Institution between it and the beneficial owner and
furnishes the Trust or its agent with a copy thereof; and (ii) a United States
Alien Holder of a Capital Security will not be subject to United States federal
withholding tax on any gain realized upon the sale or other disposition of a
Capital Security.
On April 22, 1996, the IRS proposed regulations (the "Proposed
Regulations"), which, if adopted in their current form, could affect the
procedures to be followed by a United States Alien Holder in establishing such
United States Alien Holder's status as a United States Alien for the purposes of
the withholding rules (including the back-up withholding rules referred to
below). The Proposed Regulations, if adopted in their present form, generally
would be effective for payments made after December 31, 1997. Prospective
investors should consult their tax advisors concerning the potential adoption of
such Proposed Regulations and the potential effect on their ownership of the
Capital Securities.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Capital
Securities will be reported to holders on Forms 1099, which forms should be
mailed to holders of Capital Securities by January 31 following each calendar
year.
The Trust will be obligated to report annually to Cede & Co., as holder of
record of the Capital Securities, the interest or OID related to the Junior
Subordinated Debentures that accrued during the year. The Trust currently
intends to report such information on Form 1099 prior to January 31 following
each calendar year even though the Trust is not legally required to report to
record holders until April 15 following each calendar year. The Underwriters (as
defined herein) have indicated to the Trust that, to the extent that they hold
Capital Securities as nominees for beneficial holders, they currently expect to
report to such beneficial holders on Forms 1099 by January 31 following each
calendar year. Under current law, holders of Capital Securities who hold as
nominees for beneficial holders will not have any obligation to report
information regarding the beneficial holders to the Trust. The Trust, moreover,
will not have any obligation to report to beneficial holders who are not also
record holders. Thus, beneficial holders of Capital Securities who hold their
respective Capital Securities through the Underwriters will receive Forms 1099
reflecting the income on their respective Capital Securities from such nominee
holders rather than the Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld
S-34
<PAGE> 74
amounts will be allowed as a credit against the holder's United States federal
income tax, provided the required information is provided to the IRS.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed certain changes to federal income tax law
that would, among other things, deny corporate issuers a deduction for interest
in respect of certain debt obligations, such as the Junior Subordinated
Debentures, issued on or after the date of first Congressional committee action.
The proposed legislation, if enacted in its current form, would not apply to the
Junior Subordinated Debentures if they are issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the ability
of MCN to deduct the interest payable on the Junior Subordinated Debentures.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"Description of the Capital Securities -- Special Event Redemption or
Distribution."
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
S-35
<PAGE> 75
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and are
acting as representatives (the "Representatives"), have severally agreed to
purchase the number of Capital Securities set forth opposite its name below. In
the Underwriting Agreement, the several Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Capital Securities
offered hereby if any of the Capital Securities are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
CAPITAL
SECURITIES
UNDERWRITERS ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
---------
Total..........................................
=========
</TABLE>
The Underwriters propose to offer the Capital Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus Supplement, and in part to certain securities dealers at
such price less a concession not in excess of $ per Capital Security. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per Capital Security to certain other brokers and dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
In view of the fact that the proceeds of the sale of the Capital Securities
will be used to purchase the Junior Subordinated Debentures of MCN, the
Underwriting Agreement provides that MCN will agree to pay as compensation
("Underwriters' Compensation") to the Underwriters for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (same day) funds of $ per Capital Security (or $ in the
aggregate) for the accounts of the several Underwriters.
During a period of 30 days from the date of the Prospectus Supplement,
neither the Trust nor MCN will, without the prior written consent of the
Representatives, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any Capital Securities, any security
convertible into or exchangeable into or exercisable for Capital Securities or
the Junior Subordinated Debentures or any debt securities substantially similar
to the Junior Subordinated Debentures or any equity securities substantially
similar to the Capital Securities (except for the Junior Subordinated Debentures
and the Capital Securities offered hereby).
Until the distribution of the Capital Securities is completed, rules of the
Commission may limit the ability of the Underwriters and any selling group
members to bid for and purchase the Capital Securities. As an exception to these
rules, the Representatives are permitted to engage in certain transactions that
stabilize the price of the Capital Securities. Such transactions consist of bids
or purchases for the purpose of pegging, fixing or maintaining the price of the
Capital Securities.
S-36
<PAGE> 76
If the Underwriters create a short position in the Capital Securities in
connection with the Offering, i.e., if they sell more Capital Securities than
are set forth on the cover page of this Prospectus, the Representatives may
reduce that short position by purchasing Capital Securities in the open market.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
Capital Securities in the open market to reduce the Underwriters' short position
or to stabilize the price of the Capital Securities, they may reclaim the amount
of the selling concession from the Underwriters and any selling group members
who sold those Capital Securities as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Trust, MCN nor any of the Underwriters makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Capital Securities. In
addition, neither the Trust, MCN nor any of the Underwriters makes any
representation that the Representatives will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
The Representatives have advised the Trust that they intend to make a
market in the Capital Securities but they will have no obligation to make a
market in the Capital Securities and may cease market making activities, if
commenced, at any time.
Prior to this offering, there has been no public market for the Capital
Securities.
MCN and the Trust have agreed to indemnify the Underwriters against, or
contribute to payments that the Underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, MCN and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
The validity of the Indenture, the Guarantee and the Junior Subordinated
Debentures and certain matters relating thereto will be passed upon on behalf of
MCN by Daniel L. Schiffer, Senior Vice President, General Counsel and Secretary
of MCN. Certain matters of Delaware law relating to the validity of the Capital
Securities will be passed upon on behalf of the Trust by Skadden, Arps, Slate,
Meagher & Flom (Delaware), special Delaware counsel to the Trust. Certain United
States federal income taxation matters will be passed upon for MCN and the Trust
by Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to MCN and the
Trust. Certain legal matters will be passed upon for the Underwriters by
LeBoeuf, Lamb, Greene & MacRae, L.L.P., New York, New York. Mr. Schiffer is a
full-time employee and officer of MCN and owns 23,941 shares of MCN as of
February 26, 1997. LeBoeuf, Lamb, Greene & MacRae, L.L.P. from time to time
renders legal services to MCN.
S-37
<PAGE> 77
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY MCN CORPORATION, MCN FINANCING IV OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF MCN CORPORATION OR MCN FINANCING IV SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Selected Historical Financial
Information.............................. S-4
MCN Energy Group Inc....................... S-6
MCN Financing IV........................... S-7
Risk Factors............................... S-8
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.... S-12
Capitalization............................. S-13
Accounting Treatment....................... S-13
Use of Proceeds............................ S-13
Description of the Capital Securities...... S-14
Description of the Guarantee............... S-23
Description of the Junior Subordinated
Debentures............................... S-23
Effect of Obligations Under the Junior
Subordinated Debentures and the
Guarantee................................ S-31
United States Federal Income Taxation...... S-32
Underwriting............................... S-36
Legal Matters.............................. S-37
PROSPECTUS
Available Information...................... 3
Incorporation of Certain Documents by
Reference................................ 4
MCN Energy Group Inc....................... 5
The MCN Trusts............................. 5
Use of Proceeds............................ 6
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.... 7
Description of MCN Debt Securities......... 8
Particular Terms of the Senior Debt
Securities............................... 12
Particular Terms of the Subordinated Debt
Securities............................... 16
Description of MCN Capital Stock........... 20
Description of the MCN Trust Preferred
Securities............................... 23
Description of the Preferred Securities
Guarantees............................... 25
Effect of Obligations Under the
Subordinated Debt Securities and the
Guarantee................................ 27
Description of Stock Purchase Contracts and
Stock Purchase Units..................... 28
Plan of Distribution....................... 29
Validity of Securities..................... 30
Experts.................................... 30
</TABLE>
======================================================
======================================================
$ ,000,000
MCN ENERGY GROUP INC. LOGO
MCN FINANCING IV
% CAPITAL SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
MCN ENERGY
GROUP INC.
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
, 1997
======================================================
<PAGE> 78
SUBJECT TO COMPLETION, DATED MARCH 7, 1997
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED , 1997)
2,300,000 FELINE PRIDES(SM)
MCN ENERGY GROUP INC. LOGO MCN
FINANCING III
The securities offered hereby are 2,300,000 FELINE PRIDES(SM) (the
"Securities") of MCN Corporation, doing business as MCN Energy Group Inc. ("MCN"
or the "Company"). Each FELINE PRIDES offered hereby initially will consist of a
unit (referred to as an Income PRIDES(SM)) with a Stated Amount of $50 (the
"Stated Amount") comprised of (a) a stock purchase contract (the "Purchase
Contract") under which (i) the holder will purchase from the Company on May
, 2000 (the "Purchase Contract Settlement Date"), for an amount equal to the
Stated Amount, a number of shares of common stock, par value $.01 per share, of
the Company (the "Common Stock") equal to the Settlement Rate described herein,
and (ii) the Company will pay the holder unsecured, subordinated contract
adjustment payments ("Contract Adjustment Payments"), and (b) beneficial
ownership of a % Trust Originated Preferred Security (a "Trust Preferred
Security"), having a liquidation amount per Trust Preferred Security equal to
the Stated Amount, representing a preferred, undivided beneficial interest in
the assets of MCN Financing III, a statutory business trust formed under the
laws of the State of Delaware ("MCN Financing" or "the Trust"). MCN will,
directly or indirectly, own all of the common securities (the "Common
Securities") representing undivided beneficial interests in the assets of the
Trust. The Trust exists for the sole purpose of issuing the Trust Preferred
Securities and Common Securities and investing the proceeds thereof in an
equivalent amount of % Junior Subordinated Debentures of the Company, due May
, 2002 (the "Junior Subordinated Debentures"). As long as the FELINE PRIDES
are in the form of Income PRIDES, the Trust Preferred Securities will be pledged
to the Collateral Agent, to secure the holder's obligation to purchase Common
Stock under the Purchase Contract.
(Continued on next page.)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-15 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE SECURITIES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE
SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF SUCH DEFERRAL.
------------------------
Prior to the offering made hereby there has been no public market for the
Securities. Application has been made to list the Income PRIDES on the New York
Stock Exchange ("NYSE") under the symbol "MCN prI". The Growth PRIDES (as
defined herein) and the Trust Preferred Securities will not be listed or traded
on any securities exchange. On March 5, 1997, the last reported sale price of
the Common Stock on the NYSE was $29 7/8 per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) COMMISSION(2)(3) COMPANY(4)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Per Income PRIDES...................... $50.00 $ $
- ------------------------------------------------------------------------------------------------------------------
Total(5)............................... $115,000,000 $ $
==================================================================================================================
</TABLE>
(1) Plus accrued distributions on the Trust Preferred Securities and Contract
Adjustment Payments, if any, from , 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting".
(3) The Underwriting Commission will be $ for each Income PRIDES sold to
certain institutions. Therefore, to the extent the Income PRIDES are sold to
such institutions, the Total Underwriting Commission will be less than, and
the actual Proceeds to the Company will be greater than, the amounts shown.
(4) Before deducting estimated expenses payable by the Company estimated at
$ .
(5) The Company and the Trust have granted the Underwriters a 30-day option to
purchase up to an additional 345,000 Income PRIDES to cover over-allotments,
if any. If such an option is exercised in full, the total Price to Public
will be $ , Underwriting Commission will be $ and Proceeds to Company
will be $ . See "Underwriting."
------------------------
The Securities are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, and subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Securities offered hereby will be made in New York, New York on
or about , 1997.
------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
SMITH BARNEY INC.
LADENBURG THALMANN & CO. INC.
------------------------
The date of this Prospectus Supplement is , 1997.
- ---------------
(SM) Service Mark of Merrill Lynch & Co. Inc.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 79
(Continued from previous page)
Payments of % of the Stated Amount per annum will be made or accrue on
each Income PRIDES quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing June 30, 1997, until the Purchase Contract
Settlement Date. These payments will consist of cumulative cash distributions on
the Trust Preferred Securities payable by the Trust at the rate of % of the
Stated Amount per annum, and Contract Adjustment Payments, payable by the
Company, at the rate of % of the Stated Amount per annum. The ability of the
Trust to make the quarterly distributions on the Trust Preferred Securities is
solely dependent upon the receipt of corresponding interest payments from the
Company on the Junior Subordinated Debentures. The Company has the right at any
time, and from time to time, limited to a period not extending beyond the
maturity date of the Junior Subordinated Debentures, to defer the interest
payments due on the Junior Subordinated Debentures and to defer Contract
Adjustment Payments until the Purchase Contract Settlement Date. As a
consequence of such deferral, quarterly distributions on the Income PRIDES would
be deferred, but would continue to accrue with interest compounded quarterly.
The payment of distributions out of moneys held by the Trust and payments on
liquidation of the Trust are guaranteed by MCN (the "Guarantee") to the extent
described herein and under "Description of the Guarantee." The Guarantee covers
payments of distributions and other payments on the Trust Preferred Securities
only if and to the extent the Trust has funds available therefor, which will not
be the case unless MCN has made a payment of principal or interest on the Junior
Subordinated Debentures held by the Trust as its sole asset. The Guarantee, when
taken together with MCN's obligations under the Junior Subordinated Debentures,
the Indenture (as defined below) and MCN's obligations under the Declaration (as
defined below), provides a full and unconditional guarantee on a subordinated
basis by MCN of amounts due on the Trust Preferred Securities.
Each holder will have the right, at any time after issuance of the Income
PRIDES, to substitute for any Trust Preferred Securities held by the Collateral
Agent zero-coupon U.S. Treasury Securities (CUSIP No. 912820 AW7) maturing on
May 15, 2000 (the "Treasury Securities"), in a principal amount per Purchase
Contract equal to the Stated Amount per Trust Preferred Security. Holders may
make such substitution only in integral multiples of 20 Income PRIDES.
Securities with respect to which Treasury Securities have been substituted for
Trust Preferred Securities as collateral to secure a holder's obligation under
the Purchase Contracts, will be referred to as Growth PRIDES(SM). Each Growth
PRIDES will consist of a unit with a face amount of $1000 comprised of (a) 20
Purchase Contracts under which for each Purchase Contract (i) the holder will
purchase from the Company on the Purchase Contract Settlement Date for an amount
equal to the Stated Amount, a number of shares of Common Stock of the Company
equal to the Settlement Rate described herein, and (ii) the Company will pay the
holder Contract Adjustment Payments, and (b) beneficial ownership of a Treasury
Security having a principal amount at maturity equal to $1,000. Upon the
substitution of Treasury Securities for Trust Preferred Securities as
collateral, such Trust Preferred Securities will be released to the holder as
described herein and thereafter will trade separately from the resulting Growth
PRIDES. Contract Adjustment Payments will be payable by the Company on the
Growth PRIDES on March 31, June 30, September 30 and December 31 of each year
from the time each Growth PRIDES was created. In addition, interest would
accrete on the underlying Treasury Securities. Distributions on any Trust
Preferred Securities still outstanding after the Purchase Contract Settlement
Date or after a substitution of collateral resulting in the creation of Growth
PRIDES will continue to be payable by the Trust at the rate of % of the
Stated Amount per annum, subject to the deferral right described above. A holder
of Growth PRIDES will have the right to subsequently recreate Income PRIDES by
delivering a Growth PRIDES to the Purchase Contract Agent plus 20 Trust
Preferred Securities per Growth PRIDES to the Collateral Agent in exchange for
20 Income PRIDES and the release of the underlying Treasury Securities to such
holder.
On the Purchase Contract Settlement Date, unless a holder of the Income
PRIDES (i) has settled the underlying Purchase Contract either through the early
delivery of cash to the Purchase Contract Agent in the manner described herein
or otherwise, or (ii) has notified the Purchase Contract Agent of its intention
to settle the related Purchase Contract with separate cash on the Purchase
Contract Settlement Date and has so settled the related Purchase Contract, such
holder will be deemed to have requested the Trust to put the related Junior
Subordinated Debenture to the Company, and the principal amount of such Junior
Subordinated Debenture equal to the Stated Amount per Purchase Contract will
automatically be applied to satisfy in full such holder's obligation to purchase
Common Stock under the Purchase Contract. See "Description of the Junior
Subordinated Debentures -- Put Option."
With respect to each Growth PRIDES outstanding on the Purchase Contract
Settlement Date, the principal amount of the Treasury Securities underlying each
Growth PRIDES, when paid at maturity, will be automatically applied to satisfy
in full the holder's obligation to purchase Common Stock under the 20 Purchase
Contracts per Growth PRIDES.
In the event that a holder of either an Income PRIDES or Growth PRIDES
effects the early settlement of a related Purchase Contract through the delivery
of cash or settles a Purchase Contract with cash on the Purchase Contract
Settlement Date, the underlying Trust Preferred Securities or Treasury
Securities, as the case may be, will be released to the holder as described
herein.
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING THE PURCHASE OF SECURITIES TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE> 80
MCN ENERGY GROUP INC.
SELECTED HISTORICAL FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS(1)
Operating Revenues........................... $1,997,268 $1,495,232 $1,473,633 $1,420,754 $1,395,341
Operating Income............................. $ 211,293 $ 188,229 $ 147,914 $ 138,694 $ 120,744
Net income from:
Continuing Operations...................... $ 112,569 $ 93,169 $ 74,598 $ 70,173 $ 54,537
Discontinued Operations.................... 37,771 3,587 3,170 2,617 2,581
---------- ---------- ---------- ---------- ----------
Total................................. $ 150,340 $ 96,756 $ 77,768 $ 72,790 $ 57,118
========== ========== ========== ========== ==========
Earnings Per Share from:
Continuing Operations...................... $ 1.68 $ 1.44 $ 1.26 $ 1.20 $ 1.00
Discontinued Operations.................... .57 0.05 0.05 0.04 0.05
---------- ---------- ---------- ---------- ----------
Total................................. $ 2.25 $ 1.49 $ 1.31 $ 1.24 $ 1.05
========== ========== ========== ========== ==========
Average Number of Common Shares Outstanding
(000's).................................... 66,944 64,743 59,394 58,642 54,216
GAS DISTRIBUTION (MMCF)(2)
Gas sales.................................. 220,958 209,816 204,384 205,372 203,110
End user transportation.................... 146,895 145,761 140,020 128,643 129,722
Intermediate transportation................ 527,510 374,428 322,969 302,662 209,360
---------- ---------- ---------- ---------- ----------
Total................................. 895,363 730,005 667,373 636,677 542,192
========== ========== ========== ========== ==========
Customers.................................. 1,183,443 1,172,613 1,154,545 1,141,986 1,130,165
DIVERSIFIED ENERGY(2)
Exploration & Production
Gas Production (MMcf).................... 57,202 31,420 16,513 2,307 --
Oil Production (Mbbl).................... 1,086 388 85 -- --
Gas and Oil Production (MMcf
Equivalent)........................... 63,718 33,748 17,023 2,307 --
Pipelines & Processing (MMcf)(3)
Gas Processed............................ 44,223 14,588 1,942 -- --
Transportation........................... 86,391 4,994 1,194 294 --
Energy Marketing and Power Generation
(MMcf)
Gas Sales................................ 218,952 170,668 142,352 122,782 112,263
Exchange Gas Deliveries.................. 22,586 16,462 13,301 10,016 2,443
---------- ---------- ---------- ---------- ----------
241,538 187,130 155,653 132,798 114,706
========== ========== ========== ========== ==========
CAPITAL INVESTMENTS(4)
Gas Distribution............................. $ 215,318 $ 241,494 $ 153,059 $ 143,120 $ 130,776
Diversified Energy........................... 552,866 385,114 196,030 60,925 34,608
MCN's Share of Joint Ventures................ 16,056 52,850 40,422 36,502 31,203
Discontinued Operations(1)................... 6,508 9,380 12,458 5,064 5,484
---------- ---------- ---------- ---------- ----------
Total................................. $ 790,748 $ 688,838 $ 401,969 $ 245,611 $ 202,071
========== ========== ========== ========== ==========
TOTAL ASSETS................................... $3,633,404 $2,898,640 $2,240,973 $1,881,900 $1,648,989
========== ========== ========== ========== ==========
</TABLE>
(continued on next page)
S-3
<PAGE> 81
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(5)............................... $1,252,040 $ 993,407 $ 685,519 $ 494,821 $ 379,811
========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED STOCK OF
SUBSIDIARY(5)................................ $ -- $ -- $ 2,618 $ 5,618 $ 9,000
========== ========== ========== ========== ==========
MCN-OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARIES HOLDING SOLELY
SUBORDINATED DEBENTURES OF MCN............... $ 173,809 $ 96,449 $ 96,349 $ -- $ --
========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of period)....... $ 28.875 $ 23.25 $ 18.00 $ 17.38 $ 15.44
Dividends Paid Per Share..................... $ .9400 $ .9000 $ .8675 $ .8450 $ .8250
</TABLE>
- ---------------
MMcf -- One million cubic feet.
Mbbl -- Thousands of barrels
(1) In June 1996, MCN sold its computer operations subsidiary, The Genix Group,
Inc. ("Genix"). Accordingly, Genix has been accounted for as a discontinued
operation.
(2) Includes intercompany volumes.
(3) Includes MCN's share of joint ventures.
(4) Capital investments represent consolidated capital expenditures,
acquisitions, and MCN's share of capital expenditures made by joint
ventures, less the minority partners' share of consolidated capital
expenditures.
(5) Excludes current requirements. Long-term debt includes a $100 million term
loan, due 2000, of MCNIC Oil & Gas Company, a wholly-owned subsidiary of
MCNIC, with recourse to MCN limited to certain events, including the
realization of tax credits and performance under swap contracts.
S-4
<PAGE> 82
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement.
THE OFFERING
Securities Offered......... 2,300,000 Income PRIDES.
Issuer..................... MCN Energy Group Inc. ("MCN" or the "Company")
Stated Amount.............. $50 per Income PRIDES.
Components of FELINE
PRIDES..................... Each FELINE PRIDES offered hereby initially will
consist of a unit (referred to as an Income PRIDES)
comprised of (a) a stock purchase contract (the
"Purchase Contract") under which (i) the holder
will purchase from the Company on May , 2000 (the
"Purchase Contract Settlement Date"), for an amount
equal to the Stated Amount, a number of new shares
of common stock, par value $.01 per share (the
"Common Stock"), of the Company equal to the
Settlement Rate (as defined herein), and (ii) the
Company will pay Contract Adjustment Payments to
the holder, and (b) beneficial ownership of a
% Trust Preferred Security, having a stated
liquidation amount equal to the Stated Amount,
representing a preferred, undivided beneficial
interest in the assets of the Trust.
MCN will, directly or indirectly, own all of the
Common Securities. The Trust exists for the sole
purpose of issuing the Trust Preferred Securities
and Common Securities and investing the proceeds
thereof in an equivalent amount of % Junior
Subordinated Debentures of the Company, due May ,
2002 (the "Junior Subordinated Debentures"). Upon
the occurrence of an Investment Company Event, or,
in certain circumstances, a Tax Event or
liquidation of the Trust, as described below, the
Junior Subordinated Debentures would be substituted
for the Trust Preferred Securities. References
herein to Trust Preferred Securities, unless the
context otherwise requires, mean the (i) Trust
Preferred Securities or (ii) the Junior
Subordinated Debentures which have been delivered
to holders in the case of an Investment Company
Event or, in certain circumstances, a Tax Event or
liquidation of the Trust. The distribution rate and
the payment dates for the Trust Preferred
Securities will correspond to the interest rate and
the payment dates for the Junior Subordinated
Debentures, which will be the sole assets of the
Trust. As long as the FELINE PRIDES are in the form
of Income PRIDES, the Trust Preferred Securities
will be pledged with The Chase Manhattan Bank as
collateral agent for the Company (together with any
successor thereto in such capacity, the "Collateral
Agent"), to secure the holders' obligations to
purchase Common Stock under the Purchase Contracts.
See "Risk Factors."
Purchase Contract
Agreement.................. The FELINE PRIDES will be issued under a Purchase
Contract Agreement, dated as of , 1997
(the "Purchase Contract Agreement"), between the
Company and The First National Bank of Chicago, as
agent for the holders of the FELINE PRIDES
(together with any successor thereto in such
capacity, the "Purchase Contract Agent").
Substitution of Pledged
Securities................. Each holder will have the right, at any time after
issuance of the Income PRIDES, to substitute for
any Trust Preferred Securities held by the
Collateral Agent zero-coupon U.S. Treasury
Securities (CUSIP
S-5
<PAGE> 83
No. 912820 AW7) maturing on May 15, 2000 (the
"Treasury Securities"), in a principal amount per
Purchase Contract equal to the Stated Amount per
Trust Preferred Security. Holders may make such
substitution only in integral multiples of 20
Income PRIDES. Securities with respect to which
Treasury Securities have been substituted for Trust
Preferred Securities as collateral to secure a
holder's obligation under the Purchase Contracts,
will be referred to as Growth PRIDES(SM). Each
Growth PRIDES will consist of a unit with a face
amount of $1000 comprised of (a) 20 Purchase
Contracts under which for each Purchase Contract
(i) the holder will purchase from the Company on
the Purchase Contract Settlement Date for an amount
equal to the Stated Amount, a number of shares of
Common Stock of the Company equal to the Settlement
Rate described herein, and (ii) the Company will
pay the holder Contract Adjustment Payments, and
(b) beneficial ownership of a Treasury Security
having a principal amount at maturity equal to
$1,000. Upon the substitution of Treasury
Securities for Trust Preferred Securities as
collateral, such Trust Preferred Securities will be
released to the holder as described herein and
thereafter will trade separately from the resulting
Growth PRIDES. See "Description of FELINE PRIDES --
Substitution of Pledged Securities."
Holders who elect to substitute Pledged Securities
(as defined herein), thereby creating Growth PRIDES
or recreating Income PRIDES (as discussed below),
shall be responsible for any fees or expenses
payable in connection therewith. See "Certain
Provisions of the Purchase Contract Agreement and
the Pledge Agreement -- Miscellaneous."
Recreating Income PRIDES... A holder of Growth PRIDES will have the right to
subsequently recreate an Income PRIDES by
delivering a Growth PRIDES to the Purchase Contract
Agent plus 20 Trust Preferred Securities to the
Collateral Agent in exchange for 20 Income PRIDES
and the release of the underlying Treasury Security
to such holder. See "Description of FELINE PRIDES
-- Recreating Income PRIDES."
Current Payments........... Holders of Income PRIDES are entitled to receive
cash distributions at a rate of % of the
Stated Amount per annum, payable quarterly in
arrears. The quarterly payments will consist of
cumulative cash distributions on the Trust
Preferred Securities payable by the Trust at the
rate of % of the Stated Amount per annum, and
Contract Adjustment Payments, payable by the
Company, until the Purchase Contract Settlement
Date, at the rate of % of the Stated Amount
per annum.
The ability of the Trust to make the quarterly
distributions on the Trust Preferred Securities is
solely dependent upon the receipt of corresponding
interest payments from the Company on the Junior
Subordinated Debentures. The Company's obligations
with respect to the Contract Adjustment Payments
are subordinate and junior in right of payment to
all liabilities of the Company (other than the
Yield Enhancement Payments payable by the Company
in respect of its 8 3/4% PRIDES and MCN's guarantee
of other subordinated debentures with which they
rank pari passu). See "Risk Factors -- Ranking of
Contract Adjustment Payments and Subordinate
Obligations Under the Guarantee and Junior
Subordinated Debentures."
Subject to the Company's rights of deferral
described herein, in the event holders of Income
PRIDES elect to substitute Treasury Securities for
S-6
<PAGE> 84
the Trust Preferred Securities, holders of Growth
PRIDES would receive the quarterly distributions of
Contract Adjustment Payments and, to the extent
that they continue to hold any Trust Preferred
Securities, the quarterly distributions on the
Trust Preferred Securities. In addition, interest
would continue to accrete on the Treasury
Securities. See "Risk Factors -- Right to Defer
Current Payments."
Option to Extend
Distribution Payment
Periods.................... The Company has the right at any time, and from
time to time, limited to a period not extending
beyond the maturity date of the Junior Subordinated
Debentures, to defer the interest payments due on
the Junior Subordinated Debentures. As a
consequence of such deferral, quarterly
distributions to holders of Income PRIDES (or any
Trust Preferred Securities outstanding after the
Purchase Contract Settlement Date or after a
substitution of collateral resulting in the
creation of Growth PRIDES) would be deferred (but
despite such deferral, would continue to accumulate
quarterly and would accrue interest thereon
compounded quarterly at the same rate as interest
on the Junior Subordinated Debentures). The Company
also has the right to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until
no later than the Purchase Contract Settlement
Date; however, deferred Contract Adjustment
Payments will bear additional Contract Adjustment
Payments at the rate of % per annum (such
deferred installments of Contract Adjustment
Payments together with the additional Contract
Adjustment Payments shall be referred to as the
"Deferred Contract Adjustment Payments"). See
"Description of the Purchase Contracts -- Contract
Adjustment Payments Adjustments." If interest
payments on the Junior Subordinated Debentures or
the Contract Adjustment Payments are deferred, the
Company has agreed, among other things, not to
declare or pay any dividend on or repurchase its
capital stock during the period of such deferral.
In the event that the Company elects to defer the
payment of Contract Adjustment Payments on the
Purchase Contracts until the Purchase Contract
Settlement Date, each holder of Income PRIDES or
Growth PRIDES will receive on the Purchase Contract
Settlement Date, in lieu of a cash payment, a
number of shares of Common Stock (in addition to a
number of shares of Common Stock equal to the
Settlement Rate) equal to (x) the aggregate amount
of Deferred Contract Adjustment Payments payable to
a holder of either Income PRIDES or Growth PRIDES
divided by (y) the Applicable Market Value. See
"Description of the Purchase Contracts -- Option to
Defer Contract Adjustment Payments."
Payment Dates.............. Subject to the distribution deferral provisions
described herein, the current payments described
above will be payable quarterly in arrears on March
31, June 30, September 30 and December 31 each
year, commencing June 30, 1997, through and
including (i) in the case of the Contract
Adjustment Payments, the Purchase Contract
Settlement Date or the most recent such quarterly
date on or prior to the early settlement of the
Purchase Contracts and (ii) in the case of Trust
Preferred Securities, through and including the
most recent such quarterly date on or prior to the
date a Junior Subordinated Debenture represented by
a Trust Preferred Security is put to the Company,
as described under "-- Trust Preferred
Securities -- Put Option", or the date the stated
S-7
<PAGE> 85
amount of a Trust Preferred Security, together with
all accrued and unpaid distributions thereon, is
paid in full (each, a "Payment Date").
Purchase Contract
Settlement Date............ On the Purchase Contract Settlement Date, unless a
holder of the Income PRIDES (i) has settled the
underlying Purchase Contract either through the
early delivery of cash to the Purchase Contract
Agent in the manner described herein or otherwise,
or (ii) has notified the Purchase Contract Agent of
its intention to settle the related Purchase
Contract with separate cash on the Purchase
Contract Settlement Date and has so settled the
related Purchase Contract, or an event described
under "Description of the Purchase Contracts --
Termination" occurs, such holder will be deemed to
have requested the Trust to put the related Junior
Subordinated Debenture to the Company, and the
principal amount of such Junior Subordinated
Debenture equal to the Stated Amount per Purchase
Contract will automatically be applied to satisfy
in full such holder's obligation to purchase Common
Stock under the Purchase Contract. See "Description
of the Junior Subordinated Debentures -- Put
Option."
With respect to each Growth PRIDES outstanding on
the Purchase Contract Settlement Date, the
principal amount of the Treasury Securities
underlying each Growth PRIDES, when paid at
maturity, will be automatically applied to satisfy
in full the holder's obligation to purchase Common
Stock under the 20 Purchase Contracts per Growth
PRIDES.
In the event that a holder of either an Income
PRIDES or Growth PRIDES effects the early
settlement of a related Purchase Contract through
the delivery of cash or settles a Purchase Contract
with cash on the Purchase Contract Settlement Date,
the underlying Trust Preferred Securities or
Treasury Securities, as the case may be, will be
released to the holder as described herein.
Settlement Rate............ The number of new shares of Common Stock issuable
upon settlement of each Purchase Contract (the
"Settlement Rate") will be calculated as follows
(subject to adjustment under certain
circumstances): (a) if the Applicable Market Value
(as defined below) is equal to or greater than
$ (the "Threshold Appreciation Price"),
the Settlement Rate will be , (b) if the
Applicable Market Value is less than the Threshold
Appreciation Price, but greater than $ , the
Settlement Rate will equal the Stated Amount
divided by the Applicable Market Value, and (c) if
the Applicable Market Value is less than or equal
to $ , the Settlement Rate will be .
"Applicable Market Value" means the average of the
Closing Price (as defined) per share of Common
Stock on each of the twenty consecutive Trading
Days (as defined) ending on the second Trading Day
immediately preceding the Purchase Contract
Settlement Date.
Early Settlement........... A holder of Income PRIDES or Growth PRIDES may
settle (an "Early Settlement") the underlying
Purchase Contracts prior to the Purchase Contract
Settlement Date in the manner described herein, but
only in integral multiples of 20 Income PRIDES or
one Growth PRIDES. Upon such Early Settlement, (a)
the holder will pay to the Company through the
Purchase Contract Agent in immediately available
funds an amount equal to the Stated Amount per
Purchase Contract and deliver the
S-8
<PAGE> 86
Income PRIDES or Growth PRIDES, as the case may be,
to the Purchase Contract Agent, (b) the Trust
Preferred Securities underlying such Income PRIDES
or, if substituted, the Treasury Securities
underlying such Growth PRIDES will, within three
Business Days of the Early Settlement Date (defined
herein), be transferred to the holder free and
clear of the Company's security interest therein,
and (c) the Company will, within three Business
Days of the Early Settlement Date, deliver newly
issued shares of Common Stock to the holder under
the Purchase Contract Agreement. Upon Early
Settlement, (i) the holder's rights to receive
Deferred Contract Adjustment Payments, if any, on
the Purchase Contracts being settled will be
forfeited, and (ii) the holder's right to receive
additional Contract Adjustment Payments will
terminate and, except as contemplated by clause (c)
above, no adjustment will be made to or for the
holder on account of current or deferred amounts
accrued in respect thereof.
Termination................ The Purchase Contracts (including the right to
receive accrued or Deferred Contract Adjustment
Payments and the obligation to purchase Common
Stock) will automatically terminate upon the
occurrence of certain events of bankruptcy,
insolvency or reorganization with respect to the
Company. Upon such termination, the Collateral
Agent will release the Trust Preferred Securities,
or if substituted, the Treasury Securities, held by
it to the Purchase Contract Agent for distribution
to the holders, although there may be a limited
delay before such release and distribution.
Voting Rights.............. Holders of Trust Preferred Securities will not be
entitled to vote to appoint, remove or replace, or
to increase or decrease the number of Regular
Trustees and will generally have no voting rights
except in the limited circumstances described under
"Description of Trust Preferred Securities --
Voting Rights." Holders of Purchase Contracts
forming part of the Income PRIDES or Growth PRIDES
will have no voting rights.
Listing of the Income
PRIDES..................... Application has been made to list the Income PRIDES
on the New York Stock Exchange (the "NYSE") under
the symbol "MCN prI." The Growth PRIDES and the
Trust Preferred Securities will not be listed or
traded on any securities exchange.
NYSE Symbol of Common
Stock...................... "MCN"
TRUST PREFERRED SECURITIES
The Trust.................. MCN Financing III, a Delaware business trust ("MCN
Financing" or the "Trust"). The sole assets of the
Trust will consist of the Junior Subordinated
Debentures of the Company. The Company will
directly or indirectly own all of the Common
Securities (the Common Securities and, together
with the Trust Preferred Securities, the "Trust
Securities") representing undivided beneficial
interests in the assets of the Trust.
Trust Preferred
Securities................. 2,300,000 of % Trust Preferred Securities
(liquidation amount $50 per Trust Preferred
Security), representing preferred, undivided
beneficial interests in the assets of the Trust.
Distributions.............. Distributions on the Trust Preferred Securities,
which constitute a portion of the distributions on
the Income PRIDES, will be cumulative, will accrue
from the first date of issuance of the Trust
Preferred Securities and will be payable at the
annual rate of % of the liquidation amount of
$50 per
S-9
<PAGE> 87
Trust Preferred Security when, as and if funds are
available for payment. Subject to the distribution
deferral provisions, distributions will be payable
quarterly in arrears on each March 31, June 30,
September 30 and December 31, commencing June 30,
1997.
Distribution Deferral
Provisions................. The ability of the Trust to pay distributions on
the Trust Preferred Securities is solely dependent
on the receipt of interest payments from the
Company on the Junior Subordinated Debentures. The
Company has the right at any time, and from time to
time, to defer the interest payments due on the
Junior Subordinated Debentures for successive
extension periods (the "Extension Periods"),
limited, in the aggregate, to a period not
extending beyond the maturity date of the Junior
Subordinated Debentures. Quarterly distributions on
the Trust Preferred Securities would be deferred by
the Trust (but would continue to accumulate
quarterly and would accrue interest, compounded
quarterly, at the same rates as interest on the
Junior Subordinated Debentures) until the end of
any such Extension Period. If a deferral of an
interest payment occurs, the holders of the Trust
Preferred Securities will accrue interest income
for United States federal income tax purposes in
advance of the receipt of any corresponding cash
distribution with respect to such deferred interest
payments. See "Risk Factors -- Right to Defer
Current Payments," "Description of the Trust
Preferred Securities -- Distributions" and "Certain
Federal Income Tax Consequences -- Distributions on
Trust Preferred Securities."
Rights Upon Deferral of
Distribution............... During any period in which interest payments on the
Junior Subordinated Debentures are deferred,
interest will accrue on the Junior Subordinated
Debentures (compounded quarterly) and quarterly
distributions on the Trust Preferred Securities
will continue to accumulate with interest thereon
at the distribution rate, compounded quarterly.
Liquidation Preference..... In the event of any liquidation of the Trust,
holders will be entitled to receive Junior
Subordinated Debentures in an aggregate stated
principal amount equal to the aggregate stated
liquidation amount of the Trust Preferred
Securities except as described under "--
Termination."
Put Option................. On the Purchase Contract Settlement Date, each
holder of Income PRIDES that has neither previously
exercised its option of Early Settlement nor
settled its Purchase Contract with cash will be
deemed to have requested the Trust to put its
Junior Subordinated Debentures to the Company in an
amount per Junior Subordinated Debenture equal to
$50, plus accumulated and unpaid distributions, if
any (a "Put Option"). Upon the repurchase of the
Junior Subordinated Debentures by the Company
pursuant to a Put Option, the proceeds from such
repurchase shall simultaneously be applied to
redeem Trust Preferred Securities of such holder
having an aggregate Stated Amount equal to the
aggregate principal amount of the Junior
Subordinated Debentures so repurchased and will be
applied to satisfy in full such holder's obligation
to purchase Common Stock under the Purchase
Contract as described herein.
Tax Event or Investment
Company Event
Distribution............... In certain circumstances involving a Tax Event
(which event will generally be triggered upon the
occurrence of certain adverse tax consequences or
the denial of an interest deduction to the Company
on the Junior Subordinated Debentures held by the
Trust) or an Investment
S-10
<PAGE> 88
Company Event (which event will generally be
triggered if the Trust is considered an "investment
company" under the Investment Company Act of 1940,
as amended), the Trust will be dissolved, with the
result that the Junior Subordinated Debentures with
an aggregate principal amount equal to the
aggregate stated liquidation amount of the Trust
Preferred Securities, would be distributed to the
holders of the Trust Preferred Securities on a pro
rata basis. In such event, an Income PRIDES will
thereafter consist of a Junior Subordinated
Debenture with a principal amount equal to the
Stated Amount and the related Purchase Contract and
a holder may, on the Purchase Contract Settlement
Date, cause the Junior Subordinated Debenture to be
repaid and the proceeds thereof applied to satisfy
in full such holder's obligation to purchase Common
Stock under the Purchase Contract as described
herein.
Redemption................. The Company will not have the ability to redeem the
Junior Subordinated Debentures prior to the stated
maturity date.
Guarantee.................. The Company will irrevocably and unconditionally
guarantee (the "Guarantee"), on a subordinated
basis and to the extent described herein, the
payment in full of (i) distributions on the Trust
Preferred Securities to the extent the Trust has
funds available therefor, and (ii) generally, the
liquidation amount of the Trust Preferred
Securities to the extent the Trust has assets
available for distribution to holders of Trust
Preferred Securities in the event of a dissolution,
winding up or termination of the Trust. The
Guarantee will be unsecured and will be subordinate
and junior in right of payment to all other
liabilities of the Company and will rank pari passu
in right of payment with the most senior preferred
stock issued, from time to time, if any, by the
Company and with any guarantee entered into by MCN
in respect of any preferred or preference stock of
any affiliate of the Company. See "Risk Factors --
Ranking of Contact Adjustment Payments and
Subordinate Obligations Under the Guarantee and
Junior Subordinated Debentures."
Junior Subordinated
Debentures................. The Junior Subordinated Debentures will mature on
May , 2002, and will bear interest at the rate
of % per annum, payable quarterly in arrears on
each March 31, June 30, September 30 and December
31, commencing June 30, 1997. Interest payments may
be deferred from time to time by the Company for
successive Extension Periods not extending, in the
aggregate, beyond the stated maturity date of the
Junior Subordinated Debentures. During any
Extension Period interest, would continue to accrue
and compound quarterly. Upon the termination of any
Extension Period and the payment of all amounts
then due, the Company may commence a new Extension
Period, provided such extended Extension Period
does not extend beyond the stated maturity date of
the Junior Subordinated Debentures. No interest
shall be due during an Extension Period until the
end of such period. During an Extension Period, the
Company will be prohibited from paying dividends on
or purchasing any of its capital stock and making
certain other restricted payments until quarterly
interest payments are resumed and all amounts due
on the Junior Subordinated Debentures are made
current. The Junior Subordinated Debentures will be
subordinate in right of payment of principal and
interest to all Senior Indebtedness (as defined
herein) of the Company and will rank pari passu in
right of payment with other subordinated debentures
issued by MCN and with all unsecured trade
S-11
<PAGE> 89
creditors of the Company. See "Description of the
Junior Subordinated Debentures."
Federal Income Tax
Consequences............... Provided the Company does not exercise its right to
defer interest on the Junior Subordinated
Debentures, holders of Income PRIDES and Trust
Preferred Securities will include in income their
allocable share of interest with respect to the
Junior Subordinated Debentures when paid or
accrued, in accordance with their regular method of
accounting. The Company intends to report the
Contract Adjustment Payments as income to holders
of Income PRIDES and Growth PRIDES, but holders
should consult their tax advisors concerning the
possibility that the Contract Adjustment Payments
may be treated as loans, purchase price
adjustments, rebates or option premiums rather than
being includible in income on a current basis.
Holders of Growth PRIDES will continue to include
in income any original issue discount ("OID") or
market discount or amortize any bond premium
otherwise includible or deductible, respectively,
with respect to the Treasury Securities posted with
the Collateral Agent. See "Certain Federal Income
Tax Consequences."
Use of Proceeds............ All of the proceeds from the sale of the Income
PRIDES, of which the Trust Preferred Securities are
a component, will be invested by the Trust in
Junior Subordinated Debentures of MCN and
ultimately will be used by MCN for general
corporate purposes, including capital expenditures,
investment in subsidiaries, working capital and
repayment of debt. Any additional amounts received
by the Company upon settlement of the Purchase
Contracts, whether on the Purchase Contract
Settlement Date or an Early Settlement Date, are
also expected to be used for such general corporate
purposes. See "Use of Proceeds."
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<PAGE> 90
MCN ENERGY GROUP INC.
In January 1997, MCN Corporation began doing business under the name MCN
Energy Group Inc. (MCN). The formal corporate name change is subject to
shareholder approval to be sought at the Company's 1997 Annual Shareholders'
Meeting. The name change reflects the Company's evolution during the past five
years from a natural gas distribution company into a new, diversified energy
company. MCN Energy Group Inc. will retain its current New York Stock Exchange
symbol of "MCN".
As of December 31, 1996, MCN was a $3.6 billion (assets) diversified energy
holding company with natural gas markets and investments in various regions in
North America and internationally. MCN's strategy is to aggressively invest in a
diverse portfolio of domestic and international energy-related projects. MCN's
intent is:
- to invest in a portfolio of projects including investments in
exploration and production, power generation, gas gathering and
processing systems, and gas storage;
- to continue to market natural gas to large-volume users and utilities;
and
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion.
Accordingly, MCN's capital investments could exceed $3.0 billion by the
year 2000. This expected level of investment will increase capital requirements
materially in excess of internally generated funds and require the issuance of
additional debt and equity securities. MCN's capital requirements and general
market conditions will affect the timing and amount of future issuances. As it
expands its business, MCN's capitalization objective is to maintain its solid
investment-grade credit ratings through a strong balance sheet.
MCN operates through two major business groups, Diversified Energy and Gas
Distribution.
DIVERSIFIED ENERGY, operating through MCN Investment Corporation (MCNIC),
is an integrated energy group with investments in exploration and production,
gas gathering and processing, gas storage fields and electric power generation.
It also markets natural gas to large-volume users and utilities. For the twelve
months ended December 31, 1996, operating revenues for this segment exceeded
$700 million and, at December 31, 1996, total assets exceeded $1.5 billion,
including investments in joint ventures. For the twelve month period ended
December 31, 1996, MCNIC invested approximately $575 million in various
projects, of which approximately $400 million was for exploration and production
projects. Expanding domestic and international opportunities should enable MCNIC
to continue to grow its markets and increase its asset-based investments.
At December 31, 1996, MCNIC owned 1,138 billion cubic feet (Bcf) of proved
gas reserves, and proved oil reserves totaled 17.2 million barrels, or the
equivalent of another 103 Bcf of natural gas. The number of producing oil and
gas wells totaled 2,890 at December 31, 1996.
GAS DISTRIBUTION, operating principally through Michigan Consolidated Gas
Company, operates the largest natural gas distribution and intrastate
transmission system in Michigan and one of the largest in the United States. For
the twelve months ended December 31, 1996, operating revenues for this segment
were approximately $1.3 billion. In addition, at December 31, 1996, the segment
had total assets of approximately $2.1 billion. Gas Distribution serves
approximately 1.2 million customers in more than 500 communities throughout
Michigan with gas sales and transportation markets of about 900 Bcf. Gas
Distribution continues to increase its markets by reaching customers in new
communities, offering new services to current customers and expanding its
intrastate gas transportation network.
The mailing address of MCN's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226, and its telephone number is (313) 256-5500.
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<PAGE> 91
MCN FINANCING III
MCN Financing is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of February 3, 1997, executed
by MCN, as sponsor (the "Sponsor"), and the trustees of MCN Financing (the "MCN
Trustees") and (ii) the filing of a certificate of trust with the Secretary of
State of the State of Delaware on February 3, 1997. Such declaration will be
amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part. The Declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Although upon
issuance of the Trust Preferred Securities, the holders of Income PRIDES will be
beneficial owners of the underlying Trust Preferred Securities, these Trust
Preferred Securities will be pledged with the Collateral Agent to secure the
obligations of the holders under the Purchase Contracts. See "Description of the
Purchase Contracts -- Pledged Securities and Pledge Agreement" and "Description
of the Trust Preferred Securities -- Book-Entry Only Issuance -- The Depository
Trust Company." MCN will directly or indirectly acquire Common Securities in an
aggregate liquidation amount equal to 3% of the total capital of MCN Financing.
MCN Financing exists for the exclusive purposes of (i) issuing the Trust
Securities representing undivided beneficial interests in the assets of the
Trust, (ii) investing the gross proceeds of the Trust Securities in the Junior
Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto. The Trust has a term of approximately seven (7)
years, but may terminate earlier as provided in the Declaration.
Pursuant to the Declaration, the number of MCN Trustees will initially be
three. Two of the MCN Trustees (the "Regular Trustees") will be persons who are
employees or officers of or who are affiliated with MCN. The third trustee will
be a financial institution that is unaffiliated with MCN, which trustee will
serve as institutional trustee under the Declaration and as indenture trustee
for the purposes of compliance with the provisions of the Trust Indenture Act
(the "Institutional Trustee"). Initially, Wilmington Trust Company, a Delaware
banking corporation, will be the Institutional Trustee until removed or replaced
by the holder of the Common Securities. For the purpose of compliance with the
provisions of the Trust Indenture Act, Wilmington Trust Company will also act as
trustee (the "Guarantee Trustee") under the Guarantee and as Delaware Trustee
for the purposes of the Trust Act (as defined herein), until removed or replaced
by the holder of the Common Securities. See "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus. See "Description of the
Trust Preferred Securities -- Voting Rights."
The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and the
Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined herein) as the holder of the Junior
Subordinated Debentures. In addition, the Institutional Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Junior
Subordinated Debentures for the benefit of the holders of the Trust Securities.
The Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Trust Preferred Securities. MCN,
as the direct or indirect holder of all the Common Securities, will have the
right to appoint, remove or replace any MCN Trustee and to increase or decrease
the number of MCN Trustees; provided, that the number of MCN Trustees shall be
at least three, a majority of which shall be Regular Trustees. MCN will pay all
fees and expenses related to MCN Financing and the offering of the Trust
Securities. See "Description of the Junior Subordinated
Debentures -- Miscellaneous."
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Trust Preferred Securities."
The trustee in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890. The
principal place of business of the Trust shall be c/o MCN Energy Group Inc., 500
Griswold Street, Detroit, Michigan 48226, and its telephone number is (313)
256-5500.
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<PAGE> 92
RISK FACTORS
Prospective purchasers of Securities should consider, in addition to the
other information contained or incorporated by reference in this Prospectus
Supplement or the accompanying Prospectus, the following characteristics of the
Securities.
LIMITATIONS ON OPPORTUNITY FOR EQUITY APPRECIATION; RISK OF DECLINE IN EQUITY
VALUE
The opportunity for equity appreciation afforded by an investment in the
FELINE PRIDES is less than the opportunity for equity appreciation afforded by a
direct investment in the Common Stock, because the value of Common Stock to be
received by a holder of Purchase Contracts on the Purchase Contract Settlement
Date will only exceed the Stated Amount if the Applicable Market Value of the
Common Stock exceeds the Threshold Appreciation Price (which represents an
appreciation of % over the closing price of the Common Stock on the date
hereof). If the Applicable Market Value of the Common Stock is less than the
closing price of the Common Stock on the date hereof, such value to be received
by the holder on the Purchase Contract Settlement Date will be less than the
Stated Amount paid for the Income PRIDES, in which case an investment in the
Income PRIDES will result in a loss. Accordingly, a holder of the Purchase
Contracts assumes the risk that the market value of the Common Stock may
decline, and that such decline could be substantial.
FACTORS AFFECTING TRADING PRICES
The trading prices of the Income PRIDES and the Growth PRIDES in the
secondary market will be directly affected by the trading prices of the Common
Stock in the secondary market, the general level of interest rates and the
credit quality of the Company. It is impossible to predict whether the price of
Common Stock or interest rates generally will rise or fall. Trading prices of
Common Stock will be influenced by MCN's operating results and prospects and by
economic, financial and other factors and market conditions that can affect the
capital markets generally, including the level of, and fluctuations in, the
trading prices of stocks generally and sales of substantial amounts of Common
Stock in the market subsequent to the offering of the Securities or the
perception that such sales could occur. Fluctuations in interest rates may give
rise to opportunities for arbitrage based upon changes in the relative value of
the Common Stock underlying the Purchase Contracts and of the other components
of the FELINE PRIDES. Any such arbitrage could, in turn, affect the trading
prices of the Income PRIDES, Growth PRIDES, Trust Preferred Securities and
Common Stock.
VOTING RIGHTS
Holders of Trust Preferred Securities will not be entitled to vote to
appoint, remove or replace, or to increase or decrease the number of Regular
Trustees and will generally have no voting rights except in the limited
circumstances described under "Description of Trust Preferred Securities --
Voting Rights." Holders of Purchase Contracts underlying the Income PRIDES or
Growth PRIDES will have no voting rights.
DILUTION OF COMMON STOCK
The number of shares of Common Stock that holders of the FELINE PRIDES are
entitled to receive on the Purchase Contract Settlement Date is subject to
adjustment for certain events arising from stock splits and combinations, stock
dividends and certain other actions of MCN that modify its capital structure.
See "Description of the Purchase Contracts -- Anti-Dilution Adjustments." Such
number of shares of Common Stock to be received by such holders on the Purchase
Contract Settlement Date will not be adjusted for other events, such as
offerings of Common Stock for cash or in connection with acquisitions. MCN is
not restricted from issuing additional Common Stock during the term of either
the Purchase Contracts or the Trust Preferred Securities. Additional issuances
may materially and adversely affect the price of the Common Stock and, because
of the relationship of the number of shares to be received on the Purchase
Contract Settlement Date to the price of the Common Stock, such other events may
adversely affect the trading price of the Income PRIDES or Growth PRIDES.
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<PAGE> 93
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
It is not possible to predict how the Income PRIDES, the Growth PRIDES or
the Trust Preferred Securities will trade in the secondary market or whether the
market for any such securities will be liquid or illiquid. The Income PRIDES and
the Growth PRIDES are novel securities and there is currently no secondary
market for either the Income PRIDES or Growth PRIDES. Application has been made
to list the Income PRIDES on the NYSE. The Growth PRIDES and the Trust Preferred
Securities will not be listed or traded on any securities exchange. The Company
and the Trust have been advised by the Representatives that they presently
intend to make a market for the Growth PRIDES and the Trust Preferred
Securities; however, they are not obligated to do so and any market making may
be discontinued at any time. There can be no assurance as to the liquidity of
any such market that may develop for the Income PRIDES, the Growth PRIDES or the
Trust Preferred Securities, the ability of holders to sell such securities, the
price at which holders would be able to sell such securities or whether a
trading market, if it develops, will continue. In addition, in the event that
holders of Income PRIDES were to substitute Treasury Securities for the Trust
Preferred Securities, thereby converting their Income PRIDES to Growth PRIDES,
the liquidity of Income PRIDES could be adversely affected. There can be no
assurance that the Income PRIDES will not be delisted from the NYSE or that
trading in the Income PRIDES will not be suspended as a result of the election
by holders to create Growth PRIDES through the substitution of collateral, which
could cause the number of Income PRIDES to fall below the minimum requirements
for listing the securities on the NYSE.
PLEDGED SECURITIES ENCUMBERED
Although holders of FELINE PRIDES will be beneficial owners of the
underlying Trust Preferred Securities or the Treasury Securities (together, the
"Pledged Securities"), as the case may be, those Pledged Securities will be
pledged with the Collateral Agent to secure the obligations of the holders under
the Purchase Contracts. Thus, rights of the holders to their Pledged Securities
will be subject to the Company's security interest. Additionally,
notwithstanding the automatic termination of the Purchase Contracts, in the
event that the Company becomes the subject of a case under the United States
Bankruptcy Code (the "Bankruptcy Code"), the delivery of the Pledged Securities
to holders of the Securities may be delayed by the imposition of the automatic
stay of Section 362 of the Bankruptcy Code.
TAX EVENT OR INVESTMENT COMPANY EVENT DISTRIBUTION
Upon the occurrence of a Tax Event or an Investment Company Event, the
Trust will be dissolved (except in the limited circumstances described in the
following sentence) with the result that the Junior Subordinated Debentures with
an aggregate principal amount equal to the aggregate stated liquidation amount
of the Trust Preferred Securities would be distributed to the holders of the
Trust Preferred Securities on a pro rata basis. In the case of the occurrence of
a Tax Event, such dissolution and distribution shall be conditioned on the
Company being unable to avoid such Tax Event within a 90 day period by taking
some ministerial action or pursuing some other reasonable measure that will have
no adverse effect on the Trust, the Company or the holders of the Trust
Preferred Securities and will involve no material cost. See "Description of the
Trust Preferred Securities -- Special Event Distribution."
Under current United States Federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust would not be a
taxable event to holders of the Trust Preferred Securities, including the
Collateral Agent. See "Certain Federal Income Tax Consequences -- Receipt of
Junior Subordinated Debentures upon Liquidation of the Trust."
There can be no assurance as to the impact on the market prices for the
Income PRIDES of a distribution of the Junior Subordinated Debentures in
exchange for Trust Preferred Securities upon a dissolution or liquidation of the
Trust. Because the Income PRIDES will consist of Junior Subordinated Debentures
and related Purchase Contracts upon the occurrence of an Investment Company
Event, or, in certain circumstances, a Tax Event or liquidation of the Trust,
prospective purchasers of Income PRIDES are also making an investment decision
with regard to the Junior Subordinated Debentures and should carefully review
all the information regarding the Junior Subordinated Debentures contained
herein. See "Description
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<PAGE> 94
of the Trust Preferred Securities -- Special Event Distribution" and
"Description of the Junior Subordinated Debentures -- General."
RIGHT TO DEFER CURRENT PAYMENTS
The Company may, at its option, defer the payment of Contract Adjustment
Payments on the Purchase Contracts until the Purchase Contract Settlement Date.
However, deferred installments of Contract Adjustment Payments will bear
additional Contract Adjustment Payments at the rate of % per annum
(compounding on each succeeding Payment Date) until paid (such deferred
installments of Contract Adjustment Payments together with the additional
Contract Adjustment Payments shall be referred to herein as the "Deferred
Contract Adjustment Payments"). If the Purchase Contracts are settled early or
terminated (upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company), the right to receive Contract
Adjustment Payments, and Deferred Contract Adjustment Payments, will terminate.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each holder of Purchase Contracts will receive on the Purchase
Contract Settlement Date, in lieu of a cash payment, a number of shares of
Common Stock (in addition to a number of shares of Common Stock equal to the
Settlement Rate) equal to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to a holder of Securities divided by (y) the
Applicable Market Value. See "Description of the Purchase Contracts -- Contract
Adjustment Payments."
The Company also has the right under the Indenture (as such term is defined
in "Description of Junior Subordinated Debentures" herein) to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period at any time, and from time to time, on the Junior Subordinated
Debentures. As a consequence of such an extension, quarterly distributions on
the Trust Preferred Securities, held either as a component of the Income PRIDES
or held separately, would be deferred (but despite such deferral, would accrue
interest compounded on a quarterly basis) by MCN Financing during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Debentures is limited to a period, in the
aggregate, not extending beyond the maturity date of the Junior Subordinated
Debentures. See "Description of the Trust Preferred Securities -- Distributions"
and "Description of the Junior Subordinated Debentures -- Option to Extend
Interest Payment Period."
The Company believes that the likelihood that it will exercise its right to
defer payments of interest on the Junior Subordinated Debentures is remote and
that, therefore, the Junior Subordinated Debentures should not be considered to
be issued with OID unless it actually exercises such deferral right. There is no
assurance that the Internal Revenue Service (the "IRS") will agree with such
position. See "Certain Federal Income Tax Consequences -- Distributions on Trust
Preferred Securities."
Should MCN exercise its right to defer payments of interest by extending
the interest payment period, each holder of Trust Preferred Securities held
either as a component of the Income PRIDES or held separately will accrue income
(as OID) in respect of the deferred interest allocable to its Trust Preferred
Securities for United States federal income tax purposes, which will be
allocated but not distributed to holders of record of Trust Preferred
Securities. As a result, each such holder of Trust Preferred Securities will
recognize income for United States federal income tax purposes in advance of the
receipt of cash and will not receive the cash from MCN Financing related to such
income if such holder disposes of its Trust Preferred Securities prior to the
record date for the date on which distributions of such amounts are made. MCN
has no current intention of exercising its right to defer payments of interest
by extending the interest payment period on the Junior Subordinated Debentures.
However, should MCN determine to exercise such right in the future, the market
price of the Trust Preferred Securities is likely to be affected. A holder that
disposes of its Trust Preferred Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder that
continues to hold its Trust Preferred Securities. In addition, as a result of
the existence of MCN's right to defer interest payments, the market price of the
Trust Preferred Securities (which represent an undivided beneficial interest in
the assets of MCN Financing) may be more volatile than
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<PAGE> 95
the market price of other securities that are not subject to such deferral. See
"United States Federal Income Taxation -- Distributions on Trust Preferred
Securities."
RANKING OF CONTRACT ADJUSTMENT PAYMENTS AND SUBORDINATE OBLIGATIONS UNDER THE
GUARANTEE AND JUNIOR SUBORDINATED DEBENTURES
MCN's obligations with respect to the Contract Adjustment Payments and the
Guarantee are subordinate and junior in right of payment to all liabilities of
MCN (other than the unsecured, subordinated yield enhancement payments payable
by the Company at a rate of 2 1/4% per annum on its 5,865,000 8 3/4% PRIDES
having a final settlement date of April 30, 1999 (the "Yield Enhancement
Payments") and MCN's guarantee of its other subordinated debentures, with which
they rank pari passu). The obligations of MCN under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all present and
future Senior Indebtedness of MCN and pari passu with other subordinated
debentures issued by MCN and obligations to or rights of MCN's other general
unsecured creditors and other junior subordinated debentures issued hereafter.
No payment of principal of (including redemption payments, if any), premium, if
any, or interest on the Junior Subordinated Debentures may be made if (i) any
Senior Indebtedness of MCN is not paid when due and any applicable grace period
with respect to such default has ended with such default not having been cured
or waived or ceasing to exist, or (ii) the maturity of any Senior Indebtedness
has been accelerated because of a default. As of December 31, 1996, Senior
Indebtedness aggregated approximately $1,673 million. There are no terms in the
Trust Preferred Securities, the Junior Subordinated Debentures or the Guarantee
that limit MCN's ability to incur additional indebtedness, including
indebtedness that ranks senior to the Contract Adjustment Payments, the Junior
Subordinated Debentures and the Guarantee. See "Description of the Preferred
Securities Guarantees -- Status of the Trust Preferred Securities Guarantees",
"Description of the Purchase Contracts -- Contract Adjustment Payments" and
"Description of the Junior Subordinated Debentures" in the accompanying
Prospectus, and "Description of the Junior Subordinated
Debentures -- Subordination" herein.
PURCHASE CONTRACT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED
OBLIGATIONS OF PURCHASE CONTRACT AGENT
Although the Trust Preferred Securities constituting a part of the Income
PRIDES will be issued pursuant to a Declaration (as defined herein) qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
the Purchase Contract Agreement will not be qualified as an indenture under the
Trust Indenture Act, and the Purchase Contract Agent will not be required to
qualify as a trustee thereunder. Accordingly, holders will not have the benefit
of the protection of the Trust Indenture Act. The protections generally afforded
the holder of a security issued under an indenture that has been qualified under
the Trust Indenture Act include disqualification of the indenture trustee for
"conflicting interests" as defined under the Trust Indenture Act, provisions
preventing a trustee that is also a creditor of the issuer from improving its
own credit position at the expense of the security holders immediately prior to
or after a default under the Indenture and the requirement that the indenture
trustee deliver reports at least annually with respect to certain matters
concerning the indenture trustee and the securities. Under the terms of the
Purchase Contract Agreement, the Purchase Contract Agent will not be required to
resign as agent in the event of a "conflicting interest," will not be obligated
to establish a separate account for the benefit of holders in the case of a
credit relationship with the Company at the time of a default under the Purchase
Contract Agreement and will not be required to furnish any annual reports. With
respect to the Trust Preferred Security, a holder of Income PRIDES as the holder
of an underlying Trust Preferred Security, will have the protections of the
Declaration, which will be qualified under the Trust Indenture Act.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed a number of changes to federal income tax
laws. One proposal would treat as equity, for U.S. federal income tax purposes,
debt instruments with a maximum term of more than 15 years that are not shown as
indebtedness on the issuer's consolidated balance sheet. Another proposal would
preclude the issuer from
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<PAGE> 96
deducting interest on debt instruments payable in stock of the issuer. A debt
instrument would be treated as payable in stock of the issuer if it were part of
an arrangement designed to result in payment of debt with such stock, such as
certain issuances of a forward contract in connection with the issuance of debt.
Neither proposal, if enacted into law in its current form, would be effective
for debt instruments issued prior to the date of first Congressional committee
action. There can be no assurance, however, that legislation enacted after the
date hereof will not adversely affect the tax treatment of the Junior
Subordinated Debentures or cause a Tax Event, resulting in the distribution of
the Junior Subordinated Debentures to holders of Trust Preferred Securities. See
"Description of the Trust Preferred Securities -- Special Event Distribution."
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
MCN Common Stock began trading on the NYSE on January 4, 1989, following
the effective date of the restructuring of MichCon and subsequent formation of
MCN as its holding company. The high and low sales prices of the Common Stock of
MCN, as reported on the NYSE Composite Tape, and the dividends declared on the
Common Stock during the fiscal years ended December 31, 1995 and 1996, and for
the first quarter of fiscal 1997 through March 5, 1997, are set out below:
<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH LOW PAID PER SHARE
---- ---- --------------
<S> <C> <C> <C>
1995
First Quarter.......................... 18 5/8 16 3/8 .2225
Second Quarter......................... 19 7/8 18 .2225
Third Quarter.......................... 20 17 7/8 .2225
Fourth Quarter......................... 23 1/2 19 3/8 .2325
1996
First Quarter.......................... 25 1/2 21 5/8 .2325
Second Quarter......................... 25 5/8 22 3/4 .2325
Third Quarter.......................... 27 5/8 22 3/4 .2325
Fourth Quarter......................... 30 1/2 26 5/8 .2425
1997
First Quarter (through March 5,
1997)............................... 32 5/8 28 1/2 .2425
</TABLE>
For a recent closing sales price for the Common Stock, as reported on the
NYSE, see the cover page of this Prospectus Supplement. As of February 28, 1997,
the approximate number of holders of record of Common Stock was 23,298.
The timing and amount of future cash dividends will depend on the financial
condition of MCN, the income from its subsidiaries, internal cash requirements
and other factors deemed relevant by the MCN's Board of Directors.
MCN sponsors a dividend reinvestment and stock purchase plan under which
holders of record of MCN Common Stock may purchase a limited amount of MCN
Common Stock without paying brokerage fees and other expenses. Under this plan,
the MCN Common Stock may be purchased in the open market at prevailing prices or
purchased from MCN at the average of the high and low sales prices on the NYSE
for the trading day immediately preceding the purchase.
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<PAGE> 97
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends
for MCN on a historical basis for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
MCN(1)(2)(3)................................................ 2.28 2.55 2.70 3.15 2.82
</TABLE>
- ---------------
(1) MCN has authority to issue up to 25,000,000 shares of preferred stock, no
par value; however, there are currently no shares outstanding and MCN
currently does not have a preferred stock dividend obligation. Therefore,
the Ratio of Combined Earnings to Fixed Charges and Preferred Stock
Dividends is equal to the Ratio of Earnings to Fixed Charges and is not
disclosed separately.
(2) The Ratio of Earnings to Fixed Charges is based on earnings from operations.
"Earnings" consist of the pre-tax income of majority-owned and 50%-owned
companies adjusted to include any income actually received from less than
50%-owned companies, plus fixed charges, less interest capitalized during
the period for nonutility companies and less the preferred stock dividend
requirements of MichCon included in fixed charges but not deducted in the
determination of pre-tax income. "Fixed Charges" represent (a) interest
(whether expensed or capitalized), (b) amortization of debt discount,
premium and expense, (c) an estimate of interest implicit in rentals, and
(d) in the case of MCN, the preferred securities dividend requirements of
subsidiaries (MichCon, MCN Michigan Limited Partnership and MCN Financing
I), increased to reflect the pre-tax earnings requirement for MichCon.
(3) In June 1996, MCN sold its computer operations subsidiary, Genix. For
purposes of calculating the Ratio of Earnings to Fixed Charges, Genix has
been classified as a discontinued operation and is therefore excluded from
the ratio for all periods presented.
USE OF PROCEEDS
All of the proceeds from the sale of the Income PRIDES, of which the Trust
Preferred Securities are a component, will be invested by the Trust in Junior
Subordinated Debentures of MCN pursuant to the Indenture described herein and
ultimately will be used by MCN for general corporate purposes, including capital
expenditures, investment in subsidiaries, working capital and repayment of debt.
Any additional amounts received by the Company upon settlement of the Purchase
Contracts, whether on the Purchase Contract Settlement Date or Early Settlement
Date, are also expected to be used for such general corporate purposes.
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<PAGE> 98
CAPITALIZATION
The following table sets forth the unaudited summary capitalization at
December 31, 1996 of the Company and its consolidated subsidiaries on a
historical basis and on a pro forma basis after giving effect to the sale by the
Company of the FELINE PRIDES offered hereby and the application of the net
proceeds therefrom. See "Use of Proceeds". The table should be read in
conjunction with MCN's consolidated financial statements and notes thereto and
other financial data incorporated by reference herein. See "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
----------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-Term Debt (includes notes payable and current portion
of long-term debt and capital leases)..................... $ 420,873 $
========== ==========
Long-Term Debt (including capital leases)(2)................ $1,252,040 $
MCN-obligated mandatorily redeemable preferred securities of
subsidiaries holding solely subordinated debentures of
MCN(3).................................................... 173,809
Common Stockholders' Equity................................. 784,568
---------- ----------
Total Capitalization........................................ $2,210,417 $
========== ==========
</TABLE>
- ---------------
(1) Adjusted for the sale of Trust Preferred Securities, the application of the
estimated net proceeds to the purchase of Junior Subordinated Debentures of
MCN and the application by MCN of the estimated net proceeds of Junior
Subordinated Debentures for the purposes set out under "Use of Proceeds".
(2) Includes a $100 million term loan, due 2000, of MCNIC Oil & Gas Company, a
wholly-owned subsidiary of MCN Investment, with recourse to MCN limited to
certain events, including the realization of tax credits and performance
under swap contracts.
(3) The sole assets of the subsidiaries are as follows: MCN Financing I --
8 5/8% junior subordinated debentures of MCN due 2036 with a principal
amount of $82,474,250; MCN Michigan Limited Partnership -- 9 3/8%
subordinated deferrable interest debt securities of MCN due 2024 with a
principal amount of $101,100,000; and MCN Financing III -- % subordinated
debentures of MCN due 2002 with a principal amount of approximately
$ . Upon redemption of such debt, the preferred securities of such
subsidiaries will be mandatorily redeemable.
ACCOUNTING TREATMENT
The financial statements of MCN Financing will be reflected in MCN's
consolidated financial statements with the $ Trust Preferred Securities
shown as MCN-obligated mandatorily redeemable preferred securities of
subsidiaries holding solely subordinated debentures of MCN. The financial
statement footnotes of MCN will reflect that the sole asset of MCN Financing
will be approximately $ principal amount of % Junior Subordinated
Debentures due , 2002 of MCN. See "Capitalization". Under current
generally accepted accounting principles, the Purchase Contracts will not be
recorded on the Company's consolidated balance sheet but will be disclosed in
the footnotes to the financial statements.
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<PAGE> 99
DESCRIPTION OF THE FELINE PRIDES
The following description of certain terms of the Securities offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Securities offered hereby set forth
in the accompanying Prospectus, to which reference is hereby made. The summaries
of certain provisions of documents described below do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of such documents (including the definitions therein of certain
terms), forms of which are on file with the Commission. Wherever particular
Sections of, or terms defined in, such documents are referred to herein, such
Sections or defined terms are incorporated by reference herein. Capitalized
terms not defined herein have the meanings assigned to such terms in the
accompanying Prospectus.
Each FELINE PRIDES will be issued under a Purchase Contract Agreement
between the Company and the Purchase Contract Agent. Each FELINE PRIDES offered
hereby initially will consist of a unit (referred to as an Income PRIDE) with a
Stated Amount of $50 comprised of (a) a Purchase Contract under which (i) the
holder will purchase from the Company on the Purchase Contract Settlement Date
of May , 2000, for an amount equal to the Stated Amount, a number of new
shares of Common Stock equal to the Settlement Rate described below under
"Description of the Purchase Contracts -- General," and (ii) the Company will
pay Contract Adjustment Payments to the holder, and (b) (i) beneficial ownership
of a % Trust Preferred Security, having a liquidation amount per Trust
Preferred Security equal to the Stated Amount, representing a preferred,
undivided beneficial interest in the assets of the Trust, which will consist
solely of the Junior Subordinated Debentures, or (ii) upon the occurrence of an
Investment Company Event, or, in certain circumstances, a Tax Event or
liquidation of the Trust as described below, Junior Subordinated Debentures of
the Company having a principal amount equal to the Stated Amount. As long as the
FELINE PRIDES are in the form of Income PRIDES, the Trust Preferred Securities
will be pledged to the Collateral Agent, to secure the holder's obligation to
purchase Common Stock under the Purchase Contract.
SUBSTITUTION OF PLEDGED SECURITIES
Each holder will have the right, at any time after issuance of the Income
PRIDES, to substitute for any Trust Preferred Securities held by the Collateral
Agent Treasury Securities, in a principal amount per Purchase Contract equal to
the Stated Amount per Trust Preferred Security. Holders may make such
substitution only in integral multiples of 20 Income PRIDES. Securities with
respect to which Treasury Securities have been substituted for Trust Preferred
Securities as collateral to secure a holder's obligation under the Purchase
Contracts, will be referred to as Growth PRIDES(SM). To create each Growth
PRIDES, the Income PRIDES holder will (a) deposit with the Collateral Agent a
Treasury Security and (b) transfer 20 Income PRIDES to the Purchase Contract
Agent accompanied by a notice stating that the Income PRIDES holder has
deposited a Treasury Security with the Collateral Agent and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release to such holder
the 20 Trust Preferred Securities underlying such Income PRIDES. Upon such
deposit and receipt of an instruction from the Purchase Contract Agent, the
Collateral Agent will effect the release of the 20 Trust Preferred Securities
from the pledge under the Pledge Agreement free and clear of the Company's
security interest therein to the Purchase Contract Agent, which will (i) cancel
the 20 Income PRIDES, (ii) transfer the 20 Trust Preferred Securities to such
holder and (iii) deliver one Growth PRIDES to the holder. Each Growth PRIDES
will therefore consist of a unit with a face amount of $1,000 comprised of (a)
20 Purchase Contracts, each with respect to which (i) the holder will purchase
from the Company on the Purchase Contract Settlement Date for an amount equal to
the Stated Amount, a number of shares of Common Stock of the Company equal to
the Settlement Rate described herein, and (ii) the Company will pay the holder
Contract Adjustment Payments, and (b) beneficial ownership of a Treasury
Security having a principal amount at maturity equal to $1,000. The Trust
Preferred Securities released to the holder thereafter will trade separately
from the resulting Growth PRIDES. Contract Adjustment Payments will be payable
by the Company on the Growth PRIDES on March 31, June 30, September 30 and
December 31 of each year from the time each Growth PRIDES was created. In
addition, interest would accrete on the underlying Treasury Securities.
Distributions on any Trust Preferred Securities still outstanding after the
Purchase Contract Settlement Date or after a substitution of
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collateral resulting in the creation of Growth PRIDES will continue to be
payable by the Trust at the rate of % of the Stated Amount per annum, subject
to the deferral right described above.
Holders who elect to substitute Pledged Securities, thereby creating Growth
PRIDES or recreating Income PRIDES (as discussed below), shall be responsible
for any fees or expenses payable in connection therewith. See "Certain
Provisions of the Purchase Contract Agreement and the Pledge Agreement --
Miscellaneous."
RECREATING INCOME PRIDES
A holder of each Growth PRIDES may recreate 20 Income PRIDES by (a)
depositing with the Collateral Agent 20 Trust Preferred Securities and (b)
transferring a Growth PRIDES to the Purchase Contract Agent accompanied by a
notice stating that the Growth PRIDES holder has deposited 20 Trust Preferred
Securities with the Collateral Agent and requesting that the Purchase Contract
Agent instruct the Collateral Agent to release to such holder the Treasury
Security related to such Growth PRIDES. Upon such deposit and receipt of
instruction from the Purchase Contract Agent, the Collateral Agent will effect
the release of the Treasury Security from the pledge of the Pledge Agreement
free and clear of the Company's security interest therein to the Purchase
Contract Agent, which will (i) cancel the Growth PRIDES, (ii) transfer the
Treasury Security to such holder and (iii) deliver 20 Income PRIDES to the
holder.
CURRENT PAYMENTS
Holders of Income PRIDES are entitled to receive cash distributions at a
rate of % of the Stated Amount per annum, payable quarterly in arrears. The
quarterly payments on the Income PRIDES set forth on the cover page of this
Prospectus Supplement will consist of (i) cumulative cash distributions on the
Trust Preferred Securities payable by the Trust at the rate of % of the
Stated Amount per annum, and (ii) Contract Adjustment Payments, payable by the
Company, until the Purchase Contract Settlement Date, at the rate of % of
the Stated Amount per annum.
The ability of the Trust to make the quarterly distributions on the Trust
Preferred Securities is solely dependent upon the receipt of corresponding
interest payments from the Company on the Junior Subordinated Debentures. The
Company has the right at any time, and from time to time, limited to a period
not extending beyond the maturity of the Junior Subordinated Debentures, to
defer the interest payments on the Junior Subordinated Debentures. As a
consequence of such deferral, quarterly distributions to holders of Income
PRIDES (or any Trust Preferred Securities outstanding after the Purchase
Contract Settlement Date or after a substitution of collateral resulting in the
creation of Growth PRIDES) would be deferred (but despite such deferral, would
continue to accumulate quarterly and would accrue interest thereon compounded
quarterly at the same rate as interest on the Junior Subordinated Debentures).
The Company also has the right to defer the payment of Contract Adjustment
Payments on the Purchase Contracts until the Purchase Contract Settlement Date;
however, deferred Contract Adjustment Payments will bear additional Contract
Adjustment Payments at the rate of % per annum (such deferred installments of
Contract Adjustment Payments together with the additional Contract Adjustment
Payments shall be referred to as the "Deferred Contract Adjustment Payments").
See "Description of the Purchase Contracts -- Contract Adjustment Payments" and
"Description of the Trust Preferred Securities -- Distributions."
Subject to the Company's rights of deferral, in the event a holder of
Income PRIDES substituted Treasury Securities for the Trust Preferred
Securities, such holder would still receive quarterly Contract Adjustment
Payments. In addition, interest would accrete on the underlying Treasury
Securities.
VOTING RIGHTS
Holders of Trust Preferred Securities will not be entitled to vote to
appoint, remove or replace, or to increase or decrease the number of Regular
Trustees and will generally have no voting rights except in the limited
circumstances described under "Description of Trust Preferred Securities --
Voting Rights." Holders of Purchase Contracts underlying the Income PRIDES or
Growth PRIDES will have no voting rights.
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LISTING OF THE SECURITIES
Application has been made to list the Income PRIDES on the NYSE under the
symbol "MCN prI." The Growth PRIDES and the Trust Preferred Securities will not
be listed or traded on any securities exchange.
NYSE SYMBOL OF COMMON STOCK
The Common Stock of the Company is listed on the NYSE under the symbol
"MCN."
DESCRIPTION OF THE PURCHASE CONTRACTS
GENERAL
Each Purchase Contract underlying a FELINE PRIDES (unless earlier
terminated or settled at the holder's option) will obligate the holder of such
Purchase Contract to purchase, and the Company to sell, on the Purchase Contract
Settlement Date, for an amount in cash equal to the Stated Amount, a number of
new shares of Common Stock equal to the Settlement Rate. The Settlement Rate
will be calculated as follows (subject to adjustment under certain
circumstances): (a) if the Applicable Market Value is equal to or greater than
the Threshold Appreciation Price, the Settlement Rate will be , (b) if
the Applicable Market Value is less than the Threshold Appreciation Price but
greater than $ , the Settlement Rate will equal the Stated Amount divided
by the Applicable Market Value, and (c) if the Applicable Market Value is less
than or equal to $ , the Settlement Rate will be . "Applicable Market
Value" means the average of the Closing Prices (as defined) per share of Common
Stock on each of the twenty consecutive Trading Days (as defined) ending on the
second Trading Day immediately preceding the Purchase Contract Settlement Date.
No fractional shares of Common Stock will be issued by the Company pursuant
to the Purchase Contracts. In lieu of fractional shares otherwise issuable in
respect of Purchase Contracts being settled by a holder of Income PRIDES or
Growth PRIDES the holder will be entitled to receive an amount of cash equal to
such fraction of a share times the Applicable Market Value.
On the Purchase Contract Settlement Date, unless a holder of Income PRIDES
(i) has settled the underlying Purchase Contracts prior to the Purchase Contract
Settlement Date through the early delivery of cash to the Purchase Contract
Agent or (ii) has notified the Purchase Contract Agent of its intention to
settle the related Purchase Contract with separate cash on the Purchase Contract
Settlement Date in the manner described under "-- Early Settlement" and under
"-- Notice to Settle with Cash", respectively, and has so settled the Purchase
Contract or an event described under "-- Termination" below occurs, such holder
will be deemed to have requested the Trust to put its Junior Subordinated
Debenture to the Company, in an amount per Junior Subordinated Debenture equal
to $50, plus accumulated and unpaid distributions, if any. Upon the repurchase
of the Junior Subordinated Debentures by the Company pursuant to a Put Option
(as defined herein), the proceeds from such repurchase shall simultaneously be
applied to redeem Trust Preferred Securities of such holder having an aggregate
Stated Amount equal to the aggregate principal amount of the Junior Subordinated
Debentures so repurchased and will be automatically applied to satisfy in full
such holder's obligation to purchase Common Stock under the Purchase Contract.
See "Description of the Junior Subordinated Debentures -- Put Option". With
respect to each Growth PRIDES outstanding on the Purchase Contract Settlement
Date, the principal amount of the Treasury Securities underlying each Growth
PRIDES, when paid at maturity, will be automatically transferred to the Company
to satisfy in full the holder's obligation to purchase Common Stock under the 20
Purchase Contracts per Growth PRIDES. Such Common Stock will then be issued and
delivered to such holder or such holder's designee, upon presentation and
surrender of the certificate evidencing such FELINE PRIDES (a "FELINE PRIDES
Certificate") and payment by the holder of any transfer or similar taxes payable
in connection with the issuance of the Common Stock to any person other than
such holder. In the event that a holder of either an Income PRIDES or Growth
PRIDES effects the early settlement of a Purchase Contract through the delivery
of cash or a holder of
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Income PRIDES settles a Purchase Contract with cash on the Purchase Contract
Settlement Date, the underlying Trust Preferred Securities or Treasury
Securities, as the case may be, will be released to the holder as described
herein.
Prior to the date on which shares of Common Stock are issued in settlement
of Purchase Contracts, the Common Stock underlying the related Purchase
Contracts will not be deemed to be outstanding for any purpose and the holder
thereof will generally not have any voting rights, rights to dividends or other
distributions or other rights or privileges of a stockholder by virtue of
holding such Purchase Contracts. See "Description of Trust Preferred Securities
- -- Voting Rights."
Each holder of Income PRIDES or Growth PRIDES, by acceptance thereof, will
under the terms of the Purchase Contract Agreement and the Purchase Contracts be
deemed to have (a) irrevocably agreed to be bound by the terms of the Purchase
Contracts and the Pledge Agreement for so long as such holder remains a holder
of such FELINE PRIDES and (b) duly appointed the Purchase Contract Agent as such
holder's attorney-in-fact to enter into and perform the related Purchase
Contracts on behalf of and in the name of such holder.
EARLY SETTLEMENT
A holder of Income PRIDES or Growth PRIDES may settle the underlying
Purchase Contracts prior to the Purchase Contract Settlement Date by presenting
and surrendering the FELINE PRIDES Certificate evidencing such Income PRIDES or
Growth PRIDES at the offices of the Purchase Contract Agent with the form of
"Election to Settle Early" on the reverse side of the certificate completed and
executed as indicated, accompanied by payment (in the form of a certified or
cashier's check payable to the order of the Company) of an amount equal to the
Stated Amount times the number of Purchase Contracts being settled. So long as
the FELINE PRIDES are evidenced by one or more global security certificates
deposited with the Depositary (as defined below), procedures for early
settlement will also be governed by standing arrangements between the Depositary
and the Purchase Contract Agent. HOLDERS MAY SETTLE SECURITIES EARLY ONLY IN
INTEGRAL MULTIPLES OF 20 Income PRIDES or one Growth PRIDES.
Upon Early Settlement of Purchase Contracts underlying any Income PRIDES or
Growth PRIDES, (a) the holder will receive shares of Common Stock per
Income PRIDES having a Stated Amount of $50 or shares of Common Stock
per Growth PRIDES having a face amount of $1,000 (regardless of the market price
of the Common Stock on the date of purchase), subject to adjustment under
certain circumstances, (b) the Trust Preferred Securities underlying such Income
PRIDES or, if substituted, the Treasury Securities underlying such Growth
PRIDES, will thereupon be transferred to the holder free and clear of the
Company's security interest therein, (c) the holder's right to receive Deferred
Contract Adjustment Payments (as defined below), if any, on the Purchase
Contracts being settled will be forfeited and (d) the holder's right to receive
future Contract Adjustment Payments will terminate and, except as contemplated
by clause (a) above, no adjustment will be made to or for the holder on account
of current or deferred amounts accrued in respect thereof.
If the Purchase Contract Agent receives the FELINE PRIDES Certificate,
accompanied by the completed "Election to Settle Early" and requisite check,
from a holder of Securities by 5:00 p.m., New York City time, on a Business Day,
that day will be considered the settlement date. If the Purchase Contract Agent
receives the foregoing after 5:00 p.m., New York City time, on a Business Day or
at any time on a day that is not a Business Day, the next Business Day will be
considered the settlement date.
Upon Early Settlement of Purchase Contracts in the manner described above,
presentation and surrender of the FELINE PRIDES Certificate evidencing the
related Income PRIDES or Growth PRIDES and payment of any transfer or similar
taxes payable by the holder in connection with the issuance of the Common Stock
to any person other than the holder of such Income PRIDES or Growth PRIDES, the
Company will cause the shares of Common Stock being purchased to be issued, and
the Trust Preferred Securities or, if substituted, the Treasury Securities
securing such Purchase Contracts, to be released from the pledge under the
Pledge Agreement described below and transferred, within three Business Days
following the settlement date, to the purchasing holder or such holder's
designee.
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NOTICE TO SETTLE WITH CASH
A holder of an Income PRIDES wishing to settle the related Purchase
Contract with separate cash on the Purchase Contract Settlement Date must notify
the Purchase Contract Agent by presenting and surrendering the FELINE PRIDES
Certificate evidencing such Income PRIDES at the offices of the Purchase
Contract Agent with the form of "Notice to Settle by Separate Cash" on the
reverse side of the certificate completed and executed as indicated on or prior
to 5:00 p.m., New York City time, on the second Business Day immediately
preceding the Purchase Contract Settlement Date. Such form must be accompanied
by payment (in the form of a certified or cashier's check payable to the order
of the Company) of an amount equal to the Stated Amount times the number of
Purchase Contracts being settled.
CONTRACT ADJUSTMENT PAYMENTS
Contract Adjustment Payments will be fixed at a rate per annum of % of
the Stated Amount per Purchase Contract. Contract Adjustment Payments in arrears
for more than one quarter will bear interest thereon at the rate per annum
of % thereof compounded quarterly. Contract Adjustment Payments payable for
any period will be computed on the basis of a 360-day year of twelve 30
day-months. Contract Adjustment Payments will accrue from , 1997 and
will be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing June 30, 1997.
Contract Adjustment Payments will be payable to the holders thereof as they
appear on the books and records of the Purchase Contract Agent on the relevant
record dates, which, as long as the Income PRIDES or Growth PRIDES remain in
book-entry only form, will be one Business Day prior to the relevant payment
dates. Such distributions will be paid through the Purchase Contract Agent who
will hold amounts received in respect of the Contract Adjustment Payments for
the benefit of the holders of the Purchase Contracts underlying the Income
PRIDES or Growth PRIDES. Subject to any applicable laws and regulations, each
such payment will be made as described under "Book-Entry System" below. In the
event that the Income PRIDES or Growth PRIDES do not continue to remain in
book-entry only form, the Company shall have the right to select relevant record
dates, which shall be more than one Business Day but less than 60 Business Days
prior to the relevant payment dates. In the event that any date on which
Contract Adjustment Payments are to be made on the Purchase Contracts underlying
the Income PRIDES or Growth PRIDES is not a Business Day, then payment of the
Contract Adjustment Payments payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such payment date. A "Business Day" shall mean any day other than Saturday,
Sunday or any other day on which banking institutions in New York City (in the
State of New York) are permitted or required by any applicable law to close.
The Company's obligations with respect to Contract Adjustment Payments are
subordinate and junior in right of payment to all liabilities of the Company
(other than the Yield Enhancement Payments payable by the Company in respect of
its 8 3/4% PRIDES and MCN's guarantee of other subordinated debentures issued by
the Company, with which they rank pari passu). See "Risk Factors -- Ranking of
Contract Adjustment Payments and Subordinated Obligations Under the Guarantee
and Junior Subordinated Debentures."
OPTION TO DEFER CONTRACT ADJUSTMENT PAYMENTS
The Company may, at its option and upon prior written notice to the holders
of the Income PRIDES or Growth PRIDES and the Purchase Contract Agent, defer the
payment of Contract Adjustment Payments on the Purchase Contracts until no later
than the Purchase Contract Settlement Date. However, Deferred Contract
Adjustment Payments will bear additional Contract Adjustment Payments at the
rate of % per annum (compounding on each succeeding Payment Date) until
paid. If the Purchase Contracts are terminated (upon the occurrence of certain
events of bankruptcy, insolvency or reorganization with respect to the Company),
the right to receive Contract Adjustment Payments and Deferred Contract
Adjustment Payments will terminate.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each holder of Income PRIDES or Growth
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PRIDES will receive on the Purchase Contract Settlement Date, in lieu of a cash
payment, a number of shares of Common Stock (in addition to a number of shares
of Common Stock equal to the Settlement Rate) equal to (x) the aggregate amount
of Deferred Contract Adjustment Payments payable to a holder of either Income
PRIDES or Growth PRIDES divided by (y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by the Company with
respect to the payment of Deferred Contract Adjustment Payments on the Purchase
Contract Settlement Date. In lieu of fractional shares otherwise issuable with
respect to such payment of Deferred Contract Adjustment Payments, the holder
will be entitled to receive an amount in cash equal to such fraction of a share
times the Applicable Market Value.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase shares of Common Stock, (ii) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one class or series of
the Company's capital stock for another class or series of the Company's capital
stock or (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged) or make any guarantee
payments with respect to the foregoing.
ANTI-DILUTION ADJUSTMENTS
The formula for determining the Settlement Rate will be subject to
adjustment upon the occurrence of certain events, including: (a) the payment of
dividends (and other distributions) of Common Stock on Common Stock; (b) the
issuance to all holders of Common Stock of rights, warrants or options entitling
them, for a period of up to 45 days, to subscribe for or purchase Common Stock
at less than the Current Market Price (as defined) thereof; (c) subdivisions,
splits and combinations of Common Stock; (d) distributions to all holders of
Common Stock of evidences of indebtedness of the Company, shares of capital
stock, securities, cash or property (excluding any dividend or distribution
covered by clause (a) or (b) above and any dividend or distribution paid
exclusively in cash); (e) distributions consisting exclusively of cash to all
holders of Common Stock in an aggregate amount that, together with (i) other
all-cash distributions made within the preceding 12 months and (ii) any cash and
the fair market value, as of the expiration of the tender or exchange offer
referred to below, of consideration payable in respect of any tender or exchange
offer by the Company or a subsidiary for the Common Stock concluded within the
preceding 12 months, exceeds 15% of the Company's aggregate market
capitalization (such aggregate market capitalization being the product of the
Current Market Price (as defined) of the Common Stock multiplied by the number
of shares of Common Stock then outstanding) on the date of such distribution;
and (f) the successful completion of a tender or exchange offer made by the
Company or any subsidiary for the Common Stock which involves an aggregate
consideration that, together with (i) any cash and the fair market value of
other consideration payable in respect of any tender or exchange offer by the
Company or a subsidiary for the Common Stock concluded within the preceding 12
months and (ii) the aggregate amount of any all-cash distributions to all
holders of the Company's Common Stock made within the preceding 12 months,
exceeds 15% of the Company's aggregate market capitalization on the expiration
of such tender or exchange offer.
In the case of certain reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions pursuant to which the Common Stock is
converted into the right to receive other securities, cash or property, each
Purchase Contract then outstanding would, without the consent of the holders of
Income PRIDES or Growth PRIDES, as the case may be, become a contract to
purchase only the kind and amount of securities, cash and other property
receivable upon consummation of the transaction by a holder of the number of
shares of Common Stock which would have been received by the holder of the
related Income PRIDES or Growth PRIDES immediately prior to the date of
consummation of such transaction if such holder had then settled such Purchase
Contract.
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If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (i.e., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends or rights to subscribe
to capital stock) and, pursuant to the Settlement Rate adjustment provisions of
the Purchase Contract Agreement, the Settlement Rate is increased, such increase
may be deemed to be the receipt of taxable income to holders of Securities. See
"Certain Federal Income Tax Consequences -- Adjustment of Settlement Rate."
In addition, the Company may make such increases in the Settlement Rate as
the Board of Directors of the Company deems advisable to avoid or diminish any
income tax to holders of shares of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes or for any other reasons.
Adjustments to the Settlement Rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the Settlement Rate shall be required
unless such adjustment would require an increase or decrease of at least one
percent in the Settlement Rate; provided, however, that any adjustments which by
reason of the foregoing are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
The Company will be required, within ten Business Days following the
occurrence of an event that requires or permits an adjustment in the Settlement
Rate, to provide written notice to the Purchase Contract Agent of the occurrence
of such event and a statement in reasonable detail setting forth the method by
which the adjustment to the Settlement Rate was determined and setting forth the
revised Settlement Rate.
Each adjustment to the Settlement Rate will result in a corresponding
adjustment to the number of shares of Common Stock issuable upon early
settlement of a Purchase Contract.
TERMINATION
The Purchase Contracts, and the rights and obligations of the Company and
of the holders of the FELINE PRIDES thereunder (including the right to receive
accrued Contract Adjustment Payments or Deferred Contract Adjustment Payments
and the right and obligation to purchase Common Stock), will automatically
terminate upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company. Upon such termination, the
Collateral Agent will release the Trust Preferred Securities or, if substituted,
the Treasury Securities held by it to the Purchase Contract Agent for
distribution to the holders. Upon such termination, however, such release and
termination may be subject to a limited delay. In the event that the Company
becomes the subject of a case under the Bankruptcy Code, such delay may occur as
a result of the automatic stay under the Bankruptcy Code and continue until such
automatic stay has been lifted.
PLEDGED SECURITIES AND PLEDGE AGREEMENT
The Trust Preferred Securities underlying the Income PRIDES or, if
substituted, the Treasury Securities underlying the Growth PRIDES (together, the
Pledged Securities) will be pledged to the Collateral Agent, for the benefit of
the Company, pursuant to a pledge agreement, to be dated as of ,
1997 (the "Pledge Agreement"), to secure the obligations of the holders to
purchase Common Stock under the Purchase Contracts. The rights of holders of
Income PRIDES or Growth PRIDES to the underlying Pledged Securities will be
subject to the Company's security interest therein created by the Pledge
Agreement. No holder of Income PRIDES or Growth PRIDES will be permitted to
withdraw the Pledged Securities underlying such Income PRIDES or Growth PRIDES
from the pledge arrangement except (i) to substitute Treasury Securities for
Trust Preferred Securities, (ii) to substitute Trust Preferred Securities for
Treasury Securities (for both (i) and (ii), as provided for under "Description
of the FELINE PRIDES -- Substitution of Pledged Securities") or (iii) upon the
termination or Early Settlement of the related Purchase Contracts. Subject to
such security interest and the terms of the Purchase Contract Agreement and the
Pledge Agreement, each holder of an Income PRIDES will be entitled through the
Purchase Contract Agent and the Collateral Agent to all of the proportional
rights and preferences of a Trust Preferred Security (including distribution,
voting, redemption, repayment and liquidation rights) and each holder of a
Growth PRIDES will retain beneficial ownership of the Treasury Securities
pledged in respect of such Purchase Contracts. The Company will have no interest
in the Pledged Securities other than its security interest.
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The Collateral Agent will, upon receipt of distributions on the Pledged
Securities, distribute such payments to the Purchase Contract Agent, which will
in turn distribute those payments, together with Contract Adjustment Payments
received from the Company, to the persons in whose names the related Income
PRIDES or Growth PRIDES are registered at the close of business on the Record
Date immediately preceding the date of such distribution. See "Description of
the Securities -- Current Payments."
BOOK-ENTRY SYSTEM
The Depository Trust Company (the "Depositary") will act as securities
depositary for the FELINE PRIDES. The FELINE PRIDES will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global security certificates
("Global Security Certificates"), representing the total aggregate number of
FELINE PRIDES, will be issued and will be deposited with the Depositary and will
bear a legend regarding the restrictions on exchanges and registration of
transfer thereof referred to below.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the FELINE PRIDES so
long as such FELINE PRIDES are represented by Global Security Certificates.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Depositary holds
securities that its participants ("Participants") deposit with the Depositary.
The Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
The Depositary is owned by a number of its Direct Participants and by the NYSE,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the Depositary system is also available to others, such
as securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants are
on file with the Commission.
No FELINE PRIDES represented by Global Security Certificates may be
exchanged in whole or in part for FELINE PRIDES registered, and no transfer of
Global Security Certificates in whole or in part may be registered, in the name
of any person other than the Depositary or any nominee of the Depositary unless
the Depositary has notified the Company that it is unwilling or unable to
continue as depositary for such Global Security Certificates or has ceased to be
qualified to act as such as required by the Purchase Contract Agreement or there
shall have occurred and be continuing a default by the Company in respect of its
obligations under one or more Purchase Contracts. All FELINE PRIDES represented
by one or more Global Security Certificates or any portion thereof will be
registered in such names as the Depositary may direct.
As long as the Depositary or its nominee is the registered owner of the
Global Security Certificates, such Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the Global Security
Certificates and all FELINE PRIDES represented thereby for all purposes under
the FELINE PRIDES and the Purchase Contract Agreement. Except in the limited
circumstances referred to above, owners of beneficial interests in Global
Security Certificates will not be entitled to have such Global Security
Certificates or the FELINE PRIDES represented thereby registered in their names,
will not receive or be entitled to receive physical delivery of FELINE PRIDES
Certificates in exchange therefore and will not be considered to be owners or
holders of such Global Security Certificates or any FELINE PRIDES represented
thereby for any purpose under the FELINE PRIDES or the Purchase Contract
Agreement. All payments on the FELINE PRIDES represented by the Global Security
Certificates and all transfers and deliveries of Trust
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Preferred Securities, Treasury Securities and Common Stock with respect thereto
will be made to the Depositary or its nominee, as the case may be, as the holder
thereof.
Ownership of beneficial interests in the Global Security Certificates will
be limited to Participants or per-sons that may hold beneficial interests
through institutions that have accounts with the Depositary or its nominee.
Ownership of beneficial interests in Global Security Certificates will be shown
only on, and the transfer of those ownership interests will be effected only
through, records maintained by the Depositary or its nominee (with respect to
Participants' interests) or any such Participant (with respect to interests of
persons held by such Participants on their behalf). Procedures for settlement of
Purchase Contracts on the Purchase Contract Settlement Date or upon Early
Settlement will be governed by arrangements among the Depositary, Participants
and persons that may hold beneficial interests through Participants designed to
permit such settlement without the physical movement of certificates. Payments,
transfers, deliveries, exchanges and other matters relating to beneficial
interests in Global Security Certificates may be subject to various policies and
procedures adopted by the Depositary from time to time. None of the Company, the
Purchase Contract Agent or any agent of the Company or the Purchase Contract
Agent will have any responsibility or liability for any aspect of the
Depositary's or any Participant's records relating to, or for payments made on
account of, beneficial interests in Global Security Certificates, or for
maintaining, supervising or reviewing any of the Depositary's records or any
participant's records relating to such beneficial ownership interests.
CERTAIN PROVISIONS OF THE PURCHASE CONTRACT
AGREEMENT AND THE PLEDGE AGREEMENT
GENERAL
Distributions on the FELINE PRIDES will be payable, Purchase Contracts (and
documents related thereto) will be settled and transfers of the FELINE PRIDES
will be registrable at the office of the Purchase Contract Agent in the Borough
of Manhattan, The City of New York. In addition, in the event that the FELINE
PRIDES do not remain in book-entry form, payment of distributions on the FELINE
PRIDES may be made, at the option of the Company, by check mailed to the address
of the person entitled thereto as shown on the Security Register.
On the Purchase Contract Settlement Date, shares of Common Stock will be
delivered, or, if the Purchase Contracts have terminated, Pledged Securities
will be delivered potentially after a limited delay (see "Description of the
Purchase Contracts -- Termination"), in each case upon presentation and
surrender of the FELINE PRIDES Certificate at the office of the Purchase
Contract Agent.
If a holder of outstanding Income PRIDES or Growth PRIDES fails to present
and surrender the FELINE PRIDES Certificate evidencing such Income PRIDES or
Growth PRIDES to the Purchase Contract Agent on the Purchase Contract Settlement
Date, the shares of Common Stock issuable in settlement of the applicable
Purchase Contract and in payment of any Deferred Contract Adjustment Payments
will be registered in the name of the Purchase Contract Agent and, together with
any distributions thereon, shall be held by the Purchase Contract Agent as agent
for the benefit of such holder, until such FELINE PRIDES Certificate is
presented and surrendered or the holder provides satisfactory evidence that such
certificate has been destroyed, lost or stolen, together with any indemnity that
may be required by the Purchase Contract Agent and the Company.
If the Purchase Contracts have terminated prior to the Purchase Contract
Settlement Date, the Pledged Securities have been transferred to the Purchase
Contract Agent for distribution to the holders entitled thereto and a holder
fails to present and surrender the FELINE PRIDES Certificate evidencing such
holder's Income PRIDES or Growth PRIDES to the Purchase Contract Agent, the
Pledged Securities delivered to the Purchase Contract Agent and payments thereon
shall be held by the Purchase Contract Agent as agent for the benefit of such
holder, until such FELINE PRIDES Certificate is presented or the holder provides
the evidence and indemnity described above.
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The Purchase Contract Agent will have no obligation to invest or to pay
interest on any amounts held by the Purchase Contract Agent pending
distribution, as described above.
No service charge will be made for any registration of transfer or exchange
of the FELINE PRIDES, except for any tax or other governmental charge that may
be imposed in connection therewith.
MODIFICATION
The Purchase Contract Agreement and the Pledge Agreement will contain
provisions permitting the Company and the Purchase Contract Agent or Collateral
Agent, as the case may be, with the consent of the holders of not less than
66 2/3% of the Purchase Contracts at the time outstanding, to modify the terms
of the Purchase Contracts, the Purchase Contract Agreement and the Pledge
Agreement, except that no such modification may, without the consent of the
holder of each outstanding Purchase Contract affected thereby, (a) change any
Payment Date, (b) change the amount or type of Pledged Securities underlying the
Purchase Contract, impair the right of the holder of any Pledged Securities to
receive distributions on the underlying Pledged Securities (except for the
rights of holders of Income PRIDES to substitute the Treasury Securities for the
Trust Preferred Securities or the rights of holders of Growth PRIDES to
substitute Trust Preferred Securities for the Treasury Securities) or otherwise
adversely affect the holder's rights in or to such Pledged Securities, (c)
change the place or currency of payment or reduce any Contract Adjustment
Payments or any Deferred Contract Adjustment Payments, (d) impair the right to
institute suit for the enforcement of any Purchase Contract, (e) reduce the
amount of Common Stock purchasable under any Purchase Contract, increase the
price to purchase Common Stock on settlement of any Purchase Contract, change
the Purchase Contract Settlement Date or otherwise adversely affect the holder's
rights under any Purchase Contract or (f) reduce the above-stated percentage of
outstanding Purchase Contracts the consent of whose holders is required for the
modification or amendment of the provisions of the Purchase Contracts, the
Purchase Contract Agreement or the Pledge Agreement; provided, that if any
amendment or proposal referred to above would adversely affect only the Income
PRIDES or the Growth PRIDES, then only the affected class of holder will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the consent of the holders of not less than
66 2/3% of such class.
NO CONSENT TO ASSUMPTION
Each holder of Income PRIDES or Growth PRIDES, by acceptance thereof, will
under the terms of the Purchase Contract Agreement and the Income PRIDES or
Growth PRIDES, be deemed expressly to have withheld any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in the event that the Company becomes the subject of a case under the
Bankruptcy Code.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Company will covenant in the Purchase Contract Agreement that it will
not merge or consolidate with any other entity or sell, assign, transfer, lease
or convey all or substantially all of its properties and assets to any person,
firm or corporation unless the Company is the continuing corporation or the
successor corporation is a corporation organized under the laws of the United
States of America or a state thereof and such corporation expressly assumes the
obligations of the Company under the Purchase Contracts, the Junior Subordinated
Debentures, the Purchase Contract Agreement and the Pledge Agreement, and the
Company or such successor corporation is not, immediately after such merger,
consolidation, sale, assignment, transfer, lease or conveyance, in default in
the performance of any of its obligations thereunder.
TITLE
The Company, the Purchase Contract Agent and the Collateral Agent may treat
the registered owner of any FELINE PRIDES as the absolute owner thereof for the
purpose of making payment and settling the Purchase Contracts and for all other
purposes.
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REPLACEMENT OF FELINE PRIDES CERTIFICATES
In the event that physical certificates have been issued, any mutilated
FELINE PRIDES Certificate will be replaced by the Company at the expense of the
holder upon surrender of such certificate to the Purchase Contract Agent. FELINE
PRIDES Certificates that become destroyed, lost or stolen will be replaced by
the Company at the expense of the holder upon delivery to the Company and the
Purchase Contract Agent of evidence of the destruction, loss or theft thereof
satisfactory to the Company and the Purchase Contract Agent. In the case of a
destroyed, lost or stolen FELINE PRIDES Certificate, an indemnity satisfactory
to the Purchase Contract Agent and the Company may be required at the expense of
the holder of the FELINE PRIDES evidenced by such certificate before a
replacement will be issued.
Notwithstanding the foregoing, the Company will not be obligated to issue
any Income PRIDES or Growth PRIDES on or after the Purchase Contract Settlement
Date or after the Purchase Contracts have terminated. The Purchase Contract
Agreement will provide that, in lieu of the delivery of a replacement FELINE
PRIDES Certificate following the Purchase Contract Settlement Date, the Purchase
Contract Agent, upon delivery of the evidence and indemnity described above,
will deliver the Common Stock issuable pursuant to the Purchase Contracts
included in the Income PRIDES or Growth PRIDES evidenced by such certificate,
or, if the Purchase Contracts have terminated prior to the Purchase Contract
Settlement Date, transfer the principal amount of the Pledged Securities
included in the Income PRIDES or Growth PRIDES evidenced by such certificate.
GOVERNING LAW
The Purchase Contract Agreement, the Pledge Agreement and the Purchase
Contracts will be governed by, and construed in accordance with, the laws of the
State of New York.
INFORMATION CONCERNING THE PURCHASE CONTRACT AGENT
The First National Bank of Chicago will be the Purchase Contract Agent. The
Purchase Contract Agent will act as the agent for the holders of Income PRIDES
and Growth PRIDES from time to time. The Purchase Contract Agreement will not
obligate the Purchase Contract Agent to exercise any discretionary actions in
connection with a default under the terms of the Income PRIDES and Growth PRIDES
or the Purchase Contract Agreement.
The Purchase Contract will contain provisions limiting the liability of the
Purchase Contract Agent. The Purchase Contract Agreement will contain provisions
under which the Purchase Contract Agent may resign or be replaced. Such
resignation or replacement would be effective upon the appointment of a
successor.
INFORMATION CONCERNING THE COLLATERAL AGENT
The Chase Manhattan Bank will be the Collateral Agent. The Collateral Agent
will act solely as the agent of the Company and will not assume any obligation
or relationship of agency or trust for or with any of the holders of the Income
PRIDES and Growth PRIDES except for the obligations owed by a pledgee of
property to the owner thereof under the Pledge Agreement and applicable law.
The Pledge Agreement will contain provisions limiting the liability of the
Collateral Agent. The Pledge Agreement will contain provisions under which the
Collateral Agent may resign or be replaced. Such resignation or replacement
would be effective upon the appointment of a successor.
MISCELLANEOUS
The Purchase Contract Agreement will provide that the Company will pay all
fees and expenses related to (i) the offering of the FELINE PRIDES, (ii) the
retention of the Collateral Agent and (iii) the enforcement by the Purchase
Contract Agent of the rights of the holders; provided, however, that holders who
elect to substitute Pledged Securities, thereby creating Growth PRIDES or
recreating Income PRIDES, shall be responsible for any fees or expenses payable
to the Collateral Agent in connection therewith, as well as any commissions,
fees or other expenses incurred in acquiring the Pledged Securities to be
substituted, and the Company shall not be responsible for any such fees or
expenses.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities, which form a component of the Income
PRIDES, and which, under certain circumstances, will trade separately, will be
issued pursuant to the terms of the Declaration. See "Description of the FELINE
PRIDES -- Substitution of Pledged Securities." The Declaration will be qualified
as an indenture under the Trust Indenture Act. The Institutional Trustee,
Wilmington Trust Company, an independent trustee, will act as indenture trustee
for the Trust Preferred Securities under the Declaration for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Trust Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the material terms and provisions of the Trust Preferred Securities
does not purport to be complete and is subject to, and qualified in its entirety
by reference to the Declaration, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement is a part, the Trust
Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned, directly or
indirectly, by the Company. The Common Securities rank pari passu, and payments
will be made thereon on a pro rata basis, with the Trust Preferred Securities,
except that upon the occurrence and during the continuance of a Declaration
Event of Default, the rights of the holders of the Common Securities to receive
payment of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. The Declaration does not permit the issuance by the Trust
of any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust. Pursuant to the Declaration, the Institutional
Trustee will own the Junior Subordinated Debentures purchased by the Trust for
the benefit of the holders of the Trust Securities. The payment of distributions
out of money held by the Trust, and payments upon redemption of the Trust
Preferred Securities or liquidation of the Trust, are guaranteed by the Company
to the extent described under "Description of the Preferred Securities
Guarantees" in the accompanying Prospectus. The Guarantee, when taken together
with MCN's obligations under the Junior Subordinated Debentures and the
Indenture and its obligations under the Declaration, including the obligations
to pay costs, expenses, debts and liabilities of the Trust (other than with
respect to the Trust Preferred Securities), provides a full and unconditional
guarantee of amounts due on the Trust Preferred Securities. The Guarantee will
be held by Wilmington Trust Company, the Guarantee Trustee, for the benefit of
the holders of the Trust Preferred Securities. The Guarantee does not cover
payment of distributions when the Trust does not have sufficient available funds
to pay such distributions. In such event, the remedy of a holder of Trust
Preferred Securities is to vote to direct the Institutional Trustee to enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures
(except in the limited circumstances in which the holder may take Direct
Action). See "-- Declaration Events of Default" and "-- Voting Rights."
DISTRIBUTIONS
Distributions on the Trust Preferred Securities will be fixed at a rate per
annum of % of the stated liquidation amount of $50 per Trust Preferred
Security. Distributions in arrears for more than one quarter will bear interest
thereon at the rate per annum of % thereof compounded quarterly. The term
"distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Trust Preferred Securities will be cumulative and will
accrue from , 1997 and will be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, commencing June 30,
1997, when, as and if funds are available for payment. Distributions will be
made by the Institutional Trustee, except as otherwise described below.
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debentures by extending the interest payment period
from time to time on the Junior Subordinated
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Debentures, which right, if exercised, would defer quarterly distributions on
the Trust Preferred Securities (though such distributions would continue to
accrue with interest since interest would continue to accrue on the Junior
Subordinated Debentures) during any such extended interest payment period. Such
right to extend the interest payment period for the Junior Subordinated
Debentures is limited to a period, in the aggregate, not extending beyond the
maturity date of the Junior Subordinated Debentures. In the event that the
Company exercises this right, then (a) the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of shares of the Company's Common
Stock in connection with the satisfaction by the Company of its obligations
under any employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event requiring the Company to purchase shares of the Company's Common Stock,
(ii) as a result of a reclassification of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such Company capital stock or the security
being converted or exchanged) or make any guarantee payments with respect to the
foregoing, (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company that rank pari passu with or junior
to such Junior Subordinated Debentures, and (c) the Company shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Trust Preferred Securities Guarantee). Prior to the termination of any such
Extension Period, the Company may further extend the interest payment period;
provided, that such Extension Period, together with all such previous and
further extensions thereof, may not extend beyond the maturity date of the
Junior Subordinated Debentures. Upon the termination of any Extension Period and
the payment of all amounts then due, the Company may select a new Extension
Period, subject to the above requirements. See "Description of the Junior
Subordinated Debentures -- Interest" and "-- Option to Extend Interest Payment
Period." If distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid to holders of record of the Trust Preferred
Securities as they appear on the books and records of the Trust on the record
date next following the termination of such deferral period.
Distributions on the Trust Preferred Securities must be paid on the dates
payable to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Trust Preferred Securities will be limited to
payments received from the Company on the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures." The payment of
distributions out of moneys held by the Trust is guaranteed by the Company to
the extent set forth under "Description of the Preferred Securities Guarantees"
in the accompanying Prospectus.
Distributions on the Trust Preferred Securities will be payable to the
holders thereof, including the Collateral Agent, as they appear on the books and
records of the Trust on the relevant record dates, which, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through the
Institutional Trustee which will hold amounts received in respect of the Junior
Subordinated Debentures in the Property Account for the benefit of the holders
of the Trust Preferred Securities. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment will be
made as described under "Book-Entry Only Issuance -- The Depository Trust
Company" below. In the event that the Trust Preferred Securities do not continue
to remain in book-entry form, the Regular Trustees shall have the right to
select relevant record dates, which shall be more than one Business Day but less
than 60 Business Days prior to the relevant payment dates. In the event that any
date on which distributions are to be made on the Trust Preferred Securities is
not a Business Day, then payment of the distributions payable on such date will
be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such record date.
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MATURITY
Subject to the holder's right to require the Trust to put the Junior
Subordinated Debentures to the Company on the Purchase Contract Settlement Date,
the Junior Subordinated Debentures will mature on May , 2002. Upon the
repayment of the Junior Subordinated Debentures at maturity, the proceeds from
such repayment or payment shall simultaneously be applied to redeem Trust
Preferred Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Junior Subordinated Debentures so repaid. See
"Description of the Junior Subordinated Debentures."
SPECIAL EVENT DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after such date), which change or amendment, in
the case of (a) or (b), becomes effective on or after the date of this
Prospectus Supplement, there is more than an insubstantial risk that (i) the
Trust would be subject to federal income tax with respect to income accrued or
received on the Junior Subordinated Debentures, (ii) interest payable to the
Trust on the Junior Subordinated Debentures would not be deductible by the
Company for federal income tax purposes or (iii) the Trust would be subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
1940 Act (as defined below) to the effect that, as a result of the occurrence of
a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus
Supplement, there is more than an insubstantial risk that the Trust is or will
be considered an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act").
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Trust
shall, except in the limited circumstances described below, be dissolved, with
the result that the Junior Subordinated Debentures with an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Trust Securities, would be
distributed to the holders of the Trust Securities in liquidation of such
holders' interests in the Trust on a pro rata basis within 90 days following the
occurrence, of such Special Event; provided, however, that in the case of the
occurrence of a Tax Event, such dissolution and distribution shall be
conditioned on the Company being unable to avoid such Tax Event within such 90
day period by taking some ministerial action or pursuing some other reasonable
measure that will have no adverse effect on the Trust, the Company or the
holders of the Trust Securities and will involve no material cost. If a Special
Event occurs, Junior Subordinated Debentures distributed to the Collateral Agent
in liquidation of such holder's interest in the Trust would continue to be
pledged to secure Income PRIDES holders' obligations to purchase Common Stock
under the Purchase Contracts.
After the date for any distribution of Junior Subordinated Debentures upon
dissolution of the Trust, (i) the Trust Preferred Securities will no longer be
deemed to be outstanding, (ii) the Depositary or its nominee, as the record
holder of the Trust Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution, and (iii) any certificates representing
Trust Preferred Securities not held by the Depositary or its nominee will be
deemed to represent Junior Subordinated Debentures having an aggregate principal
amount equal to the
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aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, such Trust Preferred Securities until such certificates
are presented to the Company or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Trust
Preferred Securities or the Junior Subordinated Debentures that may be
distributed in exchange for the Trust Preferred Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Trust Preferred
Securities or the Junior Subordinated Debentures that an investor may receive if
a dissolution and liquidation of the Trust were to occur may trade at a discount
to the price that the investor paid to purchase the Trust Preferred Securities
forming a part of the Income PRIDES offered hereby.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its subsidiaries may at any time, and
from time to time, purchase outstanding Trust Preferred Securities by tender, in
the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Trust Preferred Securities will be entitled to receive out of the assets
of the Trust, after satisfaction of liabilities to creditors, Junior
Subordinated Debentures in an aggregate stated principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Trust Preferred Securities on a pro rata basis to
the holders of the Trust Preferred Securities in exchange for such Trust
Preferred Securities.
The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the Trust
Preferred Securities, except that if a Declaration Event of Default has occurred
and is continuing, the Trust Preferred Securities shall have a preference over
the Trust Common Securities with regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on February 3,
2004, the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Company or the holder of the Common Securities, (iii) upon the filing of a
certificate of dissolution or its equivalent with respect to the Company, the
filing of a certificate of cancellation with respect to the Trust after
obtaining the consent of the holders of at least a majority in liquidation
amount of the Trust Securities effected thereby voting together as a single
class to file such certificate of cancellation, or the revocation of the charter
of the Company and the expiration of 90 days after the date of revocation
without a reinstatement thereof, (iv) upon the distribution of Junior
Subordinated Debentures upon the occurrence of an Investment Company Event or a
Tax Event or (v) upon the entry of a decree of a judicial dissolution of the
holder of the Trust Common Securities, the Company or the Trust.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Trust Preferred Securities
have been cured, waived or otherwise eliminated. Until such Declaration Events
of Default with respect to the Trust Preferred Securities have been so cured,
waived, or otherwise eliminated, the Institutional Trustee will be deemed to be
acting solely on behalf of the holders of the Trust Preferred Securities and
only the holders of the Trust Preferred Securities will have the right to direct
the Institutional Trustee with respect to certain matters under the Declaration
and, therefore, the Indenture. If a Declaration Event of Default with respect to
the Trust Preferred Securities is waived by holders of Trust Preferred
Securities, such waiver will also constitute the waiver of such Declaration
Event of Default with respect to the Common Securities without any further act,
vote or consent of the holders of the
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Common Securities. If the Institutional Trustee fails to enforce its rights
under the Junior Subordinated Debentures, any holder of Trust Preferred
Securities may institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures without
first proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of MCN
to pay interest or principal on the Junior Subordinated Debentures, on the date
such interest or principal is otherwise payable, then a holder of Trust
Preferred Securities may directly institute a proceeding for enforcement of
payment (a "Direct Action") to such holder directly of the principal of or
interest on the Junior Subordinated Debentures having a principal amount equal
to the aggregate liquidation amount of the Trust Preferred Securities of such
holder on or after the respective due date specified in the Junior Subordinated
Debentures. In connection with such Direct Action, MCN will be subrogated to the
rights of such holder of Trust Preferred Securities under the Declaration to the
extent of any payment made by MCN to such holder of Trust Preferred Securities
in such Direct Action. The holders of Trust Preferred Securities will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures. See "Effect of Obligations under the Junior
Subordinated Debentures and the Guarantee."
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. MCN and the Trust are
each required to file annually with the Institutional Trustee an officer's
certificate as to its compliance with all conditions and covenants under the
Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act and the Trust Indenture Act
and under "Description of the Preferred Securities Guarantees -- Modification of
the Preferred Securities Guarantees; Assignment" in the accompanying Prospectus,
and as otherwise required by law and the Declaration, the holders of the Trust
Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Trust Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration including the right to direct the
Institutional Trustee, as holder of the Junior Subordinated Debentures, to (i)
exercise the remedies available under the Indenture with respect to the Junior
Subordinated Debentures, (ii) waive any past Indenture Event of Default that is
waivable under Section 513 of the Indenture (as defined herein), (iii) exercise
any right to rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures where such consent shall be required; provided, however,
that, where a consent or action under the Indenture would require the consent or
act of holders of more than a majority in principal amount of the Junior
Subordinated Debentures (a "Super-Majority") affected thereby, only the holders
of at least such Super-Majority in aggregate liquidation amount of the Trust
Preferred Securities may direct the Institutional Trustee to give such consent
or take such action. If the Institutional Trustee fails to enforce its rights
under the Junior Subordinated Debentures or the Declaration, a record holder of
Trust Preferred Securities may, after such holder's written request to the
Institutional Trustee to enforce such rights, institute a legal proceeding
directly against the Company to enforce the Institutional Trustee's rights under
the Junior Subordinated Debentures or the Declaration without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. The Institutional Trustee shall notify all holders of the Trust
Preferred Securities of any notice of default received from the Debt Trustee (as
defined below) with respect to the Junior Subordinated Debentures. Such notice
shall state that such Indenture Event of Default also constitutes a Declaration
Event of Default. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take
any of the actions described in clauses (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the
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effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Preferred
Securities and the Common Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the Trust Preferred Securities and the Common Securities voting together as a
single class; provided, however, that where a consent under the Indenture would
require the consent of a Super-Majority, the Institutional Trustee may only give
such consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Preferred Securities and the Trust Common
Securities which the relevant Super-Majority represents of the aggregate
principal amount of the Junior Subordinated Debentures outstanding. The
Institutional Trustee shall be under no obligation to take any such action in
accordance with the directions of the holders of the Trust Preferred Securities
and the Trust Common Securities unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of federal income
tax, the Trust will not be classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Trust Preferred Securities
may be given at a separate meeting of holders of Trust Preferred Securities
convened for such purpose, at a meeting of all of the holders of Trust
Securities or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be mailed to each holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Trust
Preferred Securities will be required for the Trust to redeem and cancel Trust
Preferred Securities or distribute Junior Subordinated Debentures in accordance
with the Declaration.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
Preferred Securities that are owned at such time by the Company or any entity
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, the Company, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Trust
Preferred Securities were not outstanding.
The procedures by which holders of Trust Preferred Securities may exercise
their voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Company Trustees, who may be appointed, removed or replaced solely by
MCN as the indirect or direct holder of all of the Trust Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee or the Delaware
Trustee), provided, that if any proposed amendment provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Trust Securities, whether by
way of amendment to the Declaration or otherwise or (ii) the dissolution,
winding-up or termination of the Trust other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote
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on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of at least a majority in liquidation amount
of the Trust Securities affected thereby; provided, that if any amendment or
proposal referred to in clause (i) above would adversely affect only the Trust
Preferred Securities or the Trust Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of a majority in
liquidation amount of such class of securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of the Trust under the Trust Preferred
Securities or (y) substitutes for the Trust Preferred Securities other
securities having substantially the same terms as the Trust Securities (the
"Successor Securities"), so long as the Successor Securities rank the same as
the Trust Securities with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Institutional Trustee as the holder of the Junior Subordinated Debentures, (iii)
if the Trust Preferred Securities are listed any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
with another organization on which the Trust Preferred Securities are then
listed or quoted, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Trust Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity), (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation or replacement,
the Company has received an opinion of a nationally recognized independent
counsel to the Trust experienced in such matters to the effect that, (A) such
merger, consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act and (C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the successor entity) will continue
to be classified as a grantor trust for federal income tax purposes, and (viii)
the Company guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee and the
Common Securities Guarantee (as described in the accompanying Prospectus).
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
such consolidation, amalgamation, merger or replacement would cause the Trust or
the successor entity to be classified as other than a grantor trust for federal
income tax purposes.
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BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depositary will act as securities depositary for the Trust Preferred
Securities. The Trust Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global Trust Preferred
Securities certificates, representing the total aggregate number of Trust
Preferred Securities, will be issued and will be deposited with the Depositary.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Trust
Preferred Securities as represented by a global certificate.
Purchases of Trust Preferred Securities within the Depositary's system must
be made by or through Direct Participants, which will receive a credit for the
Trust Preferred Securities on the Depositary's records. The ownership interest
of each actual purchaser of each Trust Preferred Security (a "Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from the Depositary of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Trust Preferred Securities. Transfers of
ownership interests in the Trust Preferred Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial owners will not receive certificates representing their ownership
interests in the Trust Preferred Securities, except in the event that use of the
book-entry system for the Trust Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Trust Preferred Securities
deposited by Participants with the Depositary are registered in the name of the
Depositary's nominee, Cede & Co. The deposit of Trust Preferred Securities with
the Depositary and their registration in the name of Cede & Co. effect no change
in beneficial ownership. The Depositary has no knowledge of the actual
Beneficial Owners of the Trust Preferred Securities. The Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Trust Preferred Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
So long as the Depositary or its nominee is the registered owner or holder
of a Global Certificate, the Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Trust Preferred Securities
represented thereby for all purposes under the Declaration and the Trust
Preferred Securities. No beneficial owner of an interest in a Global Certificate
will be able to transfer that interest except in accordance with the Depositary
applicable procedures, in addition to those provided for under the Declaration.
The Depositary has advised the Company that it will take any action
permitted to be taken by a holder of Trust Preferred Securities (including the
presentation of Trust Preferred Securities for exchange as described below) only
at the direction of one or more Participants to whose account the Depositary's
interests in the Global Certificates are credited and only in respect of such
portion of the aggregate liquidation amount of Trust Preferred Securities as to
which such Participant or Participants has or have given such directions.
However, if there is an Event of Default under the Trust Preferred Securities,
the Depositary will exchange the Global Certificates for Certificated
Securities, which it will distribute to its Participants.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants or Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither the Depositary nor Cede & Co.
will itself consent or vote with respect to Trust Preferred Securities. Under
its usual procedures, the Depositary would mail an Omnibus Proxy to the Trust as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.
consenting or voting rights to those Direct Participants to whose accounts the
Trust Preferred Securities are credited on the record date
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(identified in a listing attached to the Omnibus Proxy). The Company and the
Trust believe that the arrangements among the Depositary, Direct and Indirect
Participants, and Beneficial Owners will enable the Beneficial Owners to
exercise rights equivalent in substance to the rights that can be directly
exercised by a recordholder of a beneficial interest in the Trust.
Distribution payments on the Trust Preferred Securities will be made to the
Depositary in immediately available funds. The Depositary's practice is to
credit Direct Participants' accounts on the relevant payment date in accordance
with their respective holdings shown on the Depositary's records unless the
Depositary has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of the
Depositary, the Trust or the Company, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment of
distributions to the Depositary is the responsibility of the Trust, disbursement
of such payments to Direct Participants is the responsibility of the Depositary,
and disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Trust Preferred
Security certificate will not be entitled to receive physical delivery of Trust
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of the Depositary to exercise any rights under the Trust Preferred
Securities.
Although the Depositary has agreed to the foregoing procedure in order to
facilitate transfer of interest in the Global Certificates among Participants of
the Depositary, the Depositary is under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
None of the Company, the Trust or any Trustee will have any responsibility for
the performance by the Depositary or its Participants or Indirect Participants
under the rules and procedures governing the Depositary. The Depositary may
discontinue providing its services as securities depositary with respect to the
Trust Preferred Securities at any time by giving reasonable notice to the Trust.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Trust Preferred Securities certificates are required to be printed
and delivered to holders. Additionally, the Regular Trustees (with the consent
of the Company) may decide to discontinue use of the system of book-entry
transfers through the Depositary (or any successor depositary) with respect to
the Trust Preferred Securities. In that event, certificates for the Trust
Preferred Securities will be printed and delivered to holders. In each of the
above circumstances, the Company will, appoint a paying agent with respect to
the Preferred Securities.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that MCN and the
Trust believe to be reliable, but neither MCN nor the Trust takes responsibility
for the accuracy hereof.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to the Depositary, which shall credit the
relevant accounts at the Depositary on the applicable distribution dates or, in
the case of Certificated Securities, such payments shall be made by check mailed
to the address of the holder entitled thereto as such address shall appear on
the Register. The Paying Agent shall be permitted to resign as Paying Agent upon
30 days' written notice to the Issuer Trustees. In the event that Wilmington
Trust Company shall no longer be the Paying Agent, the Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
The Institutional Trustee will act as registrar, transfer agent and paying
agent for the Trust Preferred Securities.
Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (the giving of
such indemnity as the Trust or the Company may require) in respect of any tax or
other government charge which may be imposed in relation to it.
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The Trust will not be required to register or cause to be registered the
transfer of Trust Preferred Securities after such Trust Preferred Securities
have been called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at the
request of any holder of Trust Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The holders of Trust Preferred Securities will not be
required to offer such indemnity in the event such holders, by exercising their
voting rights, direct the Institutional Trustee to take any action it is
empowered to take under the Declaration following a Declaration Event of
Default. The Institutional Trustee also serves as trustee under the Guarantee.
GOVERNING LAW
The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
federal income tax purposes. The Company is authorized and directed to conduct
its affairs so that the Junior Subordinated Debentures will be treated as
indebtedness of the Company for federal income tax purposes. In this connection,
the Company and the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Trust or the
certificate of incorporation of the Company, that each of the Company and the
Regular Trustees determines in its discretion to be necessary or desirable to
achieve such end, as long as such action does not adversely affect the interests
of the holders of the Trust Preferred Securities or vary the terms thereof.
Holders of the Trust Preferred Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Pursuant to the Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
Trust Preferred Securities issued by the Trust, the Guarantee Payments (as
defined in the accompanying Prospectus) (except to the extent paid by the
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which the Trust may have or assert. The Company's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of Trust Preferred Securities or by
causing the Trust to pay such amounts to such holders. The Guarantee will be
qualified as an indenture under the Trust Indenture Act. Wilmington Trust
Company will act as indenture trustee under the Guarantee. The terms of the
Guarantee will be those set forth in such Guarantee and those made part of such
Guarantee by the Trust Indenture Act. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Trust Preferred
Securities. Notwithstanding the foregoing, if the Company has failed to make a
payment under the Guarantee, any holder of Trust Preferred Securities may
institute a legal proceeding directly against the Company to enforce its rights
under the Guarantee without first instituting a legal proceeding directly
against the Trust, the Guarantee Trustee or any other person or entity. A
summary description of the Guarantee appears in the accompanying Prospectus
under the caption "Description of the Preferred Securities Guarantees."
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Junior Subordinated
Debentures set forth in the accompanying Prospectus under the caption
"Particular Terms of the Subordinated Debt Securities." The following
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the description in the accompanying Prospectus
and the Subordinated Debt Securities Indenture, dated as of September 1, 1994
(as supplemented by the First Supplemental Indenture, dated April 17, 1996, and
the Second Supplemental Indenture, dated July 24, 1996, as so supplemented, the
"Base Indenture") between the Company and NBD Bank, N.A., (now known as NBD
Bank, a Michigan banking corporation) as Trustee (the "Debt Trustee"), as
supplemented by a Third Supplemental Indenture, dated as of , 1997
(the Base Indenture, as so supplemented, is hereinafter referred to as the
"Indenture"). Certain capitalized terms used herein are defined in the
Indenture.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Junior Subordinated Debentures may
be distributed to the holders of the Trust Securities in liquidation of the
Trust. See "Description of the Trust Preferred Securities -- Special Event
Distribution."
GENERAL
The Junior Subordinated Debentures will be issued as unsecured debt under
the Indenture. The Junior Subordinated Debentures will be limited in aggregate
principal amount to $ , such amount being the sum of the aggregate
stated liquidation of the Trust Preferred Securities and the capital contributed
by the Company in exchange for the Common Securities (the "Company Payment").
The Junior Subordinated Debentures are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and Additional
Interest (as defined herein), if any, on May , 2002.
If Junior Subordinated Debentures are distributed to holders of Trust
Preferred Securities in liquidation of such holders' interests in the Trust,
such Junior Subordinated Debentures will initially be issued as a Global
Security (as defined herein). As described herein, under certain limited
circumstances, Junior Subordinated Debentures may be issued in certificated form
in exchange for a Global Security. See "-- Book-Entry and Settlement" below. In
the event that Junior Subordinated Debentures are issued in certificated form,
such Junior Subordinated Debentures will be in denominations of $50 and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Junior Subordinated Debentures issued as a Global Security
will be made to the Depositary, a successor depositary or, in the event that no
depositary is used, to a Paying Agent for the Junior Subordinated Debentures. In
the event Junior Subordinated Debentures are issued in certificated form,
principal and interest will be payable, the transfer of the Junior Subordinated
Debentures will be registrable and Junior Subordinated Debentures will be
exchangeable for Junior Subordinated Debentures of other denominations of a like
aggregate principal amount at the corporate trust office of the Institutional
Trustee in Wilmington, Delaware; provided, that at the option of the Company,
payment of interest may be made by check mailed to the address of the holder
entitled thereto or by wire transfer to an account appropriately designated by
the holder entitled thereto. Notwithstanding the foregoing, so long as the
holder of any Junior Subordinated Debentures is the Institutional Trustee, the
payment of principal and interest on the Junior Subordinated Debentures held by
the Institutional Trustee will be made at such place and to such account as may
be designated by the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction involving the Company.
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SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all Senior Indebtedness of the
Company and pari passu with Company trade creditors and other junior
subordinated debentures issued by the Company. No payment of principal, premium,
if any, or interest on the Junior Subordinated Debentures may be made if (i) any
Senior Indebtedness of the Company is not paid when due, (ii) any applicable
grace period with respect to such default has ended and such default has not
been cured or waived or ceased to exist, or (iii) the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default. Upon any
distribution of assets of the Company to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due or to become due on all Senior Indebtedness of
the Company must be paid in full before the holders of Junior Subordinated
Debentures are entitled to receive or retain any payment. Upon satisfaction of
all claims of all Senior Indebtedness then outstanding, the rights of the
holders of the Junior Subordinated Debentures will be subrogated to the rights
of the holders of Indebtedness of the Company to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Junior Subordinated Debentures are paid in full.
The term "Senior Indebtedness" means the principal of and premium, if any,
and interest on the following, whether outstanding on the date of execution of
the Subordinated Debt Securities Indenture or thereafter incurred or created:
(i) indebtedness of the Company for money borrowed by the Company (including
purchase money obligations with an original maturity in excess of one year) or
evidenced by debentures (other than the Subordinated Debt Securities), notes,
bankers' acceptances or other corporate debt securities or similar instruments
issued by the Company; (ii) obligations with respect to letters of credit; (iii)
indebtedness of the Company constituting a guarantee of indebtedness of others
of the type referred to in the preceding clauses (i) and (ii); or (iv) renewals,
extensions or refundings of any of the indebtedness referred to in the preceding
clauses (i), (ii) and (iii) unless, in the case of any particular indebtedness,
renewal, extension or refunding, under the express provisions of the instrument
creating or evidencing the same, or pursuant to which the same is outstanding,
such indebtedness or such renewal extension or refunding thereof is not superior
in right of payment to the Subordinated Debt Securities. In November 1994, MCN
issued approximately $101 million Series A Subordinated Deferrable Interest Debt
Securities to MCN Michigan Limited Partnership that rank pari passu with the
Junior Subordinated Debentures and in July 1996, MCN issued approximately $82
million of junior subordinated debentures due July 30, 2036 (the "8 5/8%
Debentures") to MCN Financing I that also rank pari passu with the Junior
Subordinated Debentures.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by the Company. As of December 31, 1996, Senior Indebtedness
of the Company aggregated approximately $1,673 million.
INTEREST
Each Junior Subordinated Debenture shall bear interest at the rate of %
per annum from the original date of issuance, payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year (each an "Interest
Payment Date"), commencing June 30, 1997, to the person in whose name such
Junior Subordinated Debenture is registered, subject to certain exceptions, at
the close of business on the Business Day next preceding such Interest Payment
Date. In the event the Junior Subordinated Debentures shall not continue to
remain in book-entry only form, the Company shall have the right to select
record dates, which shall be more than one Business Day but less than 60
Business Days prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed,
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a
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Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, then such payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed a number of changes to federal income tax
laws. One proposal would treat as equity, for U.S. federal income tax purposes,
debt instruments with a maximum term of more than 15 years that are not shown as
indebtedness on the issuer's consolidated balance sheet. Another proposal would
preclude the issuer from deducting interest on debt instruments payable in stock
of the issuer. A debt instrument would be treated as payable in stock of the
issuer if it were part of an arrangement designed to result in payment of debt
with such stock, such as certain issuances of a forward contract in connection
with the issuance of debt. Neither proposal, if enacted into law in its current
form, would be effective for debt instruments issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the tax
treatment of the Junior Subordinated Debentures or cause a Tax Event, resulting
in the distribution of the Junior Subordinated Debentures to holders of Trust
Preferred Securities. See "Description of the Trust Preferred Securities --
Special Event Distribution."
REDEMPTION
The Company will not have the ability to redeem the Junior Subordinated
Debentures prior to the stated maturity date.
PUT OPTION
In accordance with the terms of the Junior Subordinated Debentures, holders
have the right to require the Company to repurchase, on the Purchase Contract
Settlement Date, either in whole or in part, the Junior Subordinated Debentures
at an amount per Junior Subordinated Debenture equal to $50, plus accumulated
and unpaid distributions, if any (the "Put Option"). See "Description of
Purchase Contracts -- General."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, during
the term of the Junior Subordinated Debentures, to defer payments of interest by
extending the interest payment period for a period not extending, in the
aggregate, beyond the maturity date of the Junior Subordinated Debentures. At
the end of any Extension Period, the Company shall pay all interest then accrued
and unpaid (including any Additional Interest, as herein defined) together with
interest thereon compounded quarterly at the rate specified for the Junior
Subordinated Debentures to the extent permitted by applicable law ("Compound
Interest"); provided, that during any such Extension Period, (a) the Company
shall not declare or pay dividends on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to any of
its capital stock (other than (i) purchases or acquisitions of shares of the
Company Common Stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans or the satisfaction by MCN of its
obligations pursuant to any contract or security outstanding on the date of such
event requiring MCN to purchase shares of MCN Common Stock, (ii) as a result of
a reclassification of the Company capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company capital stock or (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such the Company capital stock or the security being converted or
exchanged) or make any guarantee payments with respect to the foregoing), (b)
the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Company that rank pari passu with or junior to the
Junior Subordinated Debentures, and (c) the Company shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Trust
Preferred Securities Guarantee). Prior to the termination of any such Extension
Period, the Company may further defer payments of interest by extending the
interest payment period; provided, however, that such
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Extension Period, including all such previous and further extensions, may not
extend beyond the maturity date of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the terms set forth in
this section. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company has no present intention of exercising
its right to defer payments of interest by extending the interest payment period
on the Junior Subordinated Debentures. If the Institutional Trustee shall be the
sole holder of the Junior Subordinated Debentures, the Company shall give the
Regular Trustees and the Institutional Trustee notice of its selection of such
Extension Period one Business Day prior to the earlier of (i) the date
distributions on the Trust Preferred Securities are payable or (ii) the date the
Regular Trustees are required to give notice, if applicable, to the New York
Stock Exchange (or other applicable self-regulatory organization) or to holders
of the Trust Preferred Securities of the record date or the date such
distribution is payable. The Regular Trustees shall give notice of the Company's
selection of such Extension Period to the holders of the Trust Preferred
Securities. If the Institutional Trustee shall not be the sole holder of the
Junior Subordinated Debentures, the Company shall give the holders of the Junior
Subordinated Debentures notice of its selection of such Extension Period ten
Business Days prior to the earlier of (i) the Interest Payment Date or (ii) the
date upon which the Company is required to give notice, if applicable, to the
New York Stock Exchange (or other applicable self-regulatory organization) or to
holders of the Junior Subordinated Debentures of the record or payment date of
such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Junior Subordinated Debentures such additional amounts as shall be
required so that the net amounts received and retained by the Trust after paying
any such taxes, duties, assessments or other governmental charges will be not
less than the amounts the Trust would have received had no such taxes, duties,
assessments or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debentures, will
have the right to declare the principal of and the interest on the Junior
Subordinated Debentures (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debentures. See "Particular Terms of the
Subordinated Debt Securities -- Events of Default and Notice Thereof" in the
accompanying Prospectus for a description of the Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders of
Trust Preferred Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debentures. See "Description of the Trust Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable, MCN acknowledges that a holder of
Trust Preferred Securities may directly institute a proceeding for enforcement
of payment to such holder directly of the principal of and interest on the
Junior Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Trust Preferred Securities of such holder on or after
the respective due date specified in the Junior Subordinated Debentures.
Notwithstanding any payments made to such holder of Trust Preferred Securities
by the Company in connection with a Direct Action, the Company shall remain
obligated to pay the principal of or interest on the Junior Subordinated Debt
Securities held by the Trust or the Institutional Trustee of the Trust, and the
Company shall be subrogated to the rights of the holder of such Trust Preferred
Securities with respect to payments on the Trust Preferred Securities to the
extent of any payments made by the Company to such holder in any Direct Action.
The holders of Trust Preferred Securities will not be able to exercise directly
any other remedy available to the holders of the Junior Subordinated Debentures.
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BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Trust Preferred Securities in connection with
the involuntary or voluntary dissolution, winding-up or liquidation of the Trust
as a result of the occurrence of a Special Event, the Junior Subordinated
Debentures will be issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the Depositary or its nominee.
Except under the limited circumstances described below, Junior Subordinated
Debentures represented by the Global Security will not be exchangeable for, and
will not otherwise be issuable as, Junior Subordinated Debentures in definitive
form. The Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of Trust
Preferred Securities in liquidation of such holders' interests in the Trust, the
Depositary will act as securities depositary for the Junior Subordinated
Debentures. For a description of the Depositary and the specific terms of the
depositary arrangements, see "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company." As of
the date of this Prospectus Supplement, the description therein of the
Depositary's book-entry system and the Depositary's practices as they relate to
purchases, transfers, notices and payments with respect to the Trust Preferred
Securities apply in all material respects to any debt obligations represented by
one or more Global Securities held by the Depositary. The Company may appoint a
successor to the Depositary or any successor depositary in the event the
Depositary or such successor depositary is unable or unwilling to continue as a
depositary for the Global Securities.
None of the Company, the Trust, the Institutional Trustee, any paying agent
and any other agent of the Company or the Debt Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Junior Subordinated Debentures or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the Depositary at any time, ceases to be a
clearing agency registered under the Exchange Act at which time the depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (iii) the Company, in its sole discretion,
determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Event of Default with respect to such Junior Subordinated
Debentures. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Junior Subordinated Debentures registered in
such names as the Depositary shall direct. It is expected that such instructions
will be based upon directions received by the Depositary from its Participants
with respect to ownership of beneficial interests in such Global Security.
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GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Company will pay all fees and expenses related to (i) the offering of
the Trust Securities and the Junior Subordinated Debentures, (ii) the
organization, maintenance and dissolution of the Trust, (iii) the retention of
the Company Trustees and (iv) the enforcement by the Institutional Trustee of
the rights of the holders of the Trust Preferred Securities. The payment of such
fees and expenses will be fully and unconditionally guaranteed by the Company.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, and to invest the proceeds from such issuance and sale in the Junior
Subordinated Debentures and engage in only those other activities necessary or
incidental thereto.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Trust Preferred Securities; (iii)
MCN shall pay all, and the Trust shall not be obligated to pay, directly or
indirectly, all costs, expenses, debt, and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration further provides
that the MCN Trustees shall not take or cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes of
the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Trust Preferred Securities (to the extent funds
therefor are available) are guaranteed by MCN as and to the extent set forth
under "Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If MCN does not make interest payments on the Junior Subordinated
Debentures purchased by the Trust, it is expected that the Trust will not have
sufficient funds to pay distributions on the Trust Preferred Securities. The
Guarantee does not apply to any payment of distributions unless and until the
Trust has sufficient funds for the payment of such distributions. The Guarantee
covers the payment of distributions and other payments on the Trust Preferred
Securities only if and to the extent that MCN has made a payment of interest or
principal on the Junior Subordinated Debentures held by the Trust as its sole
asset.
If MCN fails to make interest or other payments on the Junior Subordinated
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Trust Preferred Securities --
Book-Entry Only Issuance -- The Depository Trust Company" and "-- Voting
Rights," may direct the Institutional Trustee to enforce its rights under the
Junior Subordinated Debentures. If the Institutional Trustee fails to enforce
its rights under the Junior Subordinated Debentures, a holder of Trust Preferred
Securities may institute a legal proceeding against MCN to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures without
first instituting any legal proceeding against the Institutional Trustee or any
other person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of MCN to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable, then a
holder of Trust Preferred Securities may directly institute a proceeding against
the Company for payment. MCN, under the Guarantee, acknowledges that the
Guarantee Trustee shall enforce the Guarantee on behalf of the holders of
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the Trust Preferred Securities. If MCN fails to make payments under the
Guarantee, the Guarantee provides a mechanism whereby the holders of the Trust
Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. Notwithstanding the foregoing, if the Company has failed to make a
payment under the Guarantee, any holder of Trust Preferred Securities may
institute a legal proceeding directly against MCN to enforce its rights under
the Guarantee without first instituting a legal proceeding against the Trust,
the Guarantee Trustee, or any other person or entity.
The Guarantee, when taken together with MCN's obligations under the Junior
Subordinated Debentures and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provide a full and unconditional guarantee of amounts due on the Trust Preferred
Securities. See "Description of the Preferred Securities Guarantees -- General"
in the accompanying Prospectus.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the material United States
("U.S.") federal income tax consequences of the purchase, ownership and
disposition of Income PRIDES, Trust Preferred Securities and Growth PRIDES. The
summary represents the opinion of Skadden, Arps, Slate, Meagher & Flom LLP
("Special Tax Counsel"), special tax counsel to the Company, insofar as it
relates to matters of law and legal conclusions. Unless otherwise stated, the
summary deals only with holders who purchase Income PRIDES upon their original
issuance for an amount equal to the Stated Amount of the Trust Preferred
Securities and who hold the Income PRIDES, or upon the substitution of Treasury
Securities, the Growth PRIDES and Trust Preferred Securities, as capital assets.
The summary does not address the federal income tax consequences of the
purchase, ownership or disposition of Treasury Securities. The summary deals
only with holders who are citizens or residents of the U.S., corporations,
partnerships or other entities organized in or under the laws of the U.S. or any
political subdivision thereof, or estates or trusts defined in Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended (the "Code"). The
summary does not address the tax considerations applicable to investors that may
be subject to special U.S. federal income tax treatment, such as dealers in
securities, persons holding the Income PRIDES, Growth PRIDES or Trust Preferred
Securities as part of a "straddle" or a "conversion transaction" for U.S.
federal income tax purposes or as part of a synthetic security or other
integrated investment, or persons who have a functional currency other than the
U.S. dollar, and does not address the tax consequences under state, local or
foreign law. The summary is based upon the Code, Treasury regulations thereunder
and administrative and judicial interpretations thereof as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
No statutory, judicial or administrative authority directly addresses the
characterization of the FELINE PRIDES or instruments similar to the FELINE
PRIDES for U.S. federal income tax purposes. As a result, no assurance can be
given that the IRS will agree with the tax consequences described herein.
ACCORDINGLY, A PROSPECTIVE INVESTOR (INCLUDING A TAX-EXEMPT INVESTOR) IN THE
FELINE PRIDES SHOULD CONSULT ITS TAX ADVISOR IN DETERMINING THE TAX CONSEQUENCES
OF AN INVESTMENT IN THE FELINE PRIDES, INCLUDING THE APPLICATION OF STATE,
LOCAL, FOREIGN OR OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL
OR OTHER TAX LAWS.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Preferred Securities, Special
Tax Counsel will render an opinion generally to the effect that, under current
law and assuming full compliance with the terms of the Trust Agreement, the
Indenture, and certain other documents, and based upon certain facts and
assumptions contained in such opinion, the Trust will be classified, for U.S.
federal income tax purposes, as a grantor trust and not as an association
taxable as a corporation. Accordingly, for U.S. federal income tax purposes,
each holder of Trust Preferred Securities generally will be treated as the owner
of an undivided beneficial interest in the Junior Subordinated Debentures and,
as further discussed below, will be required to include in ordinary income such
holder's allocable share of interest or OID paid or accrued on the Junior
Subordinated Debentures.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures,
Special Tax Counsel will render an opinion generally to the effect that, under
current law and assuming full compliance with the terms of the Indenture and
certain other documents, and based upon certain facts and assumptions contained
in such opinion, the Junior Subordinated Debentures to be held by the Trust will
be classified, for U.S. federal income tax purposes, as indebtedness of the
Company.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed a number of changes to federal income tax
laws. One proposal would treat as equity, for U.S. federal income tax purposes,
debt instruments with a maximum term of more than 15 years that are not shown as
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indebtedness on the issuer's consolidated balance sheet. Another proposal would
preclude the issuer from deducting interest on debt instruments payable in stock
of the issuer. A debt instrument would be treated as payable in stock of the
issuer if it were part of an arrangement designed to result in payment of debt
with such stock, such as certain issuances of a forward contract in connection
with the issuance of debt. Neither proposal, if enacted into law in its current
form, would be effective for debt instruments issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the tax
treatment of the Junior Subordinated Debentures or cause a Tax Event, resulting
in the distribution of the Junior Subordinated Debentures to holders of Trust
Preferred Securities. See "Description of the Trust Preferred Securities --
Special Event Distribution."
INITIAL TAX BASIS IN TRUST PREFERRED SECURITY AND PURCHASE CONTRACT
The purchase price of each Income PRIDES will be allocated between the
Trust Preferred Security and the Purchase Contract included in a Income PRIDES
in proportion to their respective fair market values at the time of purchase.
Such allocation will establish the Holder's initial tax basis in the Trust
Preferred Security and Purchase Contract.
The Company intends to take the position that, at the time of issuance of
the Income PRIDES, the fair market value of each Trust Preferred Security equals
its Stated Amount and the fair market value of each Purchase Contract equals
zero. As a result, a holder should allocate the entire purchase price for a
Income PRIDES (i.e., the Stated Amount of a Trust Preferred Security) to the
Trust Preferred Security and should not allocate any portion of the purchase
price to the Purchase Contract. The Company's position will be binding upon each
holder unless the holder explicitly discloses a contrary position on a statement
attached to the holder's timely filed U.S. federal income tax return for the
taxable year in which the Income PRIDES is acquired.
DISTRIBUTIONS ON TRUST PREFERRED SECURITIES
Under applicable Treasury regulations, a debt instrument will be issued
with OID if there is more than a remote contingency that periodic stated
interest payments due on the instrument will not be timely paid. Because the
exercise by the Company of its option to defer the payment of stated interest on
the Junior Subordinated Debentures would, among other things, prevent the
Company from declaring dividends on any of its capital stock, the Company
believes that the likelihood of its exercising the option is remote within the
meaning of such regulations. As a result, the Company intends to take the
position, based upon the advice of Special Tax Counsel, that the Junior
Subordinated Debentures will not be issued with OID. Accordingly, based upon
this position, a holder of Trust Preferred Securities will include stated
interest payments on the Junior Subordinated Debentures in ordinary income at
the time that such payments are paid or accrued, in accordance with such
holder's regular method of accounting. Because such regulations have not yet
been addressed in any published rulings or other published interpretations
issued by the IRS, it is possible that the IRS could take a position contrary to
the position taken by the Company.
If the Company were to exercise its option to defer the payment of stated
interest on the Junior Subordinated Debentures, the Junior Subordinated
Debentures would be treated, solely for purposes of the OID rules, as being
re-issued at such time with OID. Under these rules, a holder of Trust Preferred
Securities would be required to include OID in ordinary income, on a current
basis, over the period that the Trust Preferred Securities are held even though
the Company would not make actual cash payments during the extended interest
payment period. The amount of OID includible in the taxable income of a holder
of Trust Preferred Securities would be determined on the basis of a constant
yield method over the remaining term of the instrument, and the actual payment
of stated interest on the Junior Subordinated Debentures would not be separately
reported as taxable income. The amount of OID that would accrue, in the
aggregate, during an extended interest payment period would approximately equal
the amount of the cash payment due at the end of such period. Any OID included
in income would increase such holder's tax basis in the Trust Preferred Security
and actual payments of stated interest would reduce such tax basis.
Because income on the Trust Preferred Securities will constitute interest
for U.S. federal income tax purposes, corporate holders of Trust Preferred
Securities will not be entitled to a dividends-received deduction in respect of
such income.
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CONTRACT ADJUSTMENT PAYMENTS
There is no authority for the treatment of the Contract Adjustment Payments
under current law. For U.S. federal income tax information reporting purposes,
the Company intends to report the Contract Adjustment Payments and the Deferred
Contract Adjustment Payments (if any) in the taxable year in which they are paid
to holders. The Company intends to take the position that the Contract
Adjustment Payments constitute taxable income to holders when received or
accrued, in accordance with the holder's regular method of accounting. Holders
should consult their respective tax advisors concerning the treatment of the
Contract Adjustment Payments and Deferred Contract Adjustment Payments,
including the possibility that the receipt of a Contract Adjustment Payments may
be treated as a loan, purchase price adjustment, rebate or option premium rather
than being includible in income on a current basis. The Company does not intend
to deduct the Contract Adjustment Payments or Deferred Contract Adjustment
Payments because it views them as a cost of issuing the Common Stock. Contract
Adjustment Payments and Deferred Contract Adjustment Payments received by a
regulated investment company should be treated as income derived with respect to
such company's business of investing in stocks and securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES UPON LIQUIDATION OF THE TRUST
If the Company exercises its right to liquidate the Trust and cause the
Junior Subordinated Debentures to be distributed, on a pro rata basis, to
holders of Trust Preferred Securities (or to the Collateral Agent on behalf of
such holders), such distribution would not be taxable to such holders. In such
event, each holder of Trust Preferred Securities would have a tax basis in the
Junior Subordinated Debentures received in the liquidation equal to the tax
basis in the holder's Trust Preferred Securities surrendered therefor, and the
holding period of such Junior Subordinated Debentures would include the period
during which the holder had held the Trust Preferred Securities. If, however,
the Trust is classified, for U.S. federal income tax purposes, as an association
taxable as a corporation at the time of such liquidation, the distribution of
Junior Subordinated Debentures would constitute a taxable event to holders of
Trust Preferred Securities.
POSTING OF TREASURY SECURITIES TO CREATE GROWTH PRIDES
A holder of an Income PRIDES that chooses to substitute a Treasury Security
for Trust Preferred Securities held by the Collateral Agent generally will not
recognize taxable gain or loss upon release of the Trust Preferred Securities to
the holder, and the holder's tax basis in the Trust Preferred Securities and
Purchase Contract will remain unchanged. In general, the substitution of the
Treasury Security should not constitute a taxable event (except with respect to
a holder who, because of the holder's particular tax status or the circumstances
under which the holder holds the Treasury Security, may be subject to tax, such
as a person who holds the Treasury Security as part of a "straddle" or a
"conversion transaction" for U.S. federal income tax purposes). Such holder will
continue to include in income any OID or market discount or amortize any bond
premium otherwise includible or deductible, respectively, by such holder with
respect to such Treasury Security. Holders should consult their respective tax
advisors concerning the tax consequences of purchasing, owning and disposing of
Treasury Securities.
POSTING OF TRUST PREFERRED SECURITIES TO RECREATE INCOME PRIDES
A holder of a Growth PRIDES that delivers Trust Preferred Securities to the
Collateral Agent generally will not recognize taxable gain or loss upon release
of the Treasury Security to the holder.
SALE OR DISPOSITION
A holder generally will recognize gain or loss upon the sale or other
disposition of an Income PRIDES, a Growth PRIDES or a Trust Preferred Security
(including a redemption of a Trust Preferred Security by the Trust). In the case
of an Income PRIDES or a Growth PRIDES, such gain or loss will be separately
calculated with respect to the Trust Preferred Security or Treasury Security, as
the case may be, and the related Purchase Contract by allocating the sum of any
cash and the fair market value of any property received upon the sale or other
disposition between the two components in proportion to their respective fair
market
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values. The amount of gain or loss with respect to each component generally
should equal the difference between the amount so allocated to each component
(reduced by any amount attributable to accrued interest or Contract Adjustment
Payments, which will be taxable as described above) and the holder's tax basis
in the respective components. In the case of a Trust Preferred Security, the
amount of gain or loss will equal the difference between the sum of any cash and
the fair market value of any property received upon the sale or other
disposition of such Trust Preferred Security (reduced by any amount attributable
to accrued interest or Contract Adjustment Payments, which will be taxable as
described above) and the holder's tax basis in the Trust Preferred Security. Any
such gain or loss generally will be capital gain or loss and will be long-term
capital gain or loss (determined separately for each component of an Income
PRIDES or a Growth PRIDES and for a Trust Preferred Security) if the holder held
the respective component of the Income PRIDES or Growth PRIDES or the Trust
Preferred Security, as the case may be, for more than one year at the time of
such sale or disposition.
PURCHASE OF COMMON STOCK UNDER PURCHASE CONTRACT
A holder of an Income PRIDES that directs the Trust to put its Junior
Subordinated Debenture to the Company on the Purchase Contract Settlement Date
will not recognize taxable gain or loss upon the exercise of such Put Option
because the holder's tax basis in its Trust Preferred Security should equal the
amount received (the Stated Amount) and be automatically applied to the holder's
purchase of the Common Stock. A holder of an Income PRIDES will not recognize
taxable gain or loss upon the tender of cash to settle the Purchase Contract and
the release of the Trust Preferred Security to such holder. A holder of a Growth
PRIDES will not recognize taxable gain or loss upon the tender of cash to settle
the Purchase Contract early and the release of the Treasury Securities to such
holder. A holder of a Growth PRIDES will recognize taxable gain or loss upon the
automatic application of the Treasury Security to settle the Purchase Contract
on the Purchase Contract Settlement Date equal to the difference, if any,
between the fair market value of the Treasury Security automatically applied to
purchase the Common Stock and the holder's tax basis in such Treasury Security.
A holder's tax basis in the Common Stock will equal the purchase price for
such Common Stock plus the holder's tax basis, if any, in the Purchase Contract.
The holding period for the Common Stock will begin on the day after the purchase
of such Common Stock.
OWNERSHIP OF COMMON STOCK ACQUIRED UNDER PURCHASE CONTRACT
Assuming that the Company has current or accumulated earnings and profits,
for U.S. federal income tax purposes, at least equal to the amount of any
dividend, a holder of Common Stock will include such a dividend in income when
paid, and the dividend will be eligible for the dividends-received deduction if
received by an otherwise qualifying corporate holder that meets the holding
period and other requirements for such deduction.
Upon the sale or other disposition of the Common Stock, a holder will
recognize gain or loss equal to the difference between the amount of cash and
fair market value of any property received and the holder's tax basis in such
Common Stock. Any such gain or loss generally will be capital gain or loss and
will be long-term capital gain or loss if the holder held the Common Stock for
more than one year at the time of such sale or disposition.
ADJUSTMENT OF SETTLEMENT RATE
Holders of Income PRIDES or Growth PRIDES might be treated as receiving a
constructive distribution from the Company if (i) the Settlement Rate is
adjusted and, as a result of such adjustment, the proportionate interest of such
holders in the assets or earnings and profits of the Company is increased, and
(ii) the adjustment is not made pursuant to a bona fide, reasonable antidilution
formula. An adjustment in the Settlement Rate would not be considered made
pursuant to such a formula if the adjustment were made to compensate for certain
taxable distributions with respect to the Common Stock. Thus, although not
currently anticipated, under certain circumstances, an increase in the
Settlement Rate may be taxable to holders of Income PRIDES and Growth PRIDES as
a dividend to the extent of the current accumulated earnings and profits of the
Company. Each Holder would be required to include its allocable share of such
constructive dividend in gross income but would not receive any cash related
thereto.
S-53
<PAGE> 131
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
(the "Underwriting Agreement") among the Company, the Trust and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Salomon Brothers Inc, Smith Barney Inc. and Ladenburg Thalmann &
Co. Inc., who are acting as representatives (the "Representatives") for the
underwriters named below (the "Underwriters"), the Company and the Trust have
agreed to sell to the Underwriters, and each of the Underwriters severally has
agreed to purchase from the Company and the Trust, the number of Income PRIDES
set forth opposite each Underwriter's name. In the Underwriting Agreement, the
several Underwriters severally have agreed, subject to the terms and conditions
set forth therein, to purchase all of the Income PRIDES offered hereby if any of
the Income PRIDES are purchased. In the event of default by an Underwriter, the
Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS INCOME PRIDES
------------ -------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Salomon Brothers Inc .......................................
Smith Barney Inc. ..........................................
Ladenburg Thalmann & Co. Inc. ..............................
---------
Total............................................. 2,300,000
=========
</TABLE>
The Representatives have advised the Company and the Trust that they
propose initially to offer the Income PRIDES to the public at the public
offering price set forth on the cover page of this Prospectus Supplement and to
certain dealers at such price less a concession not in excess of $ per
Income PRIDES. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of $ per Income PRIDES on sales to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
Until the distribution of the Securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
any selling group members to bid for and purchase the Securities or shares of
Common Stock. As an exception to these rules, the Representatives are permitted
to engage in certain transactions that stabilize the price of the Securities or
the Common Stock. Such transactions consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the Securities or the Common
Stock.
If the Underwriters create a short position in the Securities in connection
with the Offering, i.e., if they sell more Securities than are set forth on the
cover page of this Prospectus, the Representatives may reduce that short
position by purchasing Securities in the open market. The Representatives may
also elect to reduce any short position by exercising all or part of the
over-allotment option described below.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
Securities in the open market to reduce the Underwriters' short position or to
stabilize the price of the Securities, they may reclaim the amount of the
selling concession from the Underwriters and any selling group members who sold
those Securities as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition
S-54
<PAGE> 132
of a penalty bid might also have an effect on the price of a security to the
extent that it were to discourage resales of the security.
Neither the Company, the Trust nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Securities or the
Common Stock. In addition, neither the Company, the Trust nor any of the
Underwriters makes any representation that the Representatives will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.
The Company and the Trust have granted to the Underwriters an option,
exercisable for 30 days following the date of this Prospectus Supplement, to
purchase up to an aggregate of additional 345,000 Income PRIDES from the Company
and the Trust, at the price to the public set forth on the cover page of this
Prospectus Supplement, less the underwriting discount. The Underwriters may
exercise this option only to cover over-allotments, if any, made on the sale of
the Income PRIDES offered hereby. If the Underwriters exercise their
over-allotment option, each of the Underwriters has severally agreed, subject to
certain conditions, to effect the foregoing transactions with respect to
approximately the same percentage of such Income PRIDES that the respective
number of Income PRIDES set forth opposite its name in the foregoing table bears
to the Income PRIDES offered hereby.
The Company and the Trust have agreed, for a period of days after the
date of this Prospectus Supplement, to not, without the prior written consent of
Merrill Lynch, Pierce, Fenner and Smith Incorporated, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or otherwise dispose of,
or enter into any agreement to sell, any Income PRIDES, Purchase Contracts,
Trust Originated Preferred Securities or Common Stock, as the case may be, or
any securities of the Company similar to the Income PRIDES, Purchase Contracts,
Trust Originated Preferred Securities or Common Stock or any security
convertible into or exchangeable or exercisable for Income PRIDES, Purchase
Contracts, Trust Originated Preferred Securities or Common Stock other than to
the Underwriters pursuant to the Underwriting Agreement, other than shares of
Common Stock or options for shares of Common Stock issued pursuant to or sold in
connection with any employee benefit, dividend reinvestment and stock option and
stock purchase plans of the Company and its subsidiaries and other than the
Growth PRIDES or shares of Common Stock issuable upon early settlement of the
Income PRIDES or exercise of stock options.
Prior to this offering, there has been no public market for the Income
PRIDES. The public offering price for the Income PRIDES was determined in
negotiations between the Company, the Trust and the Representatives. In
determining the terms of the Income PRIDES, including the public offering price,
the Company, the Trust and the Representatives considered the market price of
the Company's Common Stock and also considered the Company's recent results of
operations, the future prospects of the Company and the industry in general,
market prices and terms of, and yields on, securities of other companies
considered to be comparable to the Company and prevailing conditions in the
securities markets. Application has been made to list the Income PRIDES on the
NYSE under the symbol "MCN prI." The Growth PRIDES and the Trust Preferred
Securities will not be listed or traded on any securities exchange. The Company
and the Trust have been advised by the Representatives that they presently
intend to make a market for the Growth PRIDES and the Trust Preferred
Securities; however, they are not obligated to do so and any market making may
be discontinued at any time. There can be no assurance that an active trading
market will develop for the Income PRIDES, the Growth PRIDES or the Trust
Preferred Securities or that the Income PRIDES will trade in the public market
subsequent to the offering at or above the initial public offering price.
The Company has agreed to indemnify the Underwriters against, or to
contribute to payments that the Underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, MCN and its subsidiaries in the ordinary
course of business.
S-55
<PAGE> 133
LEGAL MATTERS
The validity of the Purchase Contracts, the Common Stock issuable upon
settlement thereof, the Indenture, the Guarantee, the Junior Subordinated
Debentures and certain matters relating thereto will be passed upon for MCN by
Daniel L. Schiffer, Esq., Senior Vice President, General Counsel and Secretary
of MCN. Certain matters will be passed upon for the Company and the Trust by
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, which has also
acted as special tax counsel for the Company in connection with the Securities.
Certain matters of Delaware law relating to the validity of the Trust Preferred
Securities will be passed upon on behalf of the Trust by Skadden, Arps, Slate,
Meagher & Flom (Delaware), special Delaware counsel to the Trust. Certain legal
matters will be passed upon for the Underwriters by LeBoeuf, Lamb, Greene &
MacRae, L.L.P., New York, New York. Mr. Schiffer is a full-time employee and
officer of MCN and owned 23,941 shares of MCN Common Stock as of February 26,
1997. LeBoeuf, Lamb, Greene & MacRae, L.L.P., from time to time renders legal
services to the Company.
S-56
<PAGE> 134
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY MCN, MCN FINANCING III OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MCN OR MCN FINANCING
III SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Selected Historical Financial Information....... S-3
Prospectus Summary.............................. S-5
MCN Energy Group Inc. .......................... S-13
MCN Financing III............................... S-14
Risk Factors.................................... S-15
Price Range of Common Stock and Dividends....... S-19
Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and
Preferred Stock Dividends..................... S-20
Use of Proceeds................................. S-20
Capitalization.................................. S-21
Accounting Treatment............................ S-21
Description of the FELINE PRIDES................ S-22
Description of the Purchase Contracts........... S-24
Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement............ S-30
Description of the Trust Preferred Securities... S-33
Description of the Guarantee.................... S-42
Description of the Junior Subordinated
Debentures.................................... S-43
Effect of Obligations Under the Junior
Subordinated Debentures and the Guarantee..... S-48
Certain Federal Income Tax Consequences......... S-50
Underwriting.................................... S-54
Legal Matters................................... S-56
PROSPECTUS
Available Information........................... 3
Incorporation of Certain Documents by
Reference..................................... 4
MCN Energy Group Inc. .......................... 5
The MCN Trusts.................................. 5
Use of Proceeds................................. 6
Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and
Preferred Stock Dividends..................... 7
Description of MCN Debt Securities.............. 8
Particular Terms of the Senior Debt
Securities.................................... 12
Particular Terms of the Subordinated Debt
Securities.................................... 16
Description of MCN Capital Stock................ 20
Description of the MCN Trust Preferred
Securities.................................... 23
Description of the Preferred Securities
Guarantees.................................... 25
Effect of Obligations Under the Subordinated
Debt Securities and the Guarantee............. 27
Description of Stock Purchase Contracts and
Stock Purchase Units.......................... 28
Plan of Distribution............................ 29
Validity of Securities.......................... 30
Experts......................................... 30
</TABLE>
======================================================
======================================================
2,300,000 FELINE PRIDES(SM)
MCN ENERGY GROUP INC. LOGO
MCN Financing III
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
SMITH BARNEY INC.
LADENBURG THALMANN & CO. INC.
, 1997
(SM)Service Mark of Merrill Lynch & Co. Inc.
======================================================
<PAGE> 135
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 7, 1997
PROSPECTUS
$685,105,000
[MCN ENERGY GROUP INC. LOGO]
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
COMMON STOCK
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
------------------------
MCN FINANCING II
MCN FINANCING III
MCN FINANCING IV
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
MCN ENERGY GROUP INC.
------------------------
MCN Corporation, a Michigan Corporation, doing business as MCN Energy Group
Inc., ("MCN" or the "Company") may offer, from time to time, (i) unsecured
senior debt securities (the "Senior Debt Securities") consisting of debentures,
notes or other unsecured evidences of indebtedness, (ii) unsecured subordinated
debt securities (the "Subordinated Debt Securities") consisting of debentures,
notes and other unsecured evidence of indebtedness (item (i) or (ii) above being
referred to herein as the "Debt Securities"), (iii) Common Stock, $.01 par value
("MCN Common Stock"), (iv) Stock Purchase Contracts ("Stock Purchase Contracts")
to purchase Common Stock or (v) Stock Purchase Units ("Stock Purchase Units,"
"FELINE PRIDES(SM)," "Income PRIDES(SM)" or "Growth PRIDES(SM)"), each
representing ownership of a Stock Purchase Contract and Debt Securities or
Preferred Securities (as defined below) or debt obligations of third parties,
including U.S. Treasury Securities, securing the holder's obligation to purchase
the Common Stock under the Stock Purchase Contract, in each case in one or more
series and in amounts, at prices and on terms to be determined at or prior to
the time of sale.
MCN Financing II, MCN Financing III and MCN Financing IV (each, an "MCN
Trust"), each a statutory business trust formed under the laws of the State of
Delaware, may offer, from time to time, preferred securities, which may be
designated as preferred securities or capital securities, representing undivided
beneficial interests in the assets of the respective MCN Trust ("Preferred
Securities"). The payment of periodic cash distributions ("distributions") with
respect to Preferred Securities of each of the MCN Trusts out of moneys held by
each of the MCN Trusts, and payment on liquidation, redemption or otherwise with
respect to such Preferred Securities, will be guaranteed by MCN to the extent
described herein (each a "Guarantee"). See "Description of the Preferred
Securities Guarantees" below. MCN's obligations under the Preferred Securities
Guarantees are subordinate and junior in right of payment to all other
liabilities of MCN and rank pari passu with the most senior preferred stock, if
any, issued from time to time by MCN. Subordinated Debt Securities may be issued
and sold from time to time in one or more series to an MCN Trust, or a trustee
of such MCN Trust, in connection with the investment of the proceeds from the
offering of Preferred Securities and Common Securities (as defined herein) of
such MCN Trust. The Subordinated Debt Securities purchased by an MCN Trust may
be subsequently distributed pro rata to holders of Preferred Securities and
Common Securities in connection with the dissolution of such MCN Trust upon the
occurrence of certain events as may be described in an accompanying Prospectus
Supplement.
Specific terms of the particular Subordinated Debt Securities, the
Preferred Securities and the related Preferred Securities Guarantees, together
with the Stock Purchase Contracts, the Stock Purchase Units, the MCN Common
Stock and the Senior Debt Securities, in respect of which this Prospectus is
being delivered (the "Offered Securities") will be
(Continued on next page)
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE> 136
(Continued from cover)
set forth in an accompanying Prospectus Supplement or Supplements, together with
the terms of the offering of the Offered Securities, the initial price thereof
and the net proceeds from the sale thereof. The Prospectus Supplement will set
forth with regard to the particular Offered Securities, without limitation, the
following: (i) in the case of Debt Securities, the designation, aggregate
principal amount, denomination, maturity, premium, if any, any exchange,
conversion, redemption or sinking fund provisions, interest rate (which may be
fixed or variable), the time and method of calculating interest payments, the
right of the Company, if any, to defer payment or interest on the Subordinated
Debt Securities and the maximum length of such deferral period, put options, if
any, public offering price, ranking as senior or subordinated debt, any listing
on a securities exchange and other specific terms of the offering, (ii) in the
case of MCN Common Stock, the designation, number of shares, public offering
price and other specific terms of the offering, (iii) in the case of Preferred
Securities, the designation, number of securities, liquidation preference per
security, initial public offering price, any listing on a securities exchange,
dividend rate (or method of calculation thereof), dates on which dividends shall
be payable and dates from which dividends shall accrue, any voting rights, any
redemption, exchange or sinking fund provisions, any other rights, preferences,
privileges, limitations or restrictions relating to the Preferred Securities of
a specific series and the terms upon which the proceeds of the sale of the
Preferred Securities will be used to purchase a specific series of Subordinated
Debt Securities of MCN, (iv) in the case of Stock Purchase Contracts, the
designation and number of shares of Common Stock issuable thereunder, the
purchase price of Common Stock, the date or dates on which the Common Stock is
required to be purchased by the holders of the Stock Purchase Contracts, any
periodic payments required to be made by the Company to the holders of the Stock
Purchase Contract or visa versa, and the terms of the offering and sale thereof,
and (v) in the case of Stock Purchase Units, the specific terms of the Stock
Purchase Contracts and any Debt Securities or Preferred Securities or debt
obligations of third parties securing the holder's obligation to purchase the
Common Stock under the Stock Purchase Contracts, and the terms of the offering
and sale thereof. The Offered Securities may be offered in amounts, at prices
and on terms to be determined at the time of the offering, provided, however,
that the aggregate offering price to the public of the Offered Securities will
be limited to $685,105,000.
The Company's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "MCN". See "Description of MCN Capital Stock -- Price
Range of MCN Common Stock and Common Stock Dividends".
MCN and/or each of the MCN Trusts may sell the Offered Securities directly,
through agents designated from time to time or through underwriters or dealers.
See "Plan of Distribution." If any agents of MCN and/or any MCN Trust or any
underwriters or dealers are involved in the sale of the Offered Securities, the
names of such agents, underwriters or dealers and any applicable commissions and
discounts will be set forth in the related Prospectus Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
2
<PAGE> 137
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY
REFERENCE HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN OR
THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MCN OR THE MCN
TRUSTS OR BY ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS AND ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
AVAILABLE INFORMATION
MCN is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "1934 Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy statements and other information
concerning MCN can be inspected and copied at the SEC's Public Reference Room,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as the
following Regional Offices of the SEC: 7 World Trade Center, Suite 1300, New
York, New York 10048; and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549, at prescribed rates. The SEC also
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
The address of such site is http://www.sec.gov. Such reports, proxy statements
and other information may also be inspected at the offices of the NYSE, on which
MCN Common Stock is traded, at 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by MCN and the MCN Trusts with the SEC under the Securities
Act of 1933, as amended (the "Securities Act") with respect to the Offered
Securities. This Prospectus does not contain all of the information set forth in
such Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the SEC. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to MCN, the MCN Trusts, and the Offered Securities. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the SEC or
incorporated by reference herein are not necessarily complete, and in each
instance reference is made to the copy of such document so filed for a more
complete description of the matter involved. Each such statement is qualified in
its entirety by such reference.
No separate financial statements of any of the MCN Trusts have been
included herein. MCN does not consider that such financial statements would be
material to holders of the Preferred Securities because (i) all of the voting
securities of each of the MCN Trusts will be owned, directly or indirectly, by
MCN, a reporting company under the Exchange Act, (ii) each of the MCN Trusts has
no independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in the assets of such MCN Trust and
investing the proceeds thereof in Subordinated Debt Securities issued by MCN,
and (iii) MCN's obligations described herein and in any accompanying prospectus
supplement under the Declarations of each Trust, the Guarantee issued with
respect to Preferred Securities issued by that Trust, the Subordinated Debt
Securities purchased by that Trust and the related Indenture, taken together,
constitute a full and unconditional guarantee of payments due on the Trust
Securities. See "Particular Terms of the Subordinated Debt Securities" and
"Description of the Preferred Securities Guarantees."
The MCN Trusts are not currently subject to the information reporting
requirements of the 1934 Act. The MCN Trusts will become subject to such
requirements upon the effectiveness of the Registration Statement, although they
intend to seek and expect to receive exemptions therefrom.
3
<PAGE> 138
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by MCN (File No. 1-10070) with the SEC
pursuant to the 1934 Act are incorporated by reference herein and made a part
hereof:
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. The description of MCN's Common Stock as contained in its Form 8-B
dated September 29, 1988.
3. The description of MCN's Preferred Share Purchase Rights contained
in its Form 8-A dated December 28, 1989.
4. MCN's Current Report on Form 8-K dated January 14, 1997.
All documents filed by MCN pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the 1934 Act subsequent to the date hereof and prior to the termination of
the offering of the Offered Securities pursuant hereto shall be deemed to be
incorporated by reference in this Prospectus or in any Prospectus Supplement and
to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference in this Prospectus or in any Prospectus Supplement
shall be deemed to be modified or superseded for purposes of this Prospectus or
any Prospectus Supplement to the extent that a statement contained in this
Prospectus or in any Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus or in any Prospectus Supplement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus or any
Prospectus Supplement.
MCN undertakes to provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of any such
person, a copy of any or all of the foregoing documents incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to: Investor Relations, MCN Energy Group Inc., 500 Griswold
Street, Detroit, Michigan 48226; telephone 1-800-548-4655.
4
<PAGE> 139
MCN ENERGY GROUP INC.
In January 1997, MCN Corporation began doing business under the name MCN
Energy Group Inc., subject to shareholder approval to be sought at the Company's
1997 Annual Shareholders' Meeting. The name change reflects the company's growth
during the past five years into a diversified energy company. MCN Energy Group
Inc. will retain its current New York Stock Exchange symbol of MCN.
MCN is a diversified energy holding company with natural gas markets and
investments throughout North America. MCN operates through two major business
groups, Diversified Energy and Gas Distribution. MCN, organized in 1988, is
exempt from most provisions of the Public Utility Holding Company Act of 1935.
DIVERSIFIED ENERGY, operating through MCN Investment Corporation (MCNIC),
is involved in the following businesses: Exploration & Production (E&P) with
proved gas and oil reserves in the Midwest/ Appalachia, Midcontinent/Gulf Coast
and Western regions; Pipelines & Processing with gathering, processing and
transmission facilities near areas of rapid reserve development and growing
consuming markets; Energy Marketing; Power Generation with investments in
electric generation facilities; and Gas Storage with investments in storage
facilities.
GAS DISTRIBUTION consists principally of Michigan Consolidated Gas Company
(MichCon), a Michigan corporation organized in 1898 that, with its predecessors
has been in business for nearly 150 years. MichCon is a natural gas distribution
and intrastate transmission company serving 1.2 million customers in more than
500 communities throughout Michigan. MichCon is subject to the accounting
requirements and rate regulation of the Michigan Public Service Commission
(MPSC) with respect to the distribution and intrastate transportation of natural
gas.
The mailing address of MCN's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226 and its telephone number is (313) 256-5500.
THE MCN TRUSTS
Each of MCN Financing II, MCN Financing III and MCN Financing IV is a
statutory business trust formed under Delaware law pursuant to (i) a separate
declaration of trust (each a "Declaration") executed by the Company, as sponsor
for such trust (the "Sponsor") and the MCN Trustees (as defined herein) for such
trust and (ii) the filing of a certificate of trust with the Delaware Secretary
of State on March 6, 1996 (as amended by the Amendment to the Declaration of
Trust, dated May 29, 1996), in the case of MCN Financing II, and February 3,
1997, in the case of MCN Financing III and MCN Financing IV. Each MCN Trust
exists for the exclusive purposes of (i) issuing the Preferred Securities and
common securities representing undivided beneficial interests in the assets of
such Trust (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities"), (ii) investing the gross proceeds of the Trust
Securities in the Subordinated Debt Securities and (iii) engaging in only those
other activities necessary or incidental thereto. All of the Common Securities
will be directly or indirectly owned by the Company. The Common Securities will
rank pari passu, and payments will be made thereon pro rata, with the Preferred
Securities except that upon an event of default under the Declaration, the
rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Preferred Securities. The
Company will, directly or indirectly, acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of each MCN Trust. Other
than MCN Financing III, which has a term of seven years, each MCN Trust has a
term of approximately 45 years, but may earlier terminate as provided in the
Declaration. Each MCN Trust's business and affairs will be conducted by the
trustees (the "MCN Trustees") appointed by the Company, as the direct or
indirect holder of all the Common Securities. The holder of the Common
Securities will be entitled to appoint, remove or replace any of, or increase or
reduce the number of, the MCN Trustees of an MCN Trust. The duties and
obligations of the MCN Trustees shall be governed by the Declaration of such MCN
Trust. A majority of the MCN Trustees (the "Regular Trustees") of each MCN Trust
will be persons who are employees or officers of or affiliated with the Company.
In certain limited circumstances set forth in a Prospectus Supplement, the
holders of a majority of the Preferred Securities will be entitled to appoint
one
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<PAGE> 140
additional Regular Trustee, who need not be an employee or officer of or
otherwise affiliated with the Company. One MCN Trustee of each MCN Trust will be
a financial institution which will be unaffiliated with the Company and which
shall act as property trustee and as indenture trustee for purposes of the Trust
Indenture Act of 1939 (the "Trust Indenture Act"), pursuant to the terms set
forth in a Prospectus Supplement (the "Property Trustee" or the "Institutional
Trustee"). In addition, unless the Property Trustee maintains a principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law, one MCN Trustee of each MCN Trust will have its principal place
of business or reside in the State of Delaware (the "Delaware Trustee"). The
Company will pay all fees and expenses related to the MCN Trusts and the
offering of Trust Securities, the payment of which will be guaranteed by the
Company. The office of the Delaware Trustee for each MCN Trust in the State of
Delaware is Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890. The principal place of business of each MCN
Trust shall be c/o MCN Energy Group Inc., 500 Griswold Street, Detroit, Michigan
48226; telephone 1-313-256-5500.
USE OF PROCEEDS
Each MCN Trust will use the proceeds received from the sale of its
Preferred Securities to purchase Subordinated Debt Securities from MCN. Unless
otherwise indicated in a Prospectus Supplement with respect to the proceeds from
the sale of the particular Offered Securities to which such Prospectus
Supplement relates, MCN intends to add the net proceeds from the sale of Offered
Securities to its general funds, to be used for general corporate purposes,
including capital expenditures, investment in subsidiaries, working capital and
repayment of debt.
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<PAGE> 141
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends
for MCN on a historical basis for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994 1993 1992
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
MCN(1)(2)(3)................... 2.28 2.55 2.70 3.15 2.82
</TABLE>
- ---------------
(1) MCN has authority to issue up to 25,000,000 shares of preferred stock, no
par value, however, there are currently no shares outstanding and MCN
currently does not have a preferred stock dividend obligation. Therefore,
the Ratio of Combined Earnings to Fixed Charges and Preferred Stock
Dividends is equal to the Ratio of Earnings to Fixed Charges and is not
disclosed separately.
(2) The Ratio of Earnings to Fixed Charges is based on earnings from operations.
"Earnings" consist of the pre-tax income of majority-owned and 50%-owned
companies adjusted to include any income actually received from less than
50%-owned companies, plus fixed charges, less interest capitalized during
the period for nonutility companies and less the preferred stock dividend
requirements of MichCon included in fixed charges but not deducted in the
determination of pre-tax income. "Fixed Charges" represent (a) interest
(whether expensed or capitalized), (b) amortization of debt discount,
premium and expense, (c) an estimate of interest implicit in rentals, and
(d) in the case of MCN, the preferred securities dividend requirements of
subsidiaries (MichCon, MCN Michigan Limited Partnership and MCN Financing
I), increased to reflect the pre-tax earnings requirement for MichCon.
(3) In June 1996, MCN sold its computer operations subsidiary, Genix. For
purposes of calculating the Ratio of Earnings to Fixed Charges, Genix has
been classified as a discontinued operation and is therefore excluded from
the ratio for all periods presented.
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<PAGE> 142
DESCRIPTION OF MCN DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series
and will constitute either Senior Debt Securities or Subordinated Debt
Securities. Senior Debt Securities will be issued under an Indenture (the
"Senior Debt Securities Indenture"), between the Company and NBD Bank, N.A., now
known as NBD Bank, a Michigan banking corporation ("NBD"), as trustee (the
"Senior Debt Securities Trustee"). NBD is a wholly-owned subsidiary of First
Chicago NBD Corporation. The Subordinated Debt Securities will be issued under
an Indenture, dated as of September 1, 1994, as supplemented by the First
Supplemental Indenture dated April 17, 1996, and the Second Supplemental
Indenture dated July 24, 1996, (the "Subordinated Debt Securities Indenture")
between the Company and NBD as trustee (the "Subordinated Debt Securities
Trustee").
The Senior Debt Securities Indenture and the Subordinated Debt Securities
Indenture are referred to herein individually as an "Indenture" and,
collectively, as the "Indentures," and the Senior Debt Securities Trustee and
the Subordinated Debt Securities Trustee are referred to herein as the
"Trustee."
The following summaries of certain provisions of the Debt Securities and
the Indentures do not purport to be complete and are subject to, and are
qualified in their entirety by express reference to, all the provisions of the
Indentures, including the definitions therein of certain terms. Certain
capitalized terms herein are defined in the Indentures.
GENERAL
The Debt Securities will be unsecured obligations of the Company.
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provide that Debt Securities may
be issued thereunder, from time to time, in one or more series.
Reference is made to the Prospectus Supplement relating to the Debt
Securities being offered (the "Offered Debt Securities") for, among other
things, the following terms thereof: (1) the title of the Offered Debt
Securities; (2) any limit on the aggregate principal amount of the Offered Debt
Securities; (3) the date or dates on which the Offered Debt Securities will
mature; (4) the rate or rates (which may be fixed or variable) per annum at
which the Offered Debt Securities will bear interest or the method by which such
rate or rates shall be determined and the date from which such interest will
accrue or the method by which such date or dates shall be determined; (5) the
dates on which such interest will be payable and the Regular Record Dates for
such Interest Payment Dates; (6) the dates, if any, on which, and the price or
prices at which, the Offered Debt Securities may, pursuant to any mandatory or
optional sinking fund provisions, be redeemed by the Company and other detailed
terms and provisions of such sinking funds; (7) the date, if any, after which,
and the price or prices at which, the Offered Debt Securities may, pursuant to
any optional redemption provisions, be redeemed at the option of the Company or
of the Holder thereof and other detailed terms and provisions of such optional
redemption; (8) the right of the Company, if any, to defer payment of interest
on the Subordinated Debt Securities and the maximum length of any such deferral
period; (9) the right of Holders, if any, to put the Subordinated Debt
Securities to the Company; and (10) any other terms of the Offered Debt
Securities (which terms shall not be inconsistent with the appropriate
Indenture). For a description of the terms of the Offered Debt Securities,
reference must be made to both the Prospectus Supplement relating thereto and to
the description of Debt Securities set forth herein.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of, and any premium or interest on, the Offered Debt Securities
will be payable, and the Offered Debt Securities will be exchangeable and
transfers thereof will be registrable, at the Place of Payment, provided that,
at the option of
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<PAGE> 143
the Company, payment of interest may be made by check mailed to the address of
the person entitled thereto as it appears in the Security Register.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued in United States dollars in fully
registered form, without coupons, in denominations of $1,000 or any integral
multiple thereof. No service charge will be made for any transfer or exchange of
the Offered Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
For purposes of the descriptions of both the Senior Debt Securities and the
Subordinated Debt Securities, certain defined terms have the following meanings:
"Indebtedness" of any Person means, without duplication, (i) the principal
of and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capitalized Lease Obligations of such Person; (iii) all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following payment
on the letter of credit); (v) all obligations of the type referred to in clauses
(i) through (iv) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable as
obligor, guarantor or otherwise; and (vi) all obligations of the type referred
to in clauses (i) through (v) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured.
"Significant Subsidiary" means a Subsidiary or Subsidiaries of the Company
possessing assets (including the assets of its own Subsidiaries but without
regard to the Company or any other Subsidiary) having a book value, in the
aggregate, equal to not less than 10% of the book value of the aggregate assets
of the Company and its Subsidiaries calculated on a consolidated basis.
"Capitalized Lease Obligations" means an obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with such
principles.
The Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
principal amount. Special federal income tax, accounting and other
considerations applicable to any such Original Issue Discount Securities will be
described in any Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof as a result of the occurrence of an Event
of Default and the continuation thereof.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities (as such term is defined below) that will
be deposited with, or on behalf of, a Depositary ("Depositary") or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denomination
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or Global
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in registered form, a Global Security may not be registered for
transfer or exchange except as a whole by the
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<PAGE> 144
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any nominee to a successor Depositary or a
nominee of such successor Depositary and except in the circumstances described
in the applicable Prospectus Supplement. The term "Global Security", when used
with respect to any series of Debt Securities, means a Debt Security that is
executed by the Company and authenticated and delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction, which shall be
registered in the name of the Depositary or its nominee and which shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the Outstanding Debt Securities of such series or
any portion thereof, in either case having the same terms, including, without
limitation, the same original issue date, date or dates on which principal is
due, and interest rate or method of determining interest.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or, if such Debt Securities are
offered and sold directly by the Company, by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants or
Persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interests in such Global Security by Persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
The foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Securities
represented by such Global Security for all purposes under the Indenture. Unless
otherwise specified in the applicable Prospectus Supplement, owners of
beneficial interests in such Global Security will not be entitled to have Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of Debt
Securities of such series in certificated form and will not be considered the
Holders thereof for any purposes under the Indenture. Accordingly, each Person
owning a beneficial interest in such Global Security must rely on the procedures
of the Depositary and, if such Person is not a participant, on the procedures of
the participant through which such Person owns its interest, to exercise any
rights of a Holder under the Indenture. The Company understands that under
existing industry practices, if the Company requests any action of Holders or an
owner of a beneficial interest in such Global Security desires to give any
notice or take any action a Holder is entitled to give or take under the
Indenture, the Depositary would authorize the participants to give such notice
or take such action, and participants would authorize beneficial owners owning
through such participants to give such notice or take such action or would
otherwise act upon the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
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<PAGE> 145
THE TRUSTEE
NBD is the Trustee under the Senior Debt Securities Indenture and the
Subordinated Debt Securities Indenture. An affiliate of NBD has extended lines
of credit to various subsidiaries of MCN. MCN and various of its subsidiaries
maintain bank accounts and have other customary banking relationships with NBD
in the ordinary course of business. Mr. Thomas H. Jeffs II, President and Chief
Operating Officer of NBD, serves as a Director of MCN. Mr. Alfred R. Glancy III,
Chairman, President and Chief Executive Officer of MCN, serves as a Director of
NBD.
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<PAGE> 146
PARTICULAR TERMS OF THE SENIOR DEBT SECURITIES
The following description of the Senior Debt Securities sets forth certain
general terms and provisions of the Senior Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Senior Debt
Securities offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may apply to the Senior Debt Securities so offered will
be described in the Prospectus Supplement relating to such Senior Debt
Securities.
RESTRICTIONS
The Senior Debt Securities Indenture provides that the Company shall not
consolidate with, merge with or into any other corporation (whether or not the
Company shall be the surviving corporation), or sell, assign, transfer or lease
all or substantially all of its properties and assets as an entirety or
substantially as an entirety to any Person or group of affiliated Persons, in
one transaction or a series of related transactions, unless: (1) either the
Company shall be the continuing Person or the Person (if other than the Company)
formed by such consolidation or with which or into which the Company is merged
or the Person (or group of affiliated Persons) to which all or substantially all
the properties and assets of the Company are sold, assigned, transferred or
leased is a corporation (or constitute corporations) organized under the laws of
the United States or any State thereof or the District of Columbia and expressly
assumes, by an indenture supplemental to the Senior Debt Securities Indenture,
all the obligations of the Company under the Senior Debt Securities and the
Senior Debt Securities Indenture, executed and delivered to the Trustee in form
satisfactory to the Trustee; (2) immediately before and after giving effect to
such transaction or series of transactions, no Event of Default, and no Default,
with respect to the Senior Debt Securities shall have occurred and be
continuing; and (3) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indentures comply with the Senior Debt
Securities Indenture.
The Senior Debt Securities Indenture also provides that the Company will
not, nor will it permit any Significant Subsidiary to, create, incur, or suffer
to exist any Lien in, of or on the property of the Company or any of its
Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges
or levies on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith and
by appropriate proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on its
books; (ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books; (iii) Liens arising
out of pledges or deposits under worker's compensation laws, unemployment
insurance, old age pensions, or other social security or retirement benefits, or
similar legislation; (iv) utility easements, building restrictions and such
other encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Company or its Subsidiaries; (v) Liens on the
capital stock, partnership interest, or other evidence of ownership of any
Subsidiary or such Subsidiary's assets that secure project financing for such
Subsidiary; (vi) Liens arising in connection with first mortgage bonds issued by
any Significant Subsidiary pursuant to any first mortgage indenture in effect as
of the date of the Senior Debt Securities Indenture, as such indenture may be
supplemented from time to time; (vii) purchase money liens upon or in property
now owned or hereafter acquired in the ordinary course of business (consistent
with the Company's business practices) to secure (A) the purchase price of such
property or (B) Indebtedness incurred solely for the purpose of financing the
acquisition, construction, or improvement of any such property to be subject to
such liens, or Liens existing on any such property at the time of acquisition,
or extensions, renewals, or replacements of any of the foregoing for the same or
a lesser amount; provided that no such lien shall extend to or cover any
property other than the property being acquired, constructed, or improved and
replacements, modifications, and proceeds of such property, and no such
extension, renewal, or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed, or replaced; (viii)
Liens existing on the date Senior Debt Securities are first
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<PAGE> 147
issued; and (ix) Liens for no more than 90 days arising from a transaction
involving accounts receivable of the Company (including the sale of such
accounts receivable), where such accounts receivable arose in the ordinary
course of the Company's business.
The Senior Debt Securities Indenture provides that the Company will not,
nor will it permit any Subsidiary to, enter into any arrangement with any lender
or investor (other than the Company or a Subsidiary), or to which such lender or
investor (other than the Company or a Subsidiary) is a party, providing for the
leasing by the Company or such Subsidiary for a period, including renewals, in
excess of three years of any real property located within the United States
which has been owned by the Company or such Subsidiary for more than six months
and which has been or is to be sold or transferred by the Company or such
Subsidiary to such lender or investor or to any person to whom funds have been
or are to be advanced by such lender or investor on the security of such real
property unless either (a) the Company or such Subsidiary could create
Indebtedness secured by a lien consistent with the restrictions set forth in the
foregoing paragraph on the real property to be leased in an amount equal to the
Value of such transaction without equally and ratably securing the Senior Debt
Securities or (b) the Company, within six months after the sale or transfer
shall have been made, applies an amount equal to the greater of (i) the net
proceeds of the sale of the real property leased pursuant to such arrangement or
(ii) the fair market value of the real property so leased to the retirement of
Senior Debt Securities and other obligations of the Company ranking on a parity
with the Senior Debt Securities.
RANKING OF SENIOR DEBT SECURITIES
The Senior Debt Securities will rank pari passu in right of payment with
all other unsecured indebtedness of the Company, except that the Senior Debt
Securities will be senior in right of payment to any subordinated indebtedness
which, by its terms, is subordinate to the Senior Debt Securities.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Senior Debt Securities
Indenture with respect to Senior Debt Securities of any series: (1) failure to
pay interest on any Senior Debt Security of that series when due, continued for
30 days; (2) failure to pay the principal of (or premium, if any, on) any Senior
Debt Security of that series when due and payable at Maturity, upon redemption
or otherwise; (3) failure to observe or perform any other covenant, warranty or
agreement contained in the Senior Debt Securities of that series or in the
Senior Debt Securities Indenture (other than a covenant, agreement or warranty
included in the Senior Debt Securities Indenture solely for the benefit of
Senior Debt Securities other than that series), continued for a period of 60
days after notice has been given to the Company by the Trustee or Holders of at
least 25% in aggregate principal amount of the Outstanding Senior Debt
Securities of that series; (4) failure to pay at final maturity, or acceleration
of, Indebtedness of the Company having an aggregate principal amount of more
than 1% of the Company's consolidated total assets (determined as of its most
recent fiscal year-end), unless cured within 10 days after notice has been given
to the Company by the Trustee or Holders of at least 10% in aggregate principal
amount of the Outstanding Senior Debt Securities of that series; (5) certain
events of bankruptcy, insolvency or reorganization relating to the Company; and
(6) any other Event of Default with respect to Senior Debt Securities of that
series specified in the Prospectus Supplement relating thereto or Supplemental
Indenture under which such series of Senior Debt Securities is issued.
The Senior Debt Securities Indenture provides that the Trustee shall,
within 30 days after the occurrence of any Default or Event of Default with
respect to Senior Debt Securities of any series, give the Holders of Senior Debt
Securities of that series notice of all uncured Defaults or Events of Default
known to it (the term "Default" includes any event which after notice or passage
of time or both would be an Event of Default); provided, however, that, except
in the case of an Event of Default or a Default in payment on any Senior Debt
Securities of any series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or
directors or responsible officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders of Senior Debt
Securities of that series.
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<PAGE> 148
If an Event of Default with respect to Senior Debt Securities of any series
(other than due to events of bankruptcy, insolvency or reorganization) occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Outstanding Senior Debt Securities of that series, by
notice in writing to the Company (and to the Trustee if given by the Holders of
at least 25% in aggregate principal amount of the Senior Debt Securities of that
series), may declare the unpaid principal of and accrued interest to the date of
acceleration on all the Outstanding Senior Debt Securities of that series to be
due and payable immediately and, upon any such declaration, the Senior Debt
Securities of that series shall become immediately due and payable.
If an Event of Default occurs due to bankruptcy, insolvency or
reorganization, all unpaid principal of and accrued interest on the Outstanding
Senior Debt Securities of any series will become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder of
any Senior Debt Security of that series.
Any such declaration with respect to Senior Debt Securities of any series
may be annulled and past Events of Default and Defaults (except, unless
theretofore cured, an Event of Default or a Default in payment of principal of
or interest on the Senior Debt Securities of that series) may be waived by the
Holders of a majority of the principal amount of the Outstanding Senior Debt
Securities, upon the conditions provided in the Senior Debt Securities
Indenture.
The Senior Debt Securities Indenture provides that the Company shall
periodically file statements with the Trustee regarding compliance by the
Company with certain of the respective covenants thereof and shall specify any
Event of Default or Defaults with respect to Senior Debt Securities of any
series, in performing such covenants, of which the signers may have knowledge.
MODIFICATION OF SENIOR DEBT SECURITIES INDENTURE; WAIVER
The Senior Debt Securities Indenture may be modified by the Company and the
Trustee without the consent of any Holders with respect to certain matters,
including (i) to cure any ambiguity, defect or inconsistency or to correct or
supplement any provision which may be inconsistent with any other provision of
the Senior Debt Securities Indenture and (ii) to make any change that does not
materially adversely affect the interests of any Holder of Senior Debt
Securities of any series. In addition, under the Senior Debt Securities
Indenture, certain rights and obligations of the Company and the rights of
Holders of the Senior Debt Securities may be modified by the Company and the
Trustee with the written consent of the Holders of at least a majority in
aggregate principal amount of the Outstanding Senior Debt Securities of each
series affected thereby; but no extension of the maturity of any Senior Debt
Securities of any series, reduction in the interest rate or extension of the
time for payment of interest, change in the optional redemption or repurchase
provisions in a manner adverse to any Holder of Senior Debt Securities of any
series, other modification in the terms of payment of the principal of, or
interest on, any Senior Debt Securities of any series, or reduction of the
percentage required for modification, will be effective against any Holder of
any Outstanding Senior Debt Security of any series affected thereby without the
Holder's consent. The Senior Debt Securities Indenture does not limit the
aggregate amount of Senior Debt Securities of the Company which may be issued
thereunder.
The Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities of any series may on behalf of the Holders of all Senior
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain restrictive covenants of the Senior Debt
Securities Indenture. The Holders of not less than a majority in aggregate
principal amount of the Outstanding Senior Debt Securities of any series may on
behalf of the Holders of all Senior Debt Securities of that series waive any
past Event of Default or Default under the Senior Debt Securities Indenture with
respect to that series, except an Event of Default or a Default in the payment
of the principal of, or premium, if any, or any interest on any Senior Debt
Security of that series or in respect of a provision which under the Senior Debt
Securities Indenture cannot be modified or amended without the consent of the
Holder of each Outstanding Senior Debt Security of that series affected.
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<PAGE> 149
DEFEASANCE
The Company may terminate its substantive obligations in respect of Senior
Debt Securities of any series (except for its obligations to pay the principal
of (and premium, if any, on) and the interest on the Senior Debt Securities of
that series) by (i) depositing with the Trustee, under the terms of an
irrevocable trust agreement, money or U.S. Government Obligations sufficient to
pay all remaining indebtedness on the Senior Debt Securities of that series,
(ii) delivering to the Trustee either an Opinion of Counsel or a ruling directed
to the Trustee from the Internal Revenue Service to the effect that the Holders
of the Senior Debt Securities of that series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and termination
of obligations, and (iii) complying with certain other requirements set forth in
the Senior Debt Securities Indenture.
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PARTICULAR TERMS OF THE SUBORDINATED DEBT SECURITIES
The following description of the Subordinated Debt Securities sets forth
the general terms and provisions of the Subordinated Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Subordinated
Debt Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply will be described in the Prospectus
Supplement relating to such Subordinated Debt Securities.
For purposes of the description of the Subordinated Debt Securities,
certain defined terms have the following meanings:
"Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of the
Subordinated Debt Securities Indenture or thereafter incurred or created: (i)
indebtedness of the Company for money borrowed by the Company (including
purchase money obligations with an original maturity in excess of one year) or
evidenced by debentures (other than the Subordinated Debt Securities), notes,
bankers' acceptances or other corporate debt securities or similar instruments
issued by the Company; (ii) obligations with respect to letters of credit; (iii)
indebtedness of the Company constituting a guarantee of indebtedness of others
of the type referred to in the preceding clauses (i) and (ii); or (iv) renewals,
extensions or refundings of any of the indebtedness referred to in the preceding
clauses (i), (ii) and (iii) unless, in the case of any particular indebtedness,
renewal, extension or refunding, under the express provisions of the instrument
creating or evidencing the same, or pursuant to which the same is outstanding,
such indebtedness or such renewal, extension or refunding thereof is not
superior in right of payment to the Subordinated Debt Securities.
"Project Finance Indebtedness" means Indebtedness of a Subsidiary (other
than a Utility and other than the Company) secured by a Lien on any property,
acquired, constructed or improved by such Subsidiary after the date of execution
of the Subordinated Debt Securities Indenture which Lien is created or assumed
contemporaneously with, or within 120 days after, such acquisition or completion
of such construction or improvement, or within six months thereafter pursuant to
a firm commitment for financing arranged with a lender or investor within such
120-day period, to secure or provide for the payment of all or any part of the
purchase price of such property or the cost of such construction or improvement
or on any property existing at the time of acquisition thereof; provided that
such a Lien shall not apply to any property theretofore owned by any such
Subsidiary other than, in the case of any such construction or improvement, any
theretofore unimproved real property on which the property so constructed or the
improvement is located; and provided further that such Indebtedness, by its
terms, shall limit the recourse of any holder of such Indebtedness (or trustee
on such holder's behalf) in the event of any default in such Indebtedness to the
assets subject to such Liens and the capital stock of, or the dividends received
from, the Subsidiary issuing such Indebtedness. Notwithstanding the foregoing,
Project Finance Indebtedness shall include all Indebtedness that would
constitute Project Finance Indebtedness but for the fact that such Indebtedness
was issued prior to the execution of the Subordinated Debt Securities Indenture
and taking into account the fact that the property subject to the Lien may have
been acquired prior to the execution of the Subordinated Debt Securities
Indenture.
RESTRICTIONS
The Subordinated Debt Securities Indenture provides that the Company shall
not consolidate with, merge with or into any other corporation (whether or not
the Company shall be the surviving corporation), or sell, assign, transfer or
lease all or substantially all of its properties and assets as an entirety or
substantially as an entirety to any Person or group of affiliated Persons, in
one transaction or a series of related transactions, unless: (1) either the
Company shall be the continuing Person or the Person (if other than the Company)
formed by such consolidation or with which or into which the Company is merged
or the Person (or group of affiliated Persons) to which all or substantially all
the properties and assets of the Company are sold, assigned, transferred or
leased is a corporation (or constitute corporations) organized under the laws of
the United States or any State thereof or the District of Columbia and expressly
assumes, by indentures supplemental to the Subordinated Debt Securities
Indenture executed and delivered to the Trustee in form satisfactory to the
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Trustee, all the obligations of the Company under the Subordinated Debt
Securities and the Subordinated Debt Securities Indenture; (2) immediately
before and after giving effect to such transaction or series of related
transactions or series of transactions, no Event of Default, and no Default,
with respect to the Subordinated Debt Securities shall have occurred and be
continuing; and (3) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or sale, assignment, transfer or lease and such supplemental indentures
comply with the Subordinated Debt Securities Indenture.
The Subordinated Debt Securities Indenture also provides that the Company
will not, nor will it permit any Significant Subsidiary to, create, incur, or
suffer to exist any Lien in, of or on the property of the Company or any of its
Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges
or levies on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith and
by appropriate proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on its
books; (ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar Liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books; (iii) Liens arising
out of pledges or deposits under worker's compensation laws, unemployment
insurance, old age pensions, or other social security or retirement benefits, or
similar legislation; (iv) utility easements, building restrictions and such
other encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Company or its Subsidiaries; (v) Liens on the
capital stock, partnership interest, or other evidence of ownership of any
Subsidiary or such Subsidiary's assets that secure Project Financing for such
Subsidiary; (vi) Liens arising in connection with first mortgage bonds issued by
any Significant Subsidiary pursuant to any first mortgage indenture in effect as
of the date of the Subordinated Debt Securities Indenture, as such indenture may
be supplemented from time to time; (vii) purchase money liens upon or in
property now owned or hereafter acquired in the ordinary course of business
(consistent with the Company's business practices) to secure (A) the purchase
price of such property or (B) Indebtedness incurred solely for the purpose of
financing the acquisition, construction, or improvement of any such property to
be subject to such liens, or Liens existing on any such property at the time of
acquisition, or extensions, renewals, or replacements of any of the foregoing
for the same or a lesser amount; provided that no such lien shall extend to or
cover any property other than the property being acquired, constructed, or
improved and replacements, modifications, and proceeds of such property, and no
such extension, renewal, or replacement shall extend to or cover any property
not theretofore subject to the Lien being extended, renewed, or replaced; (viii)
Liens existing on the date Subordinated Debt Securities are first issued; and
(ix) Liens for no more than 90 days arising from a transaction involving
accounts receivable of the Company (including the sale of such accounts
receivable), where such accounts receivable arose in the ordinary course of the
Company's business.
The Subordinated Debt Securities Indenture provides that the Company will
not, nor will it permit any Subsidiary to, enter into any arrangement with any
lender or investor (other than the Company or a Subsidiary), or to which such
lender or investor (other than the Company or a Subsidiary) is a party,
providing for the leasing by the Company or such Subsidiary for a period,
including renewals, in excess of three years of any real property located within
the United States which has been owned by the Company or such Subsidiary for
more than six months and which has been or is to be sold or transferred by the
Company or such Subsidiary to such lender or investor or to any person to whom
funds have been or are to be advanced by such lender or investor on the security
of such real property unless either (a) the Company or such Subsidiary could
create Indebtedness secured by a lien consistent with the restrictions set forth
in the foregoing paragraph on the real property to be leased in an amount equal
to the Value of such transaction without equally and ratably securing the
Subordinated Debt Securities or (b) the Company, within six months after the
sale or transfer shall have been made, applies an amount equal to the greater of
(i) the net proceeds of the sale of the real property leased pursuant to such
arrangement or (ii) the fair market value of the real property so leased to the
retirement of Subordinated Debt Securities and other obligations of the Company
ranking senior to or on a parity with the Subordinated Debt Securities.
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EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Subordinated Debt Securities
Indenture with respect to the Subordinated Debt Securities of any series: (1)
failure to pay interest on any Subordinated Debt Securities of that series when
due, continued for 30 days; however, if the Company is permitted by the terms of
the Subordinated Debt Securities of the applicable series to defer the payment
in question, the date on which such payment is due and payable shall be the date
on which the Company is required to make payment following such deferral, if
such deferral has been elected pursuant to the terms of the Subordinated Debt
Securities; (2) failure to pay the principal of (or premium, if any, on) any
Subordinated Debt Securities of that series when due and payable at Maturity,
upon redemption or otherwise; however, if the Company is permitted by the terms
of the Subordinated Debt Securities, of the applicable series to defer the
payment in question, the date on which such payment is due and payable shall be
the date on which the Company is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the
Subordinated Debt Securities; (3) failure to observe or perform any other
covenant, warranty or agreement contained in the Subordinated Debt Securities of
that series or in the Subordinated Debt Securities Indenture (other than a
covenant, agreement or warranty included in the Subordinated Debt Securities
Indenture solely for the benefit of Subordinated Debt Securities of a series
other than that series), continued for a period of 60 days after notice has been
given to the Company by the applicable Trustee or Holders of at least 25% in
aggregate principal amount of the Outstanding Subordinated Debt Securities of
that series; (4) failure to pay at final maturity, or acceleration of,
Indebtedness of the Company, (but excluding Project Finance Indebtedness and
certain other gas and oil reserve-based financing with limited recourse to MCN
as described below), having an aggregate principal amount of more than 1% of the
Company's consolidated total assets (determined as of its most recent fiscal
year-end), unless cured within 10 days after notice has been given to the
Company by the Trustee or Holders of at least 10% in aggregate principal amount
of the Outstanding Subordinated Debt Securities of that series; (5) certain
events of bankruptcy, insolvency or reorganization relating to the Company; and
(6) any other Event of Default with respect to Subordinated Debt Securities of
that series specified in the Prospectus Supplement relating thereto; as noted in
(4) above, it will not be an Event of Default under the Subordinated Debt
Securities Indenture if a default occurs in certain gas and oil reserve-based
financing of MCNIC Oil & Gas Company (formerly known as Supply Development
Group, Inc. and a Subsidiary of the Company) or its Subsidiaries if the
obligations of MCN and its Subsidiaries with respect to such Indebtedness (other
than MCNIC Oil & Gas Company and its Subsidiaries) are limited to (i) payments
with respect to Section 29 tax credits, (ii) payments with respect to certain
material contracts of the borrower (generally limited to gas and oil supply
contracts and gas and oil hedging contracts) and (iii) certain environmental
obligations of the borrowers. As of December 31, 1996, $100,000,000 of such gas
and oil reserve-based Indebtedness was outstanding. From time to time, MCN or
its Subsidiaries may establish additional similar reserve-based credit
facilities with respect to which a default would not result in an Event of
Default under the Subordinated Debt Securities Indenture.
The Subordinated Debt Securities Indenture provides that the Trustee shall,
within 30 days after the occurrence of any Default or Event of Default with
respect to Subordinated Debt Securities of any series, give the Holders of
Subordinated Debt Securities of that series notice of all uncured Defaults or
Events of Default known to it (the term "Default" includes any event which after
notice or passage of time or both would be an Event of Default); provided,
however, that, except in the case of an Event of Default or a Default in payment
on any Subordinated Debt Securities of any series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or directors or responsible officers of the Trustee in
good faith determine that the withholding of such notice is in the interest of
the Holders of Subordinated Debt Securities of that series.
If an Event of Default with respect to Subordinated Debt Securities of any
series (other than due to events of bankruptcy, insolvency or reorganization)
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Subordinated Debt Securities of
that series, by notice in writing to the Company (and to the Trustee if given by
the Holders of at least 25% in aggregate principal amount of the Subordinated
Debt Securities of that series), may declare the unpaid principal of and accrued
interest to the date of acceleration on all the Outstanding Subordinated Debt
Securities of that series
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to be due and payable immediately and, upon any such declaration, the
Subordinated Debt Securities of that series shall become immediately due and
payable.
In addition, in the case of a Junior Subordinated Debenture issued to an
MCN Trust, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Company to pay interest or principal, then
a holder of Preferred Securities of such MCN Trust may directly institute a
proceeding against the Company for payment.
If an Event of Default occurs due to bankruptcy, insolvency or
reorganization, all unpaid principal of and accrued interest on the Outstanding
Subordinated Debt Securities of any series will become immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of any Subordinated Debt Security of that series.
Any such declaration with respect to Subordinated Debt Securities of any
series may be annulled and past Events of Default and Defaults (except, unless
theretofore cured, an Event of Default or a Default in payment of principal of
or interest on the Subordinated Debt Securities of that series) may be waived by
the Holders of a majority of the principal amount of the Outstanding
Subordinated Debt Securities of that series, upon the conditions provided in the
Subordinated Debt Securities Indenture.
The Subordinated Debt Securities Indenture provides that the Company shall
periodically file statements with the Trustees regarding compliance by the
Company with certain of the respective covenants thereof and shall specify any
Event of Default or Defaults with respect to Subordinated Debt Securities of any
series, in performing such covenants, of which the signers may have knowledge.
MODIFICATION OF SUBORDINATED DEBT SECURITIES INDENTURE; WAIVER
The Subordinated Debt Securities Indenture may be modified by the Company
and the Trustee without the consent of any Holders with respect to certain
matters, including (i) to cure any ambiguity, defect or inconsistency or to
correct or supplement any provision which may be inconsistent with any other
provision of the Subordinated Debt Securities Indenture and (ii) to make any
change that does not materially adversely affect the interests of any Holder of
Subordinated Debt Securities of any series. In addition, under the Subordinated
Debt Securities Indenture, certain rights and obligations of the Company and the
rights of Holders of the Subordinated Debt Securities may be modified by the
Company and the Trustee with the written consent of the Holders of at least a
majority in aggregate principal amount of the Outstanding Subordinated Debt
Securities of each series affected thereby; but no extension of the maturity of
any Subordinated Debt Securities of any series, reduction in the interest rate
or extension of the time for payment of interest, change in the optional
redemption or repurchase provisions in a manner adverse to any Holder of
Subordinated Debt Securities of any series, other modification in the terms of
payment of the principal of, or interest on, any Subordinated Debt Securities of
any series, or reduction of the percentage required for modification, will be
effective against any Holder of any Outstanding Subordinated Debt Security of
any series affected thereby without the Holder's consent. The Subordinated Debt
Securities Indenture does not limit the aggregate amount of Subordinated Debt
Securities of the Company which may be issued thereunder.
The Holders of a majority in aggregate principal amount of the Outstanding
Subordinated Debt Securities of any series may on behalf of the Holders of all
Subordinated Debt Securities of that series waive, insofar as that series is
concerned, compliance by the Company with certain restrictive covenants of the
Subordinated Debt Securities Indenture. The Holders of not less than a majority
in aggregate principal amount of the Outstanding Subordinated Debt Securities of
any series may on behalf of the Holders of all Subordinated Debt Securities of
that series waive any past Event of Default or Default under the Subordinated
Debt Securities Indenture with respect to that series, except an Event of
Default or a Default in the payment of the principal of, or premium, if any, or
any interest on any Subordinated Debt Security of that series or in respect of a
provision which under the Subordinated Debt Securities Indenture cannot be
modified or amended without the consent of the Holder of each Outstanding
Subordinated Debt Security of that series affected.
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DEFEASANCE
The Company may terminate its substantive obligations in respect of
Subordinated Debt Securities of any series (except for its obligations to pay
the principal of (and premium, if any, on) and the interest on the Subordinated
Debt Securities of that series) by (i) depositing with the Trustee, under the
terms of an irrevocable trust agreement, money or U.S. Government Obligations
sufficient to pay all remaining indebtedness on the Subordinated Debt Securities
of that series, (ii) delivering to the Trustee either an Opinion of Counsel or a
ruling directed to the Trustee from the Internal Revenue Service to the effect
that the Holders of the Subordinated Debt Securities of that series will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and termination of obligations, and (iii) complying with certain
other requirements set forth in the Subordinated Debt Securities Indenture.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company and pari passu
with MCN trade creditors. No payment on account of principal of, premium, if
any, or interest on the Subordinated Debt Securities and no acquisition of, or
payment on account of any sinking fund for, the Subordinated Debt Securities may
be made unless full payment of amounts then due for principal, premium, if any,
and interest then due on all Senior Indebtedness by reason of the maturity
thereof (by lapse of time, acceleration or otherwise) has been made or duly
provided for in cash or in a manner satisfactory to the Holders of such Senior
Indebtedness. In addition, the Subordinated Debt Securities Indenture provides
that if a default has occurred giving the holders of such Senior Indebtedness
the right to accelerate the maturity thereof, or an event has occurred which,
with the giving of notice, or lapse of time, or both, would constitute such an
event of default, then unless and until such event shall have been cured or
waived or shall have ceased to exist, no payment on account of principal,
premium, if any, or interest on the Subordinated Debt Securities and no
acquisition of, or payment on account of a sinking fund for, the Subordinated
Debt Securities may be made. The Company shall give prompt written notice to the
Trustee of any default under any Senior Indebtedness or under any agreement
pursuant to which Senior Indebtedness may have been issued. The Subordinated
Debt Securities Indenture provisions described in this paragraph, however, do
not prevent the Company from making a sinking fund payment with Subordinated
Debt Securities acquired prior to the maturity of Senior Indebtedness or, in the
case of default, prior to such default and notice thereof. Upon any distribution
of its assets in connection with any dissolution, liquidation or reorganization
of the Company, all Senior Indebtedness must be paid in full before the Holders
of the Subordinated Debt Securities are entitled to any payments whatsoever. As
a result of these subordinated provisions, in the event of the Company's
insolvency, holders of the Subordinated Debt Securities may recover ratably less
than senior creditors of the Company.
DESCRIPTION OF MCN CAPITAL STOCK
The following is a brief description of certain provisions relating to MCN
capital stock:
MCN has authority to issue up to 125,000,000 shares of capital stock, which
are divided into two classes as follows: 25,000,000 shares of MCN Preferred
Stock, no par value ("MCN Preferred Stock") and 100,000,000 shares of MCN Common
Stock, par value $.01 per share. On February 28, 1997, there were no shares of
MCN Preferred Stock outstanding and 67,453,128 shares of MCN Common Stock
outstanding.
MCN COMMON STOCK
Voting Rights: The holders of MCN Common Stock are entitled to one vote for
each share on all matters voted upon by MCN's shareholders and, subject to any
voting rights of outstanding MCN Preferred Stock, the holders of such shares
possess all voting power.
Any action required or permitted to be taken by any shareholder of MCN must
be effected at a duly called annual or special meeting of such shareholders and
may not be effected by any consent in writing by
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such shareholders. Except as otherwise permitted by law, special shareholder
meetings of MCN may be called only pursuant to a resolution approved by the
Board.
The holders of MCN Common Stock have noncumulative voting rights, which
means that the holders of more than 50% of the shares of MCN Common Stock voting
for the election of directors can elect 100% of the directors standing for
election at any meeting if they choose to do so and, in such event, the holders
of the remaining shares voting for the election of directors would not be able
to elect any person or persons to the Board at that meeting.
Dividend Rights: The holders of MCN Common Stock are entitled to such
dividends as may be declared from time to time by the Board from funds legally
available therefore subject to: (1) preferential dividend rights, if any, of any
series of MCN Preferred Stock then outstanding; and (2) applicable requirements,
if any, with respect to the setting aside of sums for purchase, retirement or
sinking funds for MCN Preferred Stock.
Liquidation Rights: In the event of liquidation, the holders of MCN Common
Stock will be entitled to receive pro rata any assets distributable to
shareholders in respect of shares held by them, subject to the rights of any
holders of MCN Preferred Stock.
No Preemptive Rights: No holder of MCN Common Stock has any right to
subscribe to any additional securities which may be issued by MCN.
Redemption and Conversion Provisions: MCN Common Stock does not have any
redemption provisions or conversion rights.
Preferred Share Purchase Rights: MCN Common Stock currently trades with
Preferred Share Purchase Rights. The Rights, which cannot be traded separately
from MCN Common Stock, are intended to protect shareholders in the event of an
unsolicited attempt to acquire MCN and become exercisable upon the occurrence of
certain triggering events. Triggering events include acquisition by a person or
group of beneficial ownership of 20% or more of MCN's Common Stock. The Rights
could also have the effect of delaying, deferring or preventing a takeover or
change in control of MCN that has not been approved by the Board of Directors.
Transfer Agent: The transfer agent and registrar for MCN Common Stock is
First Chicago Trust Company of New York, 525 Washington Boulevard, Jersey City,
New Jersey 07310.
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PRICE RANGE OF MCN COMMON STOCK AND COMMON STOCK DIVIDENDS
MCN Common Stock began trading on the NYSE on January 4, 1989, following
the effective date of the restructuring of MichCon and subsequent formation of
MCN as its holding company. The high and low sales prices of the Common Stock of
MCN, as reported on the NYSE Composite Tape, and the dividends declared on the
Common Stock, have been as follows:
<TABLE>
<CAPTION>
CASH
DIVIDENDS
HIGH LOW PAID PER SHARE
---- --- --------------
<S> <C> <C> <C>
1995
First Quarter........................... 18 5/8 16 3/8 .2225
Second Quarter.......................... 19 7/8 18 .2225
Third Quarter........................... 20 17 7/8 .2225
Fourth Quarter.......................... 23 1/2 19 3/8 .2325
1996
First Quarter........................... 25 1/2 21 5/8 .2325
Second Quarter.......................... 25 5/8 22 3/4 .2325
Third Quarter........................... 27 5/8 22 3/4 .2325
Fourth Quarter.......................... 30 1/2 26 5/8 .2425
1997
First Quarter (through March 5, 1997)... 32 5/8 28 1/2 .2425
</TABLE>
The closing price of MCN Common Stock on March 5, 1997 was $29 7/8 per
share. The book value of the Company's Common Stock on December 31, 1996 was
$11.66 per share.
The timing and amount of future cash dividends will depend on the financial
condition of MCN, the income from its subsidiaries, internal cash requirements
and other factors deemed relevant by MCN's Board of Directors.
MCN sponsors a dividend reinvestment and stock purchase plan under which
holders of record of MCN Common Stock may purchase a limited amount of MCN
Common Stock without paying brokerage fees and other expenses. Under this plan,
the MCN Common Stock may be purchased in the open market at prevailing prices or
purchased from MCN at the average of the high and low sales prices on the NYSE
for the trading day immediately preceding the purchase.
MCN PREFERRED STOCK
The Board of Directors of MCN is authorized, without further action by the
shareholders of MCN, to issue up to 25,000,000 shares of MCN Preferred Stock,
without par value, in one or more series, from time to time, with such voting
powers, full or limited, or without voting powers, and with such designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as may be provided in a
resolution or resolutions adopted by the Board of Directors. The authority of
the Board of Directors includes, but is not limited to, the determination or
fixing of the following with respect to shares of such class or any series
thereof: (i) the number of shares and designation; (ii) the dividend rate and
whether the dividends are to be cumulative; (iii) whether shares are to be
redeemable and, if so, the terms and provisions applying; (iv) whether the
shares are subject to a purchase, retirement or sinking fund and, if so, the
terms and provisions applying; (v) whether shares shall be convertible and, if
so, the terms and provisions applying; (vi) what voting rights are to apply, if
any, not to exceed one vote per share; (vii) the rights to which the holders of
shares are entitled upon voluntary or involuntary liquidation or dissolution;
and (viii) what restrictions are to apply, if any, on the issue or reissue of
any additional MCN Preferred Stock. If MCN Preferred Stock of a class were to be
issued, it would be preferred to the MCN Common Stock with respect to dividends
and other matters and might have the effect of making more difficult any change
in control of MCN.
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<PAGE> 157
Management cannot currently foresee whether or when MCN might issue any
shares of MCN Preferred Stock.
OTHER PROVISIONS
The Articles of Incorporation of MCN provide for a classified Board of
Directors; the removal of directors by a two-thirds vote of shareholders (but
only for cause) or by vote of two-thirds of the other directors (with or without
cause); procedures for nomination by shareholders of candidates for election as
a director; director consideration of other constituencies when evaluating a
business combination; the prohibition of shareholder action by written consent;
supermajority (two-thirds) shareholder vote to amend or repeal the foregoing
provisions; and limitations on the personal liability of directors. These
provisions are generally intended to enhance the likelihood of continuity and
stability in the composition of the Board of Directors and ensure the careful
consideration of proposed business combinations and any appropriate alternatives
for MCN's stockholders. Such provisions may have the effect of making more
difficult or discouraging a proxy contest, or delaying, deferring or preventing
a future takeover or change in control of MCN.
DESCRIPTION OF THE MCN TRUST PREFERRED SECURITIES
Each MCN Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each MCN Trust authorizes the Regular Trustees of such MCN
Trust to issue on behalf of such MCN Trust one series of Preferred Securities.
The Declaration will be qualified as an indenture under the Trust Indenture Act.
The Institutional Trustee, Wilmington Trust Company, an independent trustee,
will act as indenture trustee for the Preferred Securities, to be issued by each
MCN Trust, for the purposes of compliance with the provisions of the Trust
Indenture Act. The Preferred Securities will have such terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the Declaration or made part of the Declaration by the Trust Indenture Act, and
which will mirror the terms of the Subordinated Debt Securities held by the MCN
Trust and as described in the Prospectus Supplement related thereto. Reference
is made to the Prospectus Supplement relating to the Preferred Securities of the
Company for specific terms, including (i) the distinctive designation of such
Preferred Securities; (ii) the number of Preferred Securities issued by such MCN
Trust; (iii) the annual distribution rate (or method of determining such rate)
for Preferred Securities issued by such MCN Trust and the date or dates upon
which such distributions shall be payable; provided, however, that distributions
on such Preferred Securities shall be payable on a periodic basis to holders of
such Preferred Securities as of a record date in each period during which such
Preferred Securities are outstanding; (iv) whether distributions on Preferred
Securities issued by such MCN Trust shall be cumulative, and, in the case of
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities issued by such MCN Trust shall be cumulative; (v) the
amount or amounts which shall be paid out of the assets of such MCN Trust to the
holders of Preferred Securities of such MCN Trust upon voluntary or involuntary
dissolution, winding-up or termination of such MCN Trust; (vi) the obligation,
if any, of such MCN Trust to purchase or redeem Preferred Securities issued by
such MCN Trust and the price or prices at which, the period or periods within
which, and the terms and conditions upon which, Preferred Securities issued by
such MCN Trust shall be purchased or redeemed, in whole or in part, pursuant to
such obligation (with such redemption price to be determined through
negotiations among the Company and the Underwriters based on, among other
factors, redemption prices of securities similar to the Preferred Securities and
market conditions generally); (vii) the voting rights, if any, of Preferred
Securities issued by such MCN Trust in addition to those required by law,
including the number of votes per Preferred Security and any requirement for the
approval by the holders of Preferred Securities, or of Preferred Securities
issued by one or more MCN Trusts, or of both, as a condition to specified action
or amendments to the Declaration of such MCN Trust; (viii) the terms and
conditions, if any, upon which the Subordinated Debt Securities may be
distributed to holders of Preferred Securities; (ix) if applicable, any
securities exchange upon which the Preferred Securities shall be listed; and (x)
any other relevant rights, preferences, privileges, limitations or restrictions
of Preferred Securities issued by such MCN Trust not inconsistent with the
Declaration of such
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MCN Trust or with applicable law. All Preferred Securities offered hereby will
be guaranteed by the Company to the extent set forth below under "Description of
the Preferred Securities Guarantees." The Preferred Securities Guarantee of MCN,
when taken together with MCN's obligations under the Subordinated Debt
Securities and the relevant Supplemental Indenture, and its obligations under
each Declaration, including obligations to pay costs, expenses, debts and
liabilities of the MCN Trust (other than with respect to the Trust Securities),
would provide a full and unconditional guarantee of amounts due on Preferred
Securities issued by each of MCN Financing II, MCN Financing III and MCN
Financing IV. Certain United States federal income tax considerations applicable
to any offering of Preferred Securities will be described in the Prospectus
Supplement relating thereto.
In connection with the issuance of Preferred Securities, each MCN Trust
will issue one series of Common Securities. The Declaration of each MCN Trust
authorizes the Regular Trustees of such trust to issue on behalf of such MCN
Trust one series of Common Securities having such terms including distributions,
redemption, voting, liquidation rights or such restrictions as shall be set
forth therein. The terms of the Common Securities issued by an MCN Trust will be
substantially identical to the terms of the Preferred Securities issued by such
trust and the Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities except that, upon an event of
default under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Except in certain limited circumstances, the Common
Securities will also carry the right to vote to appoint, remove or replace any
of the MCN Trustees of an MCN Trust. All of the Common Securities of each MCN
Trust will be directly or indirectly owned by the Company.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an Event of Default under the Declaration of an MCN Trust occurs and is
continuing, then the holders of Preferred Securities of such MCN Trust would
rely on the enforcement by the Institutional Trustee of its rights as a holder
of the applicable series of Subordinated Debt Securities against the Company. In
addition, the holders of a majority in liquidation amount of the Preferred
Securities of such an MCN Trust will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Institutional Trustee or to direct the exercise of any trust or power conferred
upon the Institutional Trustee under the applicable Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as a holder of the Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the applicable series of Subordinated Debt
Securities, a holder of Preferred Securities of such MCN Trust may institute a
legal proceeding directly against the Company to enforce the Institutional
Trustee's rights under the applicable series of Subordinated Debt Securities
without first instituting any legal proceeding against the Institutional Trustee
or any other person or entity. Notwithstanding the foregoing, if an Event of
Default under the applicable Declaration has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the applicable series of Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities of such MCN Trust may
directly institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the applicable series of Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder (a "Direct Action") on or after the
respective due date specified in the applicable series of Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
applicable Declaration to the extent of any payment made by the Company to such
holder of Preferred Securities in such Direct Action.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed certain changes to federal income tax law
that would, among other things, deny corporate issuers a deduction for interest
in respect of certain debt obligations issued on or after the date of first
Congressional committee action. The proposed legislation, if enacted in its
current form, would not apply to the Subordinated
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Debt Securities if they have been issued prior to the date of first
Congressional committee action. There can be no assurance, however, that
legislation enacted after the date hereof will not adversely affect the ability
of MCN to deduct the interest payable on the Subordinated Debt Securities.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution" in the Prospectus Supplement relating thereto.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by MCN for the
benefit of the holders from time to time of Preferred Securities. Each Preferred
Securities Guarantee will be qualified as an indenture under the Trust Indenture
Act. Wilmington Trust Company, an independent trustee, will act as indenture
trustee under each Preferred Securities Guarantee (the "Preferred Guarantee
Trustee") for the purposes of compliance with the provisions of the Trust
Indenture Act. The terms of each Preferred Securities Guarantee will be those
set forth in such Preferred Securities Guarantee and those made part of such
Preferred Securities Guarantee by the Trust Indenture Act. The following summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the form of Preferred
Securities Guarantee, which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part, and the Trust Indenture Act. Each
Preferred Securities Guarantee will be held by the Preferred Guarantee Trustee
for the benefit of the holders of the Preferred Securities of the applicable MCN
Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities issued by an MCN Trust, the
Guarantee Payments (as defined herein) (except to the extent paid by such MCN
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such MCN Trust may have or assert. The following payments or
distributions with respect to Preferred Securities issued by an MCN Trust to the
extent not paid by such MCN Trust (the "Guarantee Payments"), will be subject to
the Preferred Securities Guarantee thereon (without duplication): (i) any
accrued and unpaid distributions which are required to be paid on such Preferred
Securities, to the extent such MCN Trust shall have funds available therefore;
(ii) the redemption price (the "Redemption Price") and all accrued and unpaid
distributions to the date of redemption to the extent such MCN Trust has funds
available therefore with respect to any Preferred Securities called for
redemption by such MCN Trust and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such MCN Trust (other than in
connection with the distribution of Subordinated Debt Securities to the holders
of Preferred Securities or the redemption of all of the Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment, to the
extent such MCN Trust has funds available therefore and (b) the amount of assets
of such MCN Trust remaining available for distribution to holders of such
Preferred Securities in liquidation of such MCN Trust. The Company's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of Preferred Securities or by causing the
applicable MCN Trust to pay such amounts to such holders.
Each Preferred Securities Guarantee will be a guarantee with respect to the
Preferred Securities issued by the applicable MCN Trust, but will not apply to
any payment of distributions except to the extent such MCN Trust shall have
funds available therefore. If the Company does not make interest payments on the
Subordinated Debt Securities purchased by an MCN Trust, such MCN Trust will not
pay distributions on the Preferred Securities issued by such MCN Trust and will
not have funds available therefore. See "Description of the MCN Debt
Securities -- Particular Terms of the Subordinated Debt Securities." The
Preferred Securities Guarantee, when taken together with MCN's obligations under
the Subordinated Debt Securities, the Subordinated Debt Securities Indenture,
and the Declaration will provide a full and unconditional guarantee on a
subordinated basis by the Company of payments due on the Preferred Securities.
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<PAGE> 160
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the MCN Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Preferred Securities Guarantee, except that upon an event of default under the
Subordinated Debt Securities Indenture, holders of Preferred Securities shall
have priority over holders of Common Securities with respect to distributions
and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In each Preferred Securities Guarantee, the Company will covenant that, so
long as any Preferred Securities issued by the applicable MCN Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Preferred Securities Guarantee or the Declaration of
such MCN Trust, then (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of MCN Common Stock in connection with the
satisfaction by MCN of its obligations under any employee benefit plans or the
satisfaction by MCN of its obligations pursuant to any contract or security
outstanding on the date of such event requiring MCN to purchase shares of MCN
Common Stock, (ii) as a result of a reclassification of MCN capital stock or the
exchange or conversion of one class or series of MCN's capital stock for another
class or series of MCN capital stock or, (iii) the purchase of fractional
interests in shares of MCN's capital stock pursuant to the conversion or
exchange provisions of such MCN capital stock or the security being converted or
exchanged), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company which rank pari passu with or
junior to such Subordinated Debt Securities and (c) the Company shall not make
any guarantee payments with respect to the foregoing (other than pursuant to a
Preferred Securities Guarantee).
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities issued by the applicable MCN Trust. The manner
of obtaining any such approval of holders of such Preferred Securities will be
as set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the Preferred Securities of the
applicable MCN Trust then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable MCN Trust (a) upon full payment of the
Redemption Price of all Preferred Securities of such MCN Trust, (b) upon
distribution of the Subordinated Debt Securities held by such MCN Trust to the
holders of the Preferred Securities of such MCN Trust or (c) upon full payment
of the amounts payable in accordance with the Declaration of such MCN Trust upon
liquidation of such MCN Trust. Each Preferred Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of Preferred Securities issued by the applicable MCN Trust must restore
payment of any sums paid under such Preferred Securities or such Preferred
Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
to which such Preferred Securities Guarantee relates have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Preferred Guarantee Trustee in respect of the Preferred Securities
Guarantee
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or to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities Guarantee. If the Preferred
Guarantee Trustee fails to enforce such Preferred Securities Guarantee, any
holder of Preferred Securities to which such Preferred Securities Guarantee
relates may institute a legal proceeding directly against the Company to enforce
such holder's rights under such Preferred Securities Guarantee, without first
instituting a legal proceeding against the relevant MCN Trust, the Preferred
Guarantee Trustee or any other person or entity. Notwithstanding the foregoing,
if the Company has failed to make a guarantee payment, a holder of Preferred
Securities may directly institute a proceeding against the Company for
enforcement of the Preferred Securities Guarantee for such payment. The Company
waives any right or remedy to require that any action be brought first against
such MCN Trust or any other person or entity before proceeding directly against
the Company.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Preferred Securities Guarantees will constitute unsecured obligations
of the Company and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Company, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company and with
any guarantee now or hereafter entered into by MCN in respect of any preferred
or preference stock of any affiliate of the Company; and (iii) senior to the
Company's common stock. The terms of the Preferred Securities provide that each
holder of Preferred Securities issued by the applicable MCN Trust by acceptance
thereof agrees to the subordination provisions and other terms of the Preferred
Securities Guarantee relating thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby; but the foregoing shall not relieve the Preferred Guarantee Trustee,
upon the occurrence of an event of default under such Preferred Securities
Guarantee, from exercising the rights and powers vested in it by such Preferred
Securities Guarantee.
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE
SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of each of the MCN Trusts
is to issue the Trust Securities evidencing undivided beneficial interests in
the assets of each of the MCN Trusts, and to invest the proceeds from such
issuance and sale in the Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Subordinated Debt Securities will
be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) MCN
shall pay all, and the applicable
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<PAGE> 162
MCN Trust shall not be obligated to pay, directly or indirectly, all costs,
expenses, debt, and obligations of the applicable MCN Trust (other than with
respect to the Trust Securities); and (iv) the Declaration further provides that
the MCN Trustees shall not take or cause or permit the applicable MCN Trust to,
among other things, engage in any activity that is not consistent with the
purposes of the applicable MCN Trust.
Payments of distributions (to the extent funds therefore are available) and
other payments due on the Preferred Securities (to the extent funds therefore
are available) are guaranteed by MCN as and to the extent set forth under
"Description of the Preferred Securities Guarantees." If MCN does not make
interest payments on the Subordinated Debt Securities purchased by the
applicable MCN Trust, it is expected that the applicable MCN Trust will not have
sufficient funds to pay distributions on the Preferred Securities. The Guarantee
does not apply to any payment of distributions unless and until the applicable
MCN Trust has sufficient funds for the payment of such distributions. The
Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that MCN has made a payment of
interest or principal on the Subordinated Debt Securities held by the applicable
MCN Trust as its sole asset. The Guarantee, when taken together with MCN's
obligations under the Subordinated Debt Securities and the Indenture and its
obligations under the Declaration, including its obligations to pay costs,
expenses, debts and liabilities of the applicable MCN Trust (other than with
respect to the Trust Securities), provide a full and unconditional guarantee of
amounts on the Preferred Securities.
If MCN fails to make interest or other payments on the Subordinated Debt
Securities when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Book-Entry
Only Issuance -- The Depository Trust Company" and "-- Voting Rights" in any
accompanying Prospectus Supplement, may direct the Institutional Trustee to
enforce its rights under the Subordinated Debt Securities. If the Institutional
Trustee fails to enforce its rights under the Subordinated Debt Securities, a
holder of Preferred Securities may institute a legal proceeding against MCN to
enforce the Institutional Trustee's rights under the subordinated Debt
Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of MCN to pay interest or principal on
the Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption on the redemption date), then a
holder of Preferred Securities may institute a Direct Action for payment on or
after the respective due date specified in the Subordinated Debt Securities. In
connection with such Direct Action, MCN will be subrogated to the rights of such
holder of Preferred Securities under the Declaration to the extent of any
payment made by MCN to such holder of Preferred Securities in such Direct
Action. MCN, under the Guarantee, acknowledges that the Preferred Guarantee
Trustee shall enforce the Guarantee on behalf of the holders of the Preferred
Securities. If MCN fails to make payments under the Guarantee, the Guarantee
provides a mechanism whereby the holders of the Preferred Securities may direct
the Preferred Guarantee Trustee to enforce its rights thereunder. Any holder of
Preferred Securities may institute a legal proceeding directly against MCN to
enforce the Guarantee Trustee's rights under the Guarantee without first
instituting a legal proceeding against the applicable MCN Trust, the Preferred
Guarantee Trustee, or any other person or entity.
MCN and each of the MCN Trusts believe that the above mechanisms and
obligations, taken together, provide a full and unconditional guarantee by MCN
of payments due on the Preferred Securities. See "Description of the Preferred
Securities Guarantees -- General."
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
MCN may issue Stock Purchase Contracts, representing contracts obligating
holders to purchase from the Company, and the Company to sell to the holders, a
specified number of shares of Common Stock at a future date or dates. The price
per share of Common Stock may be fixed at the time the Stock Purchase Contracts
are issued or may be determined by reference to a specific formula set forth in
the Stock Purchase Contracts. The Stock Purchase Contracts may be issued
separately or as a part of units ("Stock Purchase
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Units," "FELINE PRIDES(SM)," "Income PRIDES(SM)" or "Growth PRIDES(SM)")
consisting of a Stock Purchase Contract and Debt Securities or Preferred
Securities or debt obligations of third parties, including U.S. Treasury
securities, securing the holders' obligations to purchase the Common Stock under
the Purchase Contracts. The Stock Purchase Contracts may require MCN to make
periodic payments to the holders of the Stock Purchase Units or visa versa, and
such payments may be unsecured or prefunded on some basis. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will not purport to be complete and will be qualified in its entirety
by reference to the Stock Purchase Contracts, and, if applicable, collateral
arrangements and depositary arrangements, relating to such Stock Purchase
Contracts or Stock Purchase Units.
PLAN OF DISTRIBUTION
MCN and/or any MCN Trust may sell the Offered Securities (i) to or through
underwriters or dealers; (ii) directly to purchasers; or (iii) through agents.
The Prospectus Supplement with respect to the Offered Securities will set forth
the terms of the offering of the Offered Securities, including the name or names
of any underwriters, dealers or agents; the purchase price of the Offered
Securities and the proceeds to MCN and/or an MCN Trust from such sale; any
underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation; any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
and any securities exchange on which such Offered Securities may be listed. Any
initial public offering price, discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If dealers are utilized in the sale of Offered Securities, MCN and/or the
applicable MCN Trust will sell such Offered Securities to the dealers as
principals. The dealers may then resell such Offered Securities to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
The Offered Securities may be sold directly by MCN and/or an MCN Trust or
through agents designated by MCN and/or such MCN Trust from time to time. Any
agent involved in the offer or sale of the Offered Securities in respect to
which this Prospectus is delivered will be named, and any commissions payable by
MCN and/or the applicable MCN Trust to such agent will be set forth, in the
Prospectus Supplement relating thereto. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
The Offered Securities may be sold directly by MCN and/or an MCN Trust to
institutional investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto.
Agents, dealers and underwriters may be entitled under agreements with MCN
and/or an MCN Trust to indemnification by MCN and/or the applicable MCN Trust
against certain civil liabilities, including liabilities
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under the Securities Act, or to contribution with respect to payments which such
agents, dealers or underwriters may be required to make in respect thereof.
Agents, dealers and underwriters may be customers of, engage in transactions
with, or perform services for MCN and/or an MCN Trust in the ordinary course of
business.
Each series of Offered Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Offered
Securities are sold for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice.The Offered Securities
may or may not be listed on a national securities exchange. No assurance can be
given that there will be a market for the Offered Securities.
VALIDITY OF SECURITIES
The validity of the Offered Securities of MCN will be passed upon for MCN
by Daniel L. Schiffer, Esq., Senior Vice President, General Counsel and
Secretary of MCN, and for the underwriters by LeBoeuf, Lamb, Greene and MacRae,
L.L.P., a partnership including professional corporations, New York, New York.
Mr. Schiffer is a full-time employee and officer of MCN and owned 23,941 shares
of MCN Common Stock as of February 26, 1997. Certain matters of Delaware law
relating to the validity of the Preferred Securities will be passed upon on
behalf of the MCN Trusts by Skadden, Arps, Slate, Meagher & Flom (Delaware),
special Delaware counsel to the MCN Trusts. Certain United States federal income
taxation matters will be passed upon for MCN and the MCN Trusts by Skadden,
Arps, Slate, Meagher & Flom LLP, special tax counsel to MCN and the MCN Trusts.
LeBoeuf, Lamb, Greene & MacRae, L.L.P. from time to time renders legal services
to the Company.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 have been audited by
DELOITTE & TOUCHE LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
MCN's Annual Report on Form 10-K for the year ended December 31, 1996,
includes various oil and gas reserve information summarized from reports
prepared by the independent petroleum consultants Ryder Scott Company; Miller
and Lents, Ltd.; Lee Keeling & Associates, Inc.; S.A. Holditch & Associates,
Inc.; Questa Engineering Corporation and Advanced Resources International, Inc.
This reserve information and related schedules have been incorporated herein by
reference in reliance upon such reports given upon the authority of said firms
as experts in oil and gas reserve estimation.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 151,516
NYSE Listing Fee............................................ 100,000
Printing and Engraving...................................... 325,000
Rating Agency Fee........................................... 275,000
Accounting Fees............................................. 70,000
Legal Fees.................................................. 500,000
Blue Sky Fees............................................... 50,000
Transfer Agent's Fees....................................... 10,000
Fees of Trustee, Purchase Contract Agent and Collateral
Agent..................................................... 25,000
Miscellaneous............................................... 93,484
----------
Total............................................. $1,600,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") contain detailed provisions concerning the indemnification of directors
and officers against judgments, penalties, fines and amounts paid in settlement
of litigation.
Article VI, Section 6.1 of the By-Laws of MCN provides that MCN shall
indemnify its officers, directors, employees, agents and other persons to the
fullest extent of the MBCA.
Article NINTH of MCN's Articles of Incorporation provides that a director
of MCN shall not be personally liable to MCN or its shareholders for monetary
damages for breach of fiduciary duty as a director, except for liability for (i)
any breach of the director's duty of loyalty to MCN or its shareholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) a violation of Section 551(1) of the MBCA, or
(iv) any transaction from which the director derived an improper personal
benefit. If the MBCA is amended after the date of MCN's Articles of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of MCN shall
be eliminated or limited to the fullest extent permitted by the MBCA, as so
amended.
MCN has entered into indemnification contracts with each officer and
director of MCN, and certain officers of its subsidiaries, that contain
provisions essentially similar to the provisions of the MBCA and MCN's Articles
of Incorporation referred to above. In addition, MCN maintains directors' and
officers' liability insurance which covers certain liabilities arising from the
performance of their responsibilities as directors and officers.
The Declaration of each MCN Trust provides that no Institutional Trustee or
any of its Affiliates, Delaware Trustee or any of its Affiliates, or officer,
director, shareholder, member, partner, employee, representative or agent of the
Institutional Trustee or the Delaware Trustee (each a "Fiduciary Indemnified
Person"), and no Regular Trustee, Affiliate of any Regular Trustee, Affiliate of
any Regular Trustee, or any officer, director, shareholder, member, partner,
employee, representative or agent of any Regular Trustee, or any employee or
agent of the MCN Trust or its Affiliates (each a "Company Indemnified Person")
shall be liable, responsible or accountable in damages or otherwise to such
Trust or any officer, director, shareholder, partner, member, representative,
employee or agent of the MCN Trust or its Affiliates for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Fiduciary Indemnified Person or Company Indemnified Person in good faith on
behalf of such MCN Trust and in a manner such Fiduciary
II-1
<PAGE> 166
Indemnified Person or Company Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Fiduciary Indemnified Person
or Company Indemnified Person by such Declaration or by law, except that a
Fiduciary Indemnified Person or Company Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Fiduciary Indemnified
Person's or Company Indemnified Person's gross negligence (or, in the case of a
Fiduciary Indemnified Person, negligence) or willful misconduct with respect to
such acts or omissions.
The Declaration of each MCN Trust also provides that to the full extent
permitted by law, MCN shall indemnify any Company Indemnified Person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil criminal, administrative or
investigative (other than an action by or in the right of the Trust), by reason
of the fact that he is or was a Company Indemnified Person, against expenses
(including attorneys' fees), judgments, fines and any amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The Declaration of each MCN Trust also provides that to
the full extent permitted by law, the Company shall indemnify any Company
Indemnified person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor by reason of the fact that he is or was
a Company Indemnified Person against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matters to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonable entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper. The Declaration of each MCN Trust further
provides that expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in the immediately
preceding two sentences shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by MCN as
authorized in the Declaration. The directors and officers of MCN and the Regular
Trustees are covered by insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, which might be incurred by them in such capacities and against which they
cannot be indemnified by MCN or the MCN Trusts.
II-2
<PAGE> 167
ITEM 16. EXHIBITS.
Exhibits identified in parentheses below are on file with the SEC and are
incorporated by reference to such previous filings.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1-1 Form of Underwriting Agreement with respect to the MCN
Senior Debt Securities (to be filed under subsequent Form
8-K).
1-2 Form of Underwriting Agreement with respect to the MCN
Subordinated Debt Securities (to be filed under subsequent
Form 8-K).
1-3 Form of Underwriting Agreement with respect to MCN Common
Stock (to be filed under subsequent Form 8-K).
1-4 Form of Underwriting Agreement with respect to the MCN
Income PRIDES (to be filed under subsequent Form 8-K).
1-5 Form of Underwriting Agreement for Offering of Preferred
Securities (to be filed under subsequent Form 8-K).
4-1 Articles of Incorporation of MCN Corporation (Exhibit 3-1 to
MCN's March 31, 1994 Form 10-Q).
4-2 By-Laws of MCN Corporation, as amended (Exhibit 3-2 to MCN's
March 31, 1993 Form 10-Q).
4-3 Description of MCN's Preferred Share Purchase Rights (Form
8-A dated December 28, 1989).
4-4 Senior Debt Securities Indenture between MCN Corp. and NBD
Bank, N.A., (now known as NBD Bank) as Trustee. (Exhibit 4-4
to MCN's September 29, 1994 Form S-3 Registration Statement
No. 33-55665).
4-5 Subordinated Debt Securities Indenture between MCN Corp. and
NBD Bank, N.A., as Trustee. (Exhibit 4-5 to MCN's September
29, 1994 Form S-3 Registration Statement No. 33-55665).
4-6 First Supplemental Indenture to Subordinated Debt Securities
Indenture between MCN Corp. and NBD Bank, as Trustee, dated
April 17, 1996 (Exhibit 4-18 to MCN's April 19, 1996
Amendment No. 2 to Form S-3 Registration Statement No.
333-01521).
4-7 Form of Preferred Security (included in Exhibits 4-21, 4-22
and 4-23).*
4-8 Form of Junior Subordinated Debenture relating to MCN
Financing II (included in Exhibit 4-24).*
4-9 (a) Form of Junior Subordinated Debenture relating to MCN
Financing III (included in Exhibit 4-25).*
4-9 (b) Form of Junior Subordinated Debenture relating to MCN
Financing IV (included in Exhibit 4-26).*
4-10 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing II (Exhibit 4-8(b) to MCN's
April 10, 1996 Amendment No. 1 to Form S-3 Registration
Statement No. 333-01521).
4-11 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing III.*
4-12 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing IV.*
4-13 Form of Purchase Contract Agreement, between MCN Corporation
and The First National Bank of Chicago, as Purchase Contract
Agent (including as Exhibit A the form of the Security
Certificate).*
4-14 Form of Pledge Agreement, among MCN Corporation, The Chase
Manhattan Bank, as Collateral Agent and The First National
Bank of Chicago, as Purchase Contract Agent.*
4-15 Certificate of Trust of MCN Financing II (Exhibit 4-12 to
MCN's March 7, 1996 Form S-3 Registration Statement No.
333-01521).
</TABLE>
II-3
<PAGE> 168
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
4-16 Certificate of Trust of MCN Financing III.**
4-17 Certificate of Trust of MCN Financing IV.**
4-18 Declaration of Trust of MCN Financing II (Exhibit 4-14 to
MCN's March 7, 1996 Form S-3 Registration Statement No.
333-01521).
4-19 Declaration of Trust of MCN Financing III.*
4-20 Declaration of Trust of MCN Financing IV.*
4-21 Form of Amended and Restated Declaration of Trust of MCN
Financing II (Exhibit 4-16 to MCN's March 7, 1996 Form S-3
Registration Statement No. 333-01521).
4-22 Form of Amended and Restated Declaration of Trust of MCN
Financing III.*
4-23 Form of Amended and Restated Declaration of Trust of MCN
Financing IV.*
4-24 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with the
issuance of Junior Subordinated Debentures related to MCN
Financing II.*
4-25 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with issuance
of Junior Subordinated Debentures related to MCN Financing
III.*
4-26 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with issuance
of Junior Subordinated Debentures related to MCN Financing
IV.*
5-1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the validity of certain of the Offered
Securities.*
5-2 Opinion of Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary for MCN Corporation regarding
the validity of certain of the Offered Securities.*
8-1 Tax Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
12-1 Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Fixed Charges and Preferred Stock Dividends.
(Exhibit 12-1 to MCN's December 31, 1996, Form 10-K).
23-1 Independent Auditors' Consent -- Deloitte & Touche LLP.***
23-2 Consent of S.A. Holditch & Associates, Inc.***
23-3 Consent of Lee Keeling & Associates, Inc.***
23-4 Consent of Ryder Scott Company.***
23-5 Consent of Miller and Lents, Ltd.***
23-6 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibits 5-1 and 8-1).*
23-7 Consent of Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary for MCN Corporation (included
in Exhibit 5-2).*
23-8 Consent of Questa Engineering Corporation.*
23-9 Consent of Advanced Resources International, Inc.*
24-1 Powers of Attorney for MCN Corporation.****
24-2 Board Resolution authorizing issuance of the Offered
Securities.**
25-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, NBD Bank, N.A., as Trustee under the
Senior Debt Indenture.*
25-2 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of NBD Bank, N.A., as Trustee under the
Subordinated Debt Securities Indenture.*
25-3 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of the Preferred Securities of MCN Financing
II.**
</TABLE>
II-4
<PAGE> 169
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
25-4 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of Preferred Securities of MCN Financing III.**
25-5 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of the Preferred Securities of MCN Financing
IV.**
25-6 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing II.**
25-7 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing III.**
25-8 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing IV.**
</TABLE>
- ---------------
* Indicates document filed herewith.
** Indicates documents previously filed.
*** Updated version filed herewith.
**** Additional Powers of Attorney filed herewith.
References are to MCN (File No. 1-10070) for documents incorporated by
reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by MCN pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-5
<PAGE> 170
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 171
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, MCN Financing
II, MCN Financing III and MCN Financing IV certify that they have reasonable
grounds to believe that they meet all of the requirements for filing on Form S-3
and that they have duly caused this Amendment No. 1 to the Registration
Statement to be signed on their behalf by the undersigned, thereunto duly
authorized, in the City of Detroit and State of Michigan on March 7, 1997.
MCN FINANCING II
By /s/ DANIEL L. SCHIFFER
------------------------------------
Daniel L. Schiffer, Trustee
By /s/ SEBASTIAN COPPOLA
------------------------------------
Sebastian Coppola, Trustee
MCN FINANCING III
By /s/ DANIEL L. SCHIFFER
------------------------------------
Daniel L. Schiffer, Trustee
By /s/ SEBASTIAN COPPOLA
------------------------------------
Sebastian Coppola, Trustee
MCN FINANCING IV
By /s/ DANIEL L. SCHIFFER
------------------------------------
Daniel L. Schiffer, Trustee
By /s/ SEBASTIAN COPPOLA
------------------------------------
Sebastian Coppola, Trustee
II-7
<PAGE> 172
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Detroit, State of Michigan, on March
7, 1997.
MCN CORPORATION
(Registrant)
By: /s/ HAROLD GARDNER
------------------------------------
Harold Gardner
Vice President, Controller and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities with MCN Corporation and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman, President, Chief March 7, 1997
- -------------------------------------------------------- Executive Officer and Director
Alfred R. Glancy III
* Vice Chairman, Chief Financial March 7, 1997
- -------------------------------------------------------- Officer and Director
William K. McCrackin
/s/ HAROLD GARDNER Vice President, Controller and March 7, 1997
- -------------------------------------------------------- Chief Accounting Officer
Harold Gardner
* Director March 7, 1997
- --------------------------------------------------------
Stephen E. Ewing
* Director March 7, 1997
- --------------------------------------------------------
Roger Fridholm
* Director March 7, 1997
- --------------------------------------------------------
Frank M. Hennessey
* Director March 7, 1997
- --------------------------------------------------------
Thomas H. Jeffs II
* Director March 7, 1997
- --------------------------------------------------------
Dale A. Johnson
* Director March 7, 1997
- --------------------------------------------------------
Helen O. Petrauskas
* Director March 7, 1997
- --------------------------------------------------------
Howard F. Sims
* Director March 7, 1997
- --------------------------------------------------------
Bill M. Thompson
*By /s/ HAROLD GARDNER
----------------------------------------------------
Harold Gardner
Attorney-in-Fact
</TABLE>
II-8
<PAGE> 173
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1-1 Form of Underwriting Agreement with respect to the MCN
Senior Debt Securities (to be filed under subsequent Form
8-K).
1-2 Form of Underwriting Agreement with respect to the MCN
Subordinated Debt Securities (to be filed under subsequent
Form 8-K).
1-3 Form of Underwriting Agreement with respect to MCN Common
Stock (to be filed under subsequent Form 8-K).
1-4 Form of Underwriting Agreement with respect to the MCN
Income PRIDES (to be filed under subsequent Form 8-K).
1-5 Form of Underwriting Agreement for Offering of Preferred
Securities (to be filed under subsequent Form 8-K).
4-1 Articles of Incorporation of MCN Corporation (Exhibit 3-1 to
MCN's March 31, 1994 Form 10-Q).
4-2 By-Laws of MCN Corporation, as amended (Exhibit 3-2 to MCN's
March 31, 1993 Form 10-Q).
4-3 Description of MCN's Preferred Share Purchase Rights (Form
8-A dated December 28, 1989).
4-4 Senior Debt Securities Indenture between MCN Corp. and NBD
Bank, N.A., (now known as NBD Bank) as Trustee. (Exhibit 4-4
to MCN's September 29, 1994 Form S-3 Registration Statement
No. 33-55665).
4-5 Subordinated Debt Securities Indenture between MCN Corp. and
NBD Bank, N.A., as Trustee. (Exhibit 4-5 to MCN's September
29, 1994 Form S-3 Registration Statement No. 33-55665).
4-6 First Supplemental Indenture to Subordinated Debt Securities
Indenture between MCN Corp. and NBD Bank, as Trustee, dated
April 17, 1996 (Exhibit 4-18 to MCN's April 19, 1996
Amendment No. 2 to Form S-3 Registration Statement No.
333-01521).
4-7 Form of Preferred Security (included in Exhibits 4-21, 4-22
and 4-23).*
4-8 Form of Junior Subordinated Debenture relating to MCN
Financing II (included in Exhibit 4-24).*
4-9 (a) Form of Junior Subordinated Debenture relating to MCN
Financing III (included in Exhibit 4-25).*
4-9 (b) Form of Junior Subordinated Debenture relating to MCN
Financing IV (included in Exhibit 4-26).*
4-10 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing II (Exhibit 4-8(b) to MCN's
April 10, 1996 Amendment No. 1 to Form S-3 Registration
Statement No. 333-01521).
4-11 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing III.*
4-12 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing IV.*
4-13 Form of Purchase Contract Agreement, between MCN Corporation
and The First National Bank of Chicago, as Purchase Contract
Agent (including as Exhibit A the form of the Security
Certificate).*
4-14 Form of Pledge Agreement, among MCN Corporation, The Chase
Manhattan Bank, as Collateral Agent and The First National
Bank of Chicago, as Purchase Contract Agent.*
4-15 Certificate of Trust of MCN Financing II (Exhibit 4-12 to
MCN's March 7, 1996 Form S-3 Registration Statement No.
333-01521).
4-16 Certificate of Trust of MCN Financing III.**
</TABLE>
<PAGE> 174
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
4-17 Certificate of Trust of MCN Financing IV.**
4-18 Declaration of Trust of MCN Financing II (Exhibit 4-14 to
MCN's March 7, 1996 Form S-3 Registration Statement No.
333-01521).
4-19 Declaration of Trust of MCN Financing III.*
4-20 Declaration of Trust of MCN Financing IV.*
4-21 Form of Amended and Restated Declaration of Trust of MCN
Financing II (Exhibit 4-16 to MCN's March 7, 1996 Form S-3
Registration Statement No. 333-01521).
4-22 Form of Amended and Restated Declaration of Trust of MCN
Financing III.*
4-23 Form of Amended and Restated Declaration of Trust of MCN
Financing IV.*
4-24 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with the
issuance of Junior Subordinated Debentures related to MCN
Financing II.*
4-25 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with issuance
of Junior Subordinated Debentures related to MCN Financing
III.*
4-26 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with issuance
of Junior Subordinated Debentures related to MCN Financing
IV.*
5-1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the validity of certain of the Offered
Securities.*
5-2 Opinion of Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary for MCN Corporation regarding
the validity of certain of the Offered Securities.*
8-1 Tax Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
12-1 Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Fixed Charges and Preferred Stock Dividends.
(Exhibit 12-1 to MCN's December 31, 1996, Form 10-K).
23-1 Independent Auditors' Consent -- Deloitte & Touche LLP.***
23-2 Consent of S.A. Holditch & Associates, Inc.***
23-3 Consent of Lee Keeling & Associates, Inc.***
23-4 Consent of Ryder Scott Company.***
23-5 Consent of Miller and Lents, Ltd.***
23-6 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibits 5-1 and 8-1).*
23-7 Consent of Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary for MCN Corporation (included
in Exhibit 5-2).*
23-8 Consent of Questa Engineering Corporation.*
23-9 Consent of Advanced Resources International, Inc.*
24-1 Powers of Attorney for MCN Corporation.****
24-2 Board Resolution authorizing issuance of the Offered
Securities.**
25-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, NBD Bank, N.A., as Trustee under the
Senior Debt Indenture.*
25-2 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of NBD Bank, N.A., as Trustee under the
Subordinated Debt Securities Indenture.*
25-3 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of the Preferred Securities of MCN Financing
II.**
25-4 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of Preferred Securities of MCN Financing III.**
</TABLE>
<PAGE> 175
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
25-5 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of the Preferred Securities of MCN Financing
IV.**
25-6 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing II.**
25-7 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing III.**
25-8 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing IV.**
</TABLE>
- ---------------
* Indicates document filed herewith.
** Indicates documents previously filed.
*** Updated version filed herewith.
**** Additional Powers of Attorney filed herewith.
References are to MCN (File No. 1-10070) for documents incorporated by
reference.
<PAGE> 1
EXHIBIT 4-11
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
MCN Financing III
Dated as of March __, 1997
====================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . 5
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . 5
SECTION 2.3 Reports by the Preferred Guarantee
Trustee . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee . . . . . . 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . 6
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . 6
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . 7
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee . . . 7
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee . . . . . . . 9
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee . . . 11
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility . . . . . . . . . 12
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees . . . . . . . . . . . . . . . . . . 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . . 13
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . . . . . . 16
<PAGE> 3
Page
----
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . 16
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . 18
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . 20
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of March __, 1997, is executed and delivered by MCN
Corporation, a Michigan corporation doing business as MCN Energy Group Inc.
(the "Guarantor"), and Wilmington Trust Company, as trustee (the "Preferred
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of MCN Financing
III, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of March __, 1997, among the trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof _________ preferred securities,
liquidation amount $50 per preferred security, having an aggregate liquidation
amount of $__________ designated the __% Trust Originated Preferred Securities
(the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to pay
to the Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
<PAGE> 5
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(c) all references to "the Preferred Securities
Guarantee" or "this Preferred Securities Guarantee"
are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Preferred Securities Guarantee, unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Preferred Securities
Guarantee, unless otherwise defined in this Preferred
Securities Guarantee or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Business Day" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by
any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
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"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
"Debentures" means the series of junior subordinated debt
securities of the Guarantor designated the __% Junior Subordinated Debentures
due 2002 held by the Institutional Trustee (as defined in the Declaration) of
the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer shall have funds available
therefor, (ii) the repayment price, including all accrued and unpaid
Distributions to the date of repayment (the "Repayment Price") to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities presented for repayment by the Holders, and (iii) upon a voluntary
or involuntary dissolution, winding-up or termination of the Issuer (other than
in connection with the distribution of Debentures to the Holders in exchange
for Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
(in either case, the "Liquidation Distribution"). If an event of default under
the Indenture has occurred and is continuing, the rights of holders of the
Common Securities to receive payments under the Common Securities Guarantee
Agreement are subordinated to the rights of Holders of Preferred Securities to
receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
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"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of September 1, 1994,
among the Guarantor (the "Debenture Issuer") and NBD Bank, N.A., as trustee,
and any indenture supplemental thereto pursuant to which certain subordinated
debt securities of the Debenture Issuer are to be issued to the Institutional
Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
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<PAGE> 8
"Preferred Guarantee Trustee" means Wilmington Trust Company,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders") as of such date, (i) within 1 Business Day after
January 1 and July 1 of each year, and (ii) at any other time within 30 days of
receipt by the Guarantor of a written request for a List of Holders as of a date
no more than 14 days before such List of Holders is given to the Preferred
Guarantee Trustee provided, that the
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Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
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SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, the Preferred Guarantee Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Preferred Guarantee
Trustee shall have received written notice, or of which a Responsible Officer
of the Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by
the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee has occurred and
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is continuing, the Preferred Guarantee Trustee shall enforce this Preferred
Securities Guarantee for the benefit of the Holders of the Preferred
Securities.
(c) The Preferred Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Preferred Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee
shall be construed to relieve the Preferred Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the requirements
of this Preferred Securities Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to determine
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whether or not they conform to the requirements of this
Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee, or exercising any trust
or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
a Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established
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before taking, suffering or omitting any action hereunder, the
Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court
of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
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(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the
authority of the Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(b) No provision of this Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Preferred Guarantee Trustee shall be construed to
be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Preferred Securities Guarantee.
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ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed
in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
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(c) The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of resignation,
the resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant
to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee
all amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any
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right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Preferred Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Repayment Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities (other
than an extension of time for payment of Distributions, Repayment Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of
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<PAGE> 18
a guarantor, it being the intent of this Section 5.3 that the obligations of
the Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce
this Preferred Securities Guarantee, any Holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Preferred Securities Guarantee, without first instituting a
legal proceeding against the Issuer, the Preferred Guarantee Trustee or any
other Person. Notwithstanding the foregoing, if the Guarantor has failed to
make a Guarantee Payment, a holder of Preferred Securities may directly
institute a proceeding against the Guarantor for enforcement of the Preferred
Security Guarantee for such payment. The Guarantor waives any right or remedy
to require that any action on this Preferred Securities Guarantee be brought
first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
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<PAGE> 19
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if
there shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of its common stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit
plans or the satisfaction by the Guarantor of its obligations pursuant to any
contract or security outstanding on the date of such event requiring the
Guarantor to purchase shares of its common stock, (ii) as a result of a
reclassification of its capital stock or the exchange or conversion of one
class or series of its capital stock for another class or series of its capital
stock or, (iii) the purchase of fractional interests in shares of its capital
stock pursuant to the conversion or exchange provisions of such capital stock
or security being converted or exchanged) or make any guarantee payment with
respect thereto, (b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Guarantor which rank pari passu with or junior to the
Debentures or any other junior subordinated debentures issued by the Guarantor
and the Guarantor shall not make any guarantee payments with respect to the
foregoing (other than the Guaranty Payments).
SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor except those
liabilities of the Guarantor made pari passu or subordinate by their terms,
(ii) pari passu with the
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most senior preferred or preference stock now or hereafter issued by the
Guarantor and with any guarantee now or hereafter entered into by the Guarantor
in respect of any preferred or preference stock of any Affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i)
full payment of the Repayment Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing,
this Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts perti-
17
<PAGE> 21
nent to the existence and amount of assets from which Distributions to Holders
of Preferred Securities might properly be paid.
SECTION 8.2 Indemnification
(a) To the fullest extent permitted by applicable law,
the Guarantor shall indemnify and hold harmless each Indemnified Person from
and against any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person
in good faith in accordance with this Guarantee Agreement and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Guarantee Agreement, except that
no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
reasonable expenses (including legal fees) incurred by an Indem- nified person
in defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
(c) The obligation to indemnify as set forth in this
Section 8.2 shall survive the termination of the Preferred Securities
Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
other-
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<PAGE> 22
wise, plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all the outstanding Preferred Securities. The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):
MCN Energy Group Inc.
500 Griswold Street
Detroit, MI 48226
Attention: Office of Treasurer
(c) If given to any Holder of Preferred Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit
of the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.
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<PAGE> 23
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
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<PAGE> 24
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
MCN CORPORATION, as Guarantor
By:________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Preferred Guarantee Trustee
By:_______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4-12
====================================
CAPITAL SECURITIES GUARANTEE AGREEMENT
MCN Financing IV
Dated as of ________ __, 1997
====================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . 5
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . 5
SECTION 2.3 Reports by the Capital Guarantee Trustee . . . . . . . . 6
SECTION 2.4 Periodic Reports to Capital Guarantee Trustee . . . . . . 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . 6
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . 6
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . 7
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee . . . 7
SECTION 3.2 Certain Rights of Capital Guarantee Trustee . . . . . . . 9
SECTION 3.3. Not Responsible for Recitals or Issuance of Capital
Securities Guarantee . . . . . . . . . . . . . . . . . 11
ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1 Capital Guarantee Trustee; Eligibility . . . . . . . . . 12
SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . 13
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . 14
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . . . . . 16
<PAGE> 3
Page
----
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . 16
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . 18
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 20
ii
<PAGE> 4
CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Capital Securities Guarantee"),
dated as of ______ __, 1997, is executed and delivered by MCN Energy Group
Inc., a Michigan corporation (the "Guarantor"), and Wilmington Trust Company,
as trustee (the "Capital Guarantee Trustee"), for the benefit of the Holders
(as defined herein) from time to time of the Capital Securities (as defined
herein) of MCN Financing IV, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of _______ __, 1997, among the trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof ___________ preferred securities,
liquidation amount $1,000 per preferred security having an aggregate
liquidation amount of $__________ designated the ____% Capital Securities (the
"Capital Securities");
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth in this Capital Securities Guarantee, to pay to the
Holders of the Capital Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth
herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Capital Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Capital Securities to receive Guarantee Payments under this Capital Securities
Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Capital Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Capital
Securities Guarantee for the benefit of the Holders.
<PAGE> 5
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Capital Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Capital Securities
Guarantee has the same meaning throughout;
(c) all references to "the Capital Securities Guarantee"
or "this Capital Securities Guarantee" are to this
Capital Securities Guarantee as modified,
supplemented or amended from time to time;
(d) all references in this Capital Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Capital Securities Guarantee, unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Capital Securities
Guarantee, unless otherwise defined in this Capital
Securities Guarantee or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Business Day" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by
any applicable law to close.
"Capital Guarantee Trustee" means Wilmington Trust Company
until a Successor Capital Guarantee Trustee has been appointed and has accepted
such appointment pursuant to the terms of this Capital Securities Guarantee and
thereafter means each such Successor Capital Guarantee Trustee.
2
<PAGE> 6
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital
Guarantee Trustee at which the corporate trust business of the Capital
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of
Capital Securities.
"Debentures" means the series of junior subordinated debt
securities of the Guarantor designated the ___% Junior Subordinated Debentures
due 20__ held by the Institutional Trustee (as defined in the Declaration) of
the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Capital Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Capital Securities to the extent the Issuer shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Capital Securities
called for redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Capital
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions on the Capital
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution"). If an event of default under the
Indenture has occurred and is continuing, the rights of holders of the Common
Securities to receive payments under the Common Securities Guarantee Agreement
are subordinated to the rights of Holders of Capital Securities to receive
Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Capital Securities;
3
<PAGE> 7
provided, however, that, in determining whether the holders of the requisite
percentage of Capital Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.
"Indemnified Person" means the Capital Guarantee Trustee, any
Affiliate of the Capital Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Capital Guarantee Trustee.
"Indenture" means the Indenture dated as of September 1, 1994,
among the Guarantor (the "Debenture Issuer") and NBD Bank, N.A., as trustee,
and any indenture supplemental thereto pursuant to which certain subordinated
debt securities of the Debenture Issuer are to be issued to the Institutional
Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Capital
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Capital Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
4
<PAGE> 8
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Capital
Guarantee Trustee, any officer within the Corporate Trust Office of the Capital
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other
officer of the Corporate Trust Office of the Capital Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Capital Guarantee Trustee" means a successor
Capital Guarantee Trustee possessing the qualifications to act as Capital
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trust Securities" means the Capital Securities and the Common
Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Capital Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this
Capital Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Guarantee
Trustee with a list, in such form as the Capital Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Capital
Securities ("List of Holders") as of such date, (i) within 1 Business Day after
January 1 and July 1 of each year, and (ii) at any other time within 30 days of
receipt
5
<PAGE> 9
by the Guarantor of a written request for a List of Holders as of a date no
more than 14 days before such List of Holders is given to the Capital Guarantee
Trustee provided, that the Guarantor shall not be obligated to provide such
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Capital Guarantee Trustee by the Guarantor.
The Capital Guarantee Trustee may destroy any List of Holders previously given
to it on receipt of a new List of Holders.
(b) The Capital Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Capital Guarantee Trustee
Within 60 days after May 15 of each year, the Capital
Guarantee Trustee shall provide to the Holders of the Capital Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Capital Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Guarantee Trustee
The Guarantor shall provide to the Capital Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Capital Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Capital Securities Guarantee, but no such waiver shall extend to any
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subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Capital Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Capital Securities, notices of all
Events of Default actually known to a Responsible Officer of the Capital
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, the Capital Guarantee Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of the
Capital Guarantee Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Capital Securities.
(b) The Capital Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Capital Guarantee Trustee
shall have received written notice, or of which a Responsible Officer of the
Capital Guarantee Trustee charged with the administration of the Declaration
shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Capital Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by
the Capital Guarantee Trustee for the benefit of the Holders of the Capital
Securities, and the Capital Guarantee Trustee shall not transfer this Capital
Securities Guarantee to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 5.4(b) or to a Successor
Capital Guarantee Trustee on acceptance by such Successor Capital Guarantee
Trustee of its appointment to act as Successor Capital Guarantee Trustee. The
right, title and interest of the Capital Guarantee Trustee shall automatically
vest in any Successor Capital Guarantee Trustee, and such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such Successor Capital
Guarantee Trustee.
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(b) If an Event of Default actually known to a
Responsible Officer of the Capital Guarantee Trustee has occurred and is
continuing, the Capital Guarantee Trustee shall enforce this Capital Securities
Guarantee for the benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence
of any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Capital Securities Guarantee, and no implied covenants shall
be read into this Capital Securities Guarantee against the Capital Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Capital Guarantee Trustee, the Capital Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Capital Securities
Guarantee, and use the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee
shall be construed to relieve the Capital Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Capital
Guarantee Trustee shall be determined solely by the express
provisions of this Capital Securities Guarantee, and the
Capital Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Capital Securities Guarantee, and no implied
covenants or obligations shall be read into this Capital
Securities Guarantee against the Capital Guarantee Trustee;
and
(B) in the absence of bad faith on the part of
the Capital Guarantee Trustee, the Capital Guarantee Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Capital Guarantee
Trustee and conforming to the requirements of this Capital
Securities Guarantee; but in the case of any such certificates
or opinions that by any provision hereof are specifically
required to be furnished to the Capital Guarantee Trustee, the
Capital Guarantee Trustee shall be under a
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duty to examine the same to determine whether or not they
conform to the requirements of this Capital Securities
Guarantee;
(ii) the Capital Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Capital Guarantee Trustee, unless it shall be proved that the
Capital Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Capital Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Capital Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Capital Guarantee Trustee, or exercising any trust or
power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee
shall require the Capital Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Capital Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Capital Securities Guarantee or indemnity, reasonably satisfactory to
the Capital Guarantee Trustee, against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting upon,
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Capital Securities Guarantee shall be sufficiently evidenced by a
Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Capital
Securities Guarantee, the Capital Guarantee Trustee shall
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deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Capital
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Guarantor.
(iv) The Capital Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Capital Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Capital Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Capital Securities Guarantee from any court of
competent jurisdiction.
(vi) The Capital Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Capital Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Capital
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Capital Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Capital Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Capital Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Capital Guarantee Trustee, upon the occurrence of an Event of Default,
of its obligation to exercise the rights and powers vested in it by
this Capital Securities Guarantee.
(vii) The Capital Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Capital Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
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(viii) The Capital Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Capital Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Capital Guarantee Trustee or
its agents hereunder shall bind the Holders of the Capital Securities,
and the signature of the Capital Guarantee Trustee or its agents alone
shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the
Capital Guarantee Trustee to so act or as to its compliance with any
of the terms and provisions of this Capital Securities Guarantee, both
of which shall be conclusively evidenced by the Capital Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Capital
Securities Guarantee the Capital Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Capital Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(b) No provision of this Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Capital Guarantee Trustee shall be construed to
be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Capital
Securities Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Capital Guarantee Trustee does not assume
any responsibility for their correctness. The Capital Guarantee Trustee makes
no representation as to the validity or sufficiency of this Capital Securities
Guarantee.
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ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1 Capital Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Capital Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Capital Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee
Trustee
(a) Subject to Section 4.2(b), the Capital Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.
(b) The Capital Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Capital Guarantee Trustee and delivered to the Guarantor.
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(c) The Capital Guarantee Trustee appointed to office
shall hold office until a Successor Capital Guarantee Trustee shall have been
appointed or until its removal or resignation. The Capital Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Capital Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Capital Guarantee Trustee
and delivered to the Guarantor and the resigning Capital Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery to the Guarantor of an instrument of resignation, the
resigning Capital Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Capital Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Capital Guarantee Trustee.
(e) No Capital Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Capital Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee
or removal or resignation of the Capital Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Capital Guarantee Trustee all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any
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other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Capital Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Capital
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Capital Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Capital Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.3 that the
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obligations of the Guarantor hereunder shall be absolute and unconditional
under any and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of
the Capital Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Capital Guarantee
Trustee in respect of this Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee.
(b) If the Capital Guarantee Trustee fails to enforce
such Capital Securities Guarantee, any Holder of Capital Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Capital Guarantee Trustee's rights under this Capital Securities Guarantee,
without first instituting a legal proceeding against the Issuer, the Capital
Guarantee Trustee or any other person or entity. Notwithstanding the
foregoing, if the Guarantor has failed to make a Guarantee Payment, a holder of
Capital Securities may directly institute a proceeding against the Guarantor
for enforcement of the Preferred Security Guarantee for such payment. The
Guarantor waives any right or remedy to require that any action on this Capital
Securities Guarantee be brought first against the Issuer or any other person or
entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Capital Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Capital Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Capital Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
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agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, if there
shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of its common stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit
plans or the satisfaction by the Guarantor of its obligations pursuant to any
contract or security outstanding on the date of such event requiring the
Guarantor to purchase shares of its common stock, (ii) as a result of a
reclassification of its capital stock or the exchange or conversion of one
class or series of the Guarantor's capital stock for another class or series of
the Guarantor's capital stock or, (iii) the purchase of fractional interests in
shares of its capital stock pursuant to the conversion or exchange provisions
of such capital stock of the Guarantor or the security being converted or
exchanged) or make any guarantee payment with respect thereto or (b) the
Guarantor shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees)
issued by the Guarantor which rank pari passu with or junior to the Debentures
or any other junior subordinated debentures issued by the Guarantor, and (c)
the Guarantor shall not make any Guarantee payments with respect to the
foregoing (other than the Guarantee payments).
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SECTION 6.2 Ranking
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor (other than the
Guarantor's guarantee of the trust originated preferred securities, if any,
issued by MCN Financing I, MCN Financing II, and MCN Financing III, which
guarantees will rank pari passu with the Capital Securities Guarantee), (ii)
pari passu with the most senior preferred or preference stock now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Affiliate
of the Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Capital Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Capital Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Capital Securities
or (iii) upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing,
this Capital Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Capital Securities
must restore payment of any sums paid under the Capital Securities or under
this Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Capital Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Capital Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Capital Securities
might properly be paid.
SECTION 8.2 Indemnification
(a) To the fullest extent permitted by applicable law,
the Guarantor shall indemnify and hold harmless each Indemnified Person from
and against any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person
in good faith in accordance with this Guarantee Agreement and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Guarantee Agreement, except that
no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
reasonable expenses (including legal fees) incurred by an Indem- nified person
in defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
(c) The obligation to indemnify as set forth in this
Section 8.2 shall survive the termination of the Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Capital Securities then outstanding.
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SECTION 9.2 Amendments
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Capital Securities Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all the outstanding Capital Securities. The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the Capital
Guarantee Trustee's mailing address set forth below (or such other address as
the Capital Guarantee Trustee may give notice of to the Holders of the Capital
Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Capital Securities):
MCN Energy Group Inc.
500 Griswold Street
Detroit, MI 48226
Attention: Office of General Counsel
(c) If given to any Holder of Capital Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
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SECTION 9.4 Benefit
This Capital Securities Guarantee is solely for the benefit of
the Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.5 Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and year first
above written.
MCN ENERGY GROUP INC., as Guarantor
By:_________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Capital Guarantee Trustee
By:________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.13
------------------------------------------------------
------------------------------------------------------
MCN CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS PURCHASE CONTRACT AGENT
---------------------
PURCHASE CONTRACT AGREEMENT
---------------------
DATED AS OF MARCH __, 1997
-----------------------------------------------------
-----------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
RECITALS.................................................................. 1
ARTICLE I
Definitions and Other Provisions
of General Applications................................................... 1
Section 1.1. Definitions............................................. 1
Section 1.2. Compliance Certificates and Opinions.................... 12
Section 1.3. Form of Documents Delivered to Agent.................... 13
Section 1.4. Acts of Holders; Record Dates........................... 14
Section 1.5. Notices................................................. 16
Section 1.6. Notice to Holders; Waiver............................... 17
Section 1.7. Effect of Headings and Table of Contents................ 18
Section 1.8. Successors and Assigns.................................. 18
Section 1.9. Separability Clause..................................... 18
Section 1.10. Benefits of Agreement................................... 18
Section 1.11. Governing Law........................................... 19
Section 1.12. Legal Holidays.......................................... 19
Section 1.13. Counterparts............................................ 19
Section 1.14. Inspection of Agreement................................. 19
i
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PAGE
ARTICLE II
Certificate Forms....................................................... 20
Section 2.1. Forms of Certificates Generally..................... 20
Section 2.2. Form of Agent's Certificate of Authentication ...... 21
ARTICLE III
The Securities.......................................................... 21
Section 3.1. Title and Terms; Denominations...................... 21
Section 3.2. Rights and Obligations Evidenced by the
Certificates........................................ 22
Section 3.3. Execution, Authentication, Delivery and Dating...... 23
Section 3.4. Temporary Certificates.............................. 24
Section 3.5. Registration; Registration of Transfer
and Exchange........................................ 25
Section 3.6. Book-Entry Interests................................ 27
Section 3.7. Notices to Holders.................................. 28
Section 3.8. Appointment of Successor Clearing Agency............ 28
Section 3.9. Definitive Certificates............................. 28
Section 3.10. Mutilated, Destroyed, Lost and Stolen
Certificates........................................ 28
Section 3.11. Persons Deemed Owners............................... 30
Section 3.12. Cancellation........................................ 31
Section 3.13. Substitution of Securities.......................... 31
Section 3.14. Reestablishment of Income PRIDES.................... 33
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<PAGE> 4
PAGE
Section 3.15. No Consent to Assumption . . . . . . . . . . . . . . . . 34
ARTICLE IV
The Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.1. Payment of Distribution; Rights to
Distributions Preserved . . . . . . . . . . . . . . . . 34
Section 4.2. Transfer of Collateral upon Occurrence of
Termination Event . . . . . . . . . . . . . . . . . . . 35
Section 4.3. Notice and Voting . . . . . . . . . . . . . . . . . . . 37
Section 4.4. Tax Event; Investment Company Event . . . . . . . . . . 37
ARTICLE V
The Purchase Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.1. Purchase of Shares of Common Stock . . . . . . . . . . . 38
Section 5.2. Contract Adjustment Payments . . . . . . . . . . . . . 40
Section 5.3. Deferral of Payment Dates For Con-
tract Adjustment Payments . . . . . . . . . . . . . . . 42
Section 5.4. Payment of Purchase Price . . . . . . . . . . . . . . . 43
Section 5.5. Issuance of Shares of Common Stock . . . . . . . . . . . 45
Section 5.6. Adjustment of Settlement Rate . . . . . . . . . . . . . 46
Section 5.7. Notice of Adjustments and Certain Other Events . . . . . 54
Section 5.8. Termination Event; Notice . . . . . . . . . . . . . . . 55
Section 5.9. Early Settlement . . . . . . . . . . . . . . . . . . . 55
Section 5.10. No Fractional Shares . . . . . . . . . . . . . . . . . 57
Section 5.11. Charges and Taxes . . . . . . . . . . . . . . . . . . . 58
iii
<PAGE> 5
ARTICLE VI
PAGE
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.1. Unconditional Right of Holders to
Receive Contract Adjustment Payments
and to Purchase Common Stock . . . . . . . . . . . . . . . 59
Section 6.2. Restoration of Rights and Remedies . . . . . . . . . . . . 59
Section 6.3. Rights and Remedies Cumulative . . . . . . . . . . . . . . 59
Section 6.4. Delay or Omission Not Waiver . . . . . . . . . . . . . . . 60
Section 6.5. Undertaking for Costs . . . . . . . . . . . . . . . . . . 60
Section 6.6. Waiver of Stay or Extension Laws . . . . . . . . . . . . . 61
ARTICLE VII
The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.1. Certain Duties and Responsibilities . . . . . . . . . . . 61
Section 7.2. Notice of Default. . . . . . . . . . . . . . . . . . . . . 62
Section 7.3. Certain Rights of Agent . . . . . . . . . . . . . . . . . 62
Section 7.4. Not Responsible for Recitals or Issu-
ance of Securities . . . . . . . . . . . . . . . . . . . . 64
Section 7.5. May Hold Securities . . . . . . . . . . . . . . . . . . . 64
Section 7.6. Money Held in Custody . . . . . . . . . . . . . . . . . . 64
Section 7.7. Compensation and Reimbursement . . . . . . . . . . . . . . 64
Section 7.8. Corporate Agent Required; Eligibili-
ty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.9. Resignation and Removal; Appointment
of Successor . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.10. Acceptance of Appointment by Succes-
sor . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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<PAGE> 6
PAGE
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . 68
Section 7.12. Preservation of Information; Communi- . . . . . . . . . .
cations to Holders . . . . . . . . . . . . . . . . . . . . 68
Section 7.13. No Obligations of Agent . . . . . . . . . . . . . . . . . 69
Section 7.14. Tax Compliance . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VIII
Supplemental Agreements 70
Section 8.1. Supplemental Agreements Without Consent of Holders . . . . 70
Section 8.2. Supplemental Agreements with Consent of Holders . . . . . 71
Section 8.3. Execution of Supplemental Agreements . . . . . . . . . . . 72
Section 8.4. Effect of Supplemental Agreements . . . . . . . . . . . . 72
Section 8.5. Reference to Supplemental Agreements . . . . . . . . . . . 72
ARTICLE IX
Consolidation, Merger, Sale or Conveyance . . . . . . . . . . . . . . . 73
Section 9.1. Covenant Not to Merge, Consolidate,
Sell or Convey Property Except Under
Certain Conditions . . . . . . . . . . . . . . . 73
Section 9.2. Rights and Duties of Successor Corporation 73
Section 9.3. Opinion of Counsel to Agent . . . . . . . . . . . . . . . 74
ARTICLE X
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.1. Performance Under Purchase Contracts . . . . . . . . . . . 74
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<PAGE> 7
PAGE
Section 10.2. Maintenance of Office or Agency . . . . . . . . . . . . . 75
Section 10.3. Company to Reserve Common Stock . . . . . . . . . . . . . 75
Section 10.4. Covenants as to Common Stock . . . . . . . . . . . . . .. 76
Section 10.5. Statements of Officers of the Company
as to Default . . . . . . . . . . . . . . . . . . . . . . 76
EXHIBIT A Form of Income PRIDES Certificate
EXHIBIT B Form of Growth PRIDES Certificate
EXHIBIT C Instruction to Collateral Agent
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<PAGE> 8
PURCHASE CONTRACT AGREEMENT, dated as of March __, 1997, between MCN
Corporation, a Michigan corporation, doing business as MCN Energy Group Inc.,
(the "Company"), and The First National Bank of Chicago, a national banking
association, acting as purchase contract agent for the Holders of Securities
from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.
All things necessary to make the Purchase Contracts, when the Certificates
are executed by the Company and authenticated, executed on behalf of the
Holders and delivered by the Agent, as provided in this Agreement, the valid
obligations of the Company, and to constitute these presents a valid agreement
of the Company, in accordance with its terms, have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
Definitions and Other Provisions
of General Applications
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
<PAGE> 9
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(d) the following terms have the meanings given to them in the
Declaration: (i) Indenture, (ii) Investment Company Event; (iii) Liquidation
Distribution; and (iv) Tax Event; and
(e) the following terms have the meanings given to them in this Section
1.1(e).
"Act" when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean such
Person.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 5.1.
2
<PAGE> 10
"Bankruptcy Code" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"Beneficial Owner" means, with respect to a Book-Entry Interest, a Person,
who is the beneficial owner of such Book-Entry Interest, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant or
as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Board of Directors" means the board of directors of the Company or a duly
authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification and
delivered to the Agent.
"Book-Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 3.6.
"Business Day" means any day which is not a Saturday or Sunday or a day on
which the NYSE or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to be closed.
"Cash Settlement" has the meaning set forth in Section 5.4(a)(i).
"Certificate" means an Income PRIDES Certificate or a Growth PRIDES
Certificate.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as a depositary for
the Securities and in whose name or in the name of a nominee of that
organization, shall be registered a Global Cert-
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<PAGE> 11
ificate and which shall undertake to effect book entry transfers and pledges of
the Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with
the Clearing Agency.
"Collateral Substitution" has the meaning specified in Section 5.1.
"Closing Price" has the meaning specified in Section 3.13.
"Collateral Agent" means The Chase Manhattan Bank, as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have become
such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Collateral Agent" shall mean the Person who is then the Collateral
Agent thereunder.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor shall have become such pursuant to the
applicable provision of this Agreement, and thereafter "Company" shall mean
such successor.
"Contract Adjustment Payments" means the fee payable by the Company in
respect of each Purchase Contract, equal to __% per annum of the Stated Amount,
computed on the basis of the actual number of days elapsed in a year of 365 or
366 days, as the case may be, plus any Deferred Contract Adjustment Payments
accrued pursuant to Section 5.2, except that the Contract Adjustment Payments
payable on the first Payment Date will be adjusted so that the Contract
Adjustment Payments payable on such date will be the equivalent of _____% of
the Stated Amount per annum accruing from the date of issuance of the
Securities to June 30, 1997.
"Corporate Trust Office" means the principal corporate trust office of the
Agent at which, at any particular time, its corporate trust business shall be
adminis-
4
<PAGE> 12
tered, which office at the date hereof is located at One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust
Services Division, except that for purposes of Section 10.2, such term shall
mean the office or agency of the Agent in the Borough of Manhattan, the City of
New York, which office at the date hereof is located at 14 Wall Street, Eighth
Floor, New York, New York 10005.
"Current Market Price" has the meaning specified in Section 5.6(a)(8).
"Declaration" means the Amended and Restated Declaration of Trust of MCN
Financing III (the "Trust"), dated March __, 1997, among the Company, as the
sponsor, the trustees named therein and the holders from time to time of
individual beneficial interests in the assets of the Trust.
"Deferred Contract Adjustment Payments" has the meaning specified in
Section 5.3.
"Depositary" means, initially, DTC until another Clearing Agency becomes
its successor.
"DTC" means The Depositary Trust Company, the initial Clearing Agency.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4.
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<PAGE> 13
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Global Certificate" means a Certificate that evidences all or part of the
Securities and is registered in the name of a Depositary or a nominee thereof.
"Global Preferred Security Certificate" means a certificate evidencing the
rights and obligations of a holder in respect of the number of Preferred
Securities specified on such certificate and which is registered in the name of
a Clearing Agency or a nominee thereof.
"Growth PRIDES" means, following the substitution of one or more Treasury
Securities for Preferred Securities as collateral to secure a holder's
obligations under a Purchase Contract, the collective rights and obligations of
a holder of a Growth PRIDES Certificate in respect of such Treasury Securities,
subject to the Pledge thereof, and the related Purchase Contract.
"Growth PRIDES Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Growth PRIDES specified on
such certificate.
"Growth PRIDES Register" and "Growth PRIDES Registrar" have the respective
meanings specified in Section 3.5.
"Holder," when used with respect to a Security, means a Person in whose
name the Security evidenced by an Income PRIDES Certificate and/or a Growth
PRIDES Certificate is registered in the related Income PRIDES Register and/or
the Growth PRIDES Register, as the case may be.
"Indenture Trustee" means NBD Bank, N.A. (now known as NBD Bank), a
Michigan Banking Corporation, as trustee under the Indenture, or any successor
thereto.
"Institutional Trustee" means Wilmington Trust Company, as institutional
trustee under the Declaration, or any successor thereto that is a financial
institution unaffiliated with the Company.
"Income PRIDES" means the collective rights and obligations of a holder of
an Income PRIDES Certificate
6
<PAGE> 14
in respect of a Preferred Security, subject to the Pledge thereof, and
a related Purchase Contract.
"Income PRIDES Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Income PRIDES specified on
such certificate.
"Income PRIDES Register" and "Income PRIDES Registrar" have the respective
meanings specified in Section 3.5.
"Investment Company Event" has the meaning set forth in Annex I of the
Declaration.
"Issuer Order" or "Issuer Request" means a written order or request signed
in the name of the Company by its Chairman of the Board, any Vice Chairman, its
President or a Vice President and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Agent.
"Junior Subordinated Debentures" means the series of junior subordinated
debentures of the Company designated the __% Junior Subordinated Debentures due
May 2002, to be issued under the Indenture as of the date hereof.
"NYSE" has the meaning specified in Section 5.1.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, any Vice Chairman of the Board, the President or any Vice President and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by legal counsel,
who may be an employee of or counsel to the Company and who shall be reasonably
acceptable to the Agent.
"Outstanding Securities," with respect to any Income PRIDES and/or Growth
PRIDES, means, as of the date of determination, all Income PRIDES and/or Growth
PRIDES evidenced by Securities Certificates theretofore authenticated, executed
and delivered under this Agreement, except:
7
<PAGE> 15
(i) If a Termination Event has occurred, (A) Growth PRIDES and
(B) Income PRIDES for which the Stated Amount of the underlying
Preferred Security or a Liquidation Distribution in respect of such
Preferred Security has been theretofore deposited with the Agent in
trust for the Holders of such Income PRIDES;
(ii) Income PRIDES and Growth PRIDES evidenced by Certificates
theretofore cancelled by the Agent or delivered to the Agent for
cancellation or deemed cancelled pursuant to the provisions of this
Agreement; and
(iii) Income PRIDES and Growth PRIDES evidenced by Certificates in
exchange for or in lieu of which other Certificates have been
authenticated, executed on behalf of the Holder and delivered pursuant
to this Agreement, other than any such Certificate in respect of which
there shall have been presented to the Agent proof satisfactory to it
that such Certificate is held by a bona fide purchaser in whose hands
the Income PRIDES or Growth PRIDES evidenced by such Certificate are
valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
number of the Income PRIDES or Growth PRIDES have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Income PRIDES or
Growth PRIDES owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Income PRIDES or
Growth PRIDES which a Responsible Officer of the Agent knows to be so owned
shall be so disregarded. Income PRIDES or Growth PRIDES so owned which have
been pledged in good faith may be regarded as Outstanding Securities if the
pledgee establishes to the satisfaction of the Agent the pledgee's right so to
act with respect to such Income PRIDES or Growth PRIDES and that the pledgee is
not the Company or any Affiliate of the Company.
"Payment Date" means each March 31, June 30, September 30, and December
31, commencing [June 30], 1997.
8
<PAGE> 16
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" means the pledge under the Pledge Agreement of the Preferred
Securities or the Treasury Securities, in each case constituting a part of the
Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, by and among the Company, the Collateral Agent and the Agent, on its
own behalf and as attorney-in-fact for the Holders from time to time of the
Securities.
"Predecessor Certificate" means a Predecessor Income PRIDES Certificate or
a Predecessor Growth PRIDES Certificate.
"Predecessor Growth PRIDES Certificate" of any particular Growth PRIDES
Certificate means every previous Growth PRIDES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Growth PRIDES evidenced thereby; and, for the purposes of this definition, any
Growth PRIDES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Growth PRIDES
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Growth
PRIDES Certificate.
"Predecessor Income PRIDES Certificate" of any particular Income PRIDES
Certificate means every previous Income PRIDES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Income PRIDES evidenced thereby; and, for the purposes of this definition, any
Income PRIDES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Income PRIDES
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Income
PRIDES Certificate.
9
<PAGE> 17
"Preferred Securities" means the __% Trust Originated Preferred Securities
of the Trust, each having a stated liquidation amount of $50 (the "Stated
Amount"), representing preferred undivided beneficial interests in the assets
of the Trust.
"Proceeds" has the meaning set forth in Section 1 of the Pledge Agreement.
"Purchase Contract," when used with respect to any Security, means the
contract obligating the Company to sell and the Holder of such Security to
purchase Common Stock on the terms and subject to the conditions set forth in
Article Five hereof.
"Purchase Contract Settlement Date" means May __, 2000.
"Purchase Contract Settlement Fund" has the meaning specified in Section
5.5.
"Purchase Price" has the meaning specified in Section 5.1.
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
"Record Date" for the distribution and Contract Adjustment Payments
payable on any Payment Date means, as to any Global Certificate, the Business
Day next preceding such Payment Date, and as to any other Certificate, the 15th
day of the month preceding such Payment Date.
"Register" means the Income PRIDES Register and the Growth PRIDES
Register.
"Registrar" means the Income PRIDES Registrar and the Growth PRIDES
Registrar.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Repayment Price" means, with respect to a Preferred Security, the Stated
Amount plus any accrued and unpaid distributions thereon to the date of
repayment (subject to the rights of holders of record on the relevant record
date to receive distributions due on a Payment Date).
10
<PAGE> 18
"Responsible Officer," when used with respect to the Agent, means any
officer of the Agent assigned by the Agent to administer its corporate trust
matters.
"Security" means an Income PRIDES or a Growth PRIDES.
"Settlement Rate" has the meaning specified in Section 5.1.
"Stated Amount" has the meaning set forth in the definition of "Preferred
Securities" set forth in this Article.
"Tax Event" has the meaning set forth in Annex I of the Declaration.
"Termination Date" means the date, if any, on which a Termination Event
occurs.
"Termination Event" means the occurrence of any of the following events:
(i) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or order by a court having jurisdiction in the premises shall
have been entered granting relief under the Bankruptcy Code, adjudicating the
Company to be insolvent, or approving as properly filed a petition seeking
reorganization or liquidation of the Company under the Bankruptcy Code or any
other similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued
undischarged and unstayed for a period of 60 days; or (ii) a judgment, decree
or order of a court having jurisdiction in the premises for the appointment of
a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of
the Company or of its property, or for the winding up or liquidation of its
affairs, shall have been entered, and, unless such judgment, decree or order
shall have been entered within 60 days prior to the Purchase Contract
Settlement Date, such judgment, decree or order shall have continued
undischarged and unstayed for a period of 60 days, or (iii) at any time on or
prior to the Purchase Contract Settlement Date the Company shall file a
petition for relief under the Bankruptcy Code, or shall consent to the filing
of a bankruptcy proceeding against it, or shall file a peti-
11
<PAGE> 19
tion or answer or consent seeking reorganization or liquidation under the United
States Bankruptcy Code or any other similar applicable Federal or State law, or
shall consent to the filing of any such petition, or shall consent to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property, or shall make an assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts generally
as they become due.
"Threshold Appreciation Price" has the meaning specified in Section 5.1.
"TIA" means the Trust Indenture Act of 1939, as amended, or any successor
statute.
"Trading Day" has the meaning specified in Section 5.1.
"Treasury Security" means a zero-coupon U.S. Treasury Security due May 15,
2000 (Cusip Number 912820 AW7) in a principal amount for each Purchase Contract
equal to the aggregate Stated Amount of all of the Preferred Securities for
which such Treasury Security is being substituted.
"Underwriting Agreement" means the Underwriting Agreement dated March __,
1997 between the Company and the Trust, on the one hand, and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc, Smith Barney Inc, and Ladenburg
Thalmann & Co. Inc., as representatives of the several Underwriters named
therein, on the other hand.
"Vice President" means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
Section 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of this Agreement, the Company shall furnish to the Agent an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to
12
<PAGE> 20
the proposed action have been complied with and an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent, if
any, have been complied with, except that in the case of any such application
or request as to which the furnishing of such documents is specifically
required by any provision of this Agreement relating to such particular
application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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<PAGE> 21
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Agent and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Agreement and (subject to Section 7.1) conclusive in favor of the Agent
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent deems
sufficient.
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(c) The ownership of Securities shall be proved by the Income PRIDES
Register or the Growth PRIDES Register, as the case may be.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Agent or the
Company in reliance thereon, whether or not notation of such action is made
upon such Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Agreement to be given, made or taken
by Holders of Securities. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite number of Outstanding Securities on
such record date. Nothing in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be
cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite number of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Agent in writing and to each
Holder of Securities in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the
Company may designate any date as the "Expiration Date" and from time to time
may change the Expira-
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tion Date to any earlier or later day; provided that no such change shall be
effective unless notice of the proposed new Expiration Date is given to the
Agent in writing, and to each Holder of Securities in the manner set forth in
Section 1.6, on or prior to the existing Expiration Date. If an Expiration
Date is not designated with respect to any record date set pursuant to this
Section, the Company shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
Section 1.5. Notices.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with,
(1) the Agent by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing and personally delivered
or mailed, first-class postage prepaid, to the Agent at One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention:
Corporate Trust Services Division, or at any other address previously
furnished in writing by the Agent to the Holders and the Company, or
(2) the Company by the Agent or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing and personally delivered
or mailed, first-class postage prepaid, to the Company at 500 Griswold
Street, Detroit, Michigan 48226, Attention: Treasurer, or at any other
address previously furnished in writing to the Agent by the Company.
(3) the Collateral Agent by the Agent, the Company or any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in
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<PAGE> 24
writing and personally delivered or mailed, first-class postage
prepaid, addressed to the Collateral Agent at The Chase Manhattan Bank,
450 W. 33rd Street, 15th Floor, New York, New York 10001, Attention:
Corporate Trust Trustee Administration, or at any other address
previously furnished in writing by the Collateral Agent to the Agent,
the Company and the Holders; or
(4) the Institutional Trustee by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing and personally delivered
or mailed, first-class postage prepaid, addressed to the Institutional
Trustee at Rodney Sq. North, 1100 N. Market Street, Wilmington, Delaware
19890, Attention: Corporate Trustee Administration, or at any other
address previously furnished in writing by the Institutional Trustee to
the Company; or
(5) the Indenture Trustee by the Company shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing and personally delivered
or mailed, first-class postage prepaid, addressed to the Indenture
Trustee at _______________, Attention: _______________, or at any other
address previously furnished in writing by the Indenture Trustee to the
Company.
Section 1.6 Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person enti-
17
<PAGE> 25
tled to receive such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by Holders shall be
filed with the Agent, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Agent
shall constitute a sufficient notification for every purpose hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.8. Successors and Assigns
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefits or any legal or equitable right, remedy
or claim under this Agreement. The Holders from time to time shall be
beneficiaries of this Agreement and shall be bound by all of the terms and
conditions hereof and of the Securities evidenced by their Certificates by
their acceptance of delivery of such Certificates.
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Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Income PRIDES
Certificates or the Growth PRIDES Certificates) payment of the Contract
Adjustment Payments shall not be made on such date, but such payments shall be
made on the next succeeding Business Day with the same force and effect as if
made on such Payment Date provided that no interest shall accrue or be payable
by the Company or any Holder for the period from and after any such Payment
Date, except that, if such next succeeding Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such
Payment Date.
In any case where any Purchase Contract Settlement Date shall not be a
Business Day, then (notwithstanding any other provision of this Agreement, the
Income PRIDES Certificates or the Growth PRIDES Certificates), the Purchase
Contracts shall not be performed on such date, but the Purchase Contracts shall
be performed on the next preceding Business Day with the same force and effect
as if performed on such Purchase Contract Settlement Date.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall
together constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by
any Holder.
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ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally.
The Income PRIDES Certificates (including the form of Purchase Contracts
forming part of the Income PRIDES evidenced thereby) shall be in substantially
the form set forth in Exhibit A hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income PRIDES are listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Income PRIDES Certificates, as evidenced by their
execution of the Income PRIDES Certificates.
The definitive Income PRIDES Certificates shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing the Income PRIDES
evidenced by such Income PRIDES Certificates, consistent with the provisions
of this Agreement, as evidenced by their execution thereof.
The Growth PRIDES Certificates (including the form of Purchase Contracts
forming part of the Growth PRIDES evidenced thereby) shall be in substantially
the form set forth in Exhibit B hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Growth PRIDES may be listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Growth PRIDES Certificates, as evidenced by their
execution of the Growth PRIDES Certificates.
The definitive Growth PRIDES Certificates shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing the Growth PRIDES
evidenced by such Growth PRIDES Certifi-
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cates, consistent with the provisions of this Agreement, as evidenced by their
execution thereof.
Every Global Certificate authenticated, executed on behalf of the Holders
and delivered hereunder shall bear a legend in substantially the following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER
OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Income PRIDES
shall be in substantially the form set forth on the form of the Income PRIDES
Certificates.
The form of the Agent's certificate of authentication of the Growth PRIDES
shall be in substantially the form set forth on the form of the Growth PRIDES
Certificates.
ARTICLE III
The Securities
Section 3.1. Title and Terms; Denominations.
The aggregate number of Securities evidenced by Certificates authenticated,
executed on behalf of the Holders and delivered hereunder is limited to
[2,300,000] (subject to increase up to a maximum of [345,000] to the extent the
over-allotment option of the underwriters under the Underwriting Agreement is
exercised), except for Certificates authenticated, executed and delivered
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<PAGE> 29
upon registration of transfer of, in exchange for, or in lieu of, other
Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9 or 8.5.
The Certificates shall be issuable only in registered form and only in
denominations of a single Income PRIDES or Growth PRIDES and any integral
multiple thereof.
Section 3.2. Rights and Obligations Evidenced by the Certificates.
Each Income PRIDES Certificate shall evidence the number of Income PRIDES
specified therein, with each such Security representing the ownership by the
Holder thereof of a Preferred Security with a principal amount equal to the
Stated Amount, subject to the Pledge of such Preferred Security by such Holder
pursuant to the Pledge Agreement, and the rights and obligations of the Holder
under one Purchase Contract. The Agent as attorney-in-fact for, and on behalf
of, each Holder shall pledge, pursuant to the Pledge Agreement, dated as of the
date hereof, a Preferred Security to the Collateral Agent and grant to the
Collateral Agent a security interest in the right, title, and interest of such
Holder in such Security, for the benefit of the Company, to secure the
obligation of the Holder under the Purchase Contracts to purchase the Common
Stock of the Company. Prior to the purchase, if any, of shares of Common Stock
under the Purchase Contracts, the Income PRIDES Certificates shall not entitle
the Holders to any of the rights of a holder of shares of Common Stock,
including, without limitation, the right to vote or receive any dividends or
other payments or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or for the election of directors of the Company or
for any other matter, or any other rights whatsoever as stockholders of the
Company.
Each Growth PRIDES Certificate shall evidence the number of Growth PRIDES
specified therein, with each such Growth PRIDES representing the ownership by
the Holder thereof of a Treasury Security with a principal amount equal to the
aggregate Stated Amount of the Preferred Securities for which such Treasury
Security is being substituted, subject to the Pledge of such Treasury Security
by such Holder pursuant to the Pledge Agreement and
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<PAGE> 30
the rights and obligations of the Holder thereof under one Purchase Contract.
Prior to the purchase, if any, of shares of Common Stock under the Purchase
Contracts, such Purchase Contracts shall not entitle the Holders of Growth
PRIDES Certificates to any of the rights of a holder of shares of Common Stock,
including, without limitation, the right to vote or receive any dividends or
other payments or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or for the election of directors of the Company or
for any other matter, or any other rights whatsoever as stockholders of the
Company.
Section 3.3. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this , and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Agent for authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such Certificates, and the
Agent in accordance with such Issuer Order shall authenticate, execute on
behalf of the Holder and deliver such Certificates.
The Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates.
No Purchase Contract evidenced by a Certificate shall be valid until such
Certificate has been executed on behalf of the Holder by the manual signature
of an authorized signatory of the Agent, as such Holder's
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<PAGE> 31
attorney-in-fact. Such signature by an authorized signatory of the Agent shall
be conclusive evidence that the Holder of such Certificate has entered into the
Purchase Contracts evidenced by such Certificate.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or be
valid or obligatory for any purpose unless there appears on such Certificate a
certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
Section 3.4. Temporary Certificates.
Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit
A or Exhibit B hereto, as the case may be, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income PRIDES are listed, or as may,
consistently herewith, be determined by the officers of the Company executing
such Certificates, as evidenced by their execution of the Certificates.
If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation
of definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of
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<PAGE> 32
like tenor authorized denominations and evidencing a like number of Income
PRIDES or Growth PRIDES, as the case may be, as the temporary Certificate or
Certificates so surrendered. Until so exchanged, the temporary Certificates
shall in all respects evidence the same benefits and the same obligations with
respect to the Income PRIDES or Growth PRIDES, as the case may be, evidenced
thereby as definitive Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
The Agent shall keep at the Corporate Trust Office a register (the "Income
PRIDES Register") in which, subject to such reasonable regulations as it may
prescribe, the Agent shall provide for the registration of Income PRIDES
Certificates and of transfers of Income PRIDES Certificates (the Agent, in such
capacity, the "Income PRIDES Registrar") and a Register (the "Growth PRIDES
Register") in which, subject to such reasonable regulations as it may prescribe,
the Agent shall provide for the registration of the Growth PRIDES Certificates
following Collateral Substitutions and transfers of Growth PRIDES (the Agent, in
such capacity, the "Growth PRIDES Registrar").
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the designated transferee or
transferees, and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized denominations, like
tenor, and evidencing a like number of Income PRIDES or Growth PRIDES, as the
case may be.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Income PRIDES or Growth PRIDES, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so for exchange, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver the Certificates which the Holder making the exchange is entitled to
receive.
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<PAGE> 33
All Certificates issued upon any registration of transfer or exchange of a
Certificate shall evidence the ownership of the same number of Income PRIDES or
Growth PRIDES, as the case may be, and be entitled to the same benefits and
subject to the same obligations, under this Agreement as the Income PRIDES or
Growth PRIDES, as the case may be, evidenced by the Certificate surrendered upon
such registration of transfer or exchange.
Every Certificate presented or surrendered for registration of transfer or
for exchange shall (if so required by the Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Agent duly executed, by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Agent may require payment
from the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates, other than any exchanges pursuant to Sections 3.6 and
8.5 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder and deliver any Certificate
presented or surrendered for registration of transfer or for exchange on or
after the Purchase Contract Settlement Date or the Termination Date. In lieu of
delivery of a new Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Agent shall (i) if the Purchase
Contract Settlement Date has occurred, deliver the shares of Common Stock
issuable in respect of the Purchase Contracts forming a part of the Securities
evidenced by such Certificate, or (ii) in the case of Income PRIDES, if a
Termination Event shall have occurred prior to the Purchase Contract Settlement
Date, transfer the principal amount of the Preferred Securities evidenced
thereby, in each case subject to the applicable conditions and in accordance
with the applicable provisions of Article Five hereof.
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Section 3.6. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form of one
or more, fully registered Global Certificates, to be delivered to the
Depositary by, or on behalf of, the Company. Such Global Certificate shall
initially be registered on the books and records of the Company in the name of
Cede & Co., the nominee of the Depositary, and no Beneficial Owner will receive
a definitive Certificate representing such Beneficial Owner's interest in such
Global Certificate, except as provided in Section 3.9. The Agent shall enter
into an agreement with the Depositary if so requested by the Company. Unless
and until definitive, fully registered Certificates have been issued to
Beneficial Owners pursuant to Section 3.9:
(a)the provisions of this Section 3.6 shall be in full force and effect;
(b)the Company shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of Contract Adjustment
Payments and receiving approvals, votes or consents hereunder) as the Holder of
the Securities and the sole holder of the Global Certificate(s) and shall have
no obligation to the Beneficial Owners;
(c)to the extent that the provisions of this Section 3.6 conflict with any
other provisions of this Agreement, the provisions of this Section 3.6 shall
control; and
(d)the rights of the Beneficial Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements
between such Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants. The Clearing Agency will make book entry transfers among
Clearing Agency Participants and receive and transmit payments of Contract
Adjustment Payments to such Clearing Agency Participants.
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Section 3.7. Notice to Holders.
Whenever a notice or other communication to the Holders is required to be
given under this Agreement, the Company or the Company's agent shall give such
notices and communications to the Holders and, with respect to any Securities
registered in the name of a Clearing Agency or the nominee of a Clearing
Agency, the Company or the Company's agent shall, except as set forth herein,
have no obligations to the Beneficial Owners.
Section 3.8. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities, the Company may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Securities.
Section 3.9. Definitive Certificates.
If (i) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities and a successor Clearing Agency is
not appointed within 90 days after such discontinuance pursuant to Section 3.8,
(ii) the Company elects to terminate the book-entry system through the Clearing
Agency with respect to the Securities, or (iii) there shall have occurred and
be continuing a default by the Company in respect of its obligations under one
or more Purchase Contracts, then upon surrender of the Global Certificates
representing the Book-Entry Interests with respect to the Securities by the
Clearing Agency, accompanied by registration instructions, the Company shall
cause definitive Certificates to be delivered to Beneficial Owners in
accordance with the instructions of the Clearing Agency. The Company shall not
be liable for any delay in delivery of such instructions and may conclusively
rely on and shall be protected in relying on, such instructions.
Section 3.10. Mutilated, Destroyed, Lost and Stolen
Certificates.
If any mutilated Certificate is surrendered to the Agent, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a
28
<PAGE> 36
new Certificate, evidencing the same number of Income PRIDES or Growth PRIDES,
as the case may be, and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i) evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity as may be required by them to hold each of them
and any agent of any of them harmless, then, in the absence of notice to the
Company or the Agent that such Certificate has been acquired by a bona fide ,
the Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver to the Holder, in
lieu of any such destroyed, lost or stolen Certificate, a new Certificate,
evidencing the same number of Income PRIDES or Growth PRIDES, as the case may
be, and bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Certificate on or after the Purchase Contract Settlement Date or the
Termination Date. In lieu of delivery of a new Certificate, upon satisfaction
of the applicable conditions specified above in this Section and receipt of
appropriate registration or transfer instructions from such Holder, the Agent
shall (i) if the Purchase Contract Settlement Date has occurred, deliver the
shares of Common Stock issuable in respect of the Purchase Contracts forming a
part of the Securities evidenced by such Certificate, or (ii) if a Termination
Event shall have occurred prior to the Purchase Contract Settlement Date,
transfer the principal amount of the Preferred Securities and/or the Treasury
Securities, as the case may be, evidenced thereby, in each case subject to the
applicable conditions and in accordance with the applicable provisions of
Article Five hereof.
Upon the issuance of any new Certificate under this Section, the Company
and the Agent may require the payment by the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Agent)
connected therewith.
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Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.11. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of transfer,
the Company and the Agent, and any agent of the Company or the Agent, may treat
the Person in whose name such Certificate is registered as the owner of the
Income PRIDES or Growth PRIDES evidenced thereby, for the purpose of receiving
distributions on the Preferred Securities, receiving payments of Contract
Adjustment Payments, performance of the Purchase Contracts and for all other
purposes whatsoever, whether or not any distributions on the Preferred
Securities or the Contract Adjustment Payments payable in respect of the
Purchase Contracts constituting a part of the Income PRIDES or Growth PRIDES
evidenced thereby shall be overdue and notwithstanding any notice to the
contrary, and neither the Company nor the Agent, nor any agent of the Company
or the Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent the Company, the Agent or any agent of the Company
or the Agent, from giving effect to any written certification, proxy or other
authorization furnished by any Clearing Agency (or its nominee), as a Holder,
with respect to such Global Certificate or impair, as between such Clearing
Agency and owners of beneficial interests in such Global Certificate, the
operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.
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Section 3.12. Cancellation.
All Certificates surrendered for delivery of shares of Common Stock on or
after the Purchase Contract Settlement Date, upon the transfer of Preferred
Securities and/or Treasury Securities, as the case may be, after the occurrence
of a Termination Event or pursuant to an Early Settlement, or upon the
registration of a transfer or exchange of a Security, or a Collateral
Substitution or the re-establishment of an Income PRIDES shall, if surrendered
to any Person other than the Agent, be delivered to the Agent and, if not
already cancelled, shall be promptly cancelled by it. The Company may at any
time deliver to the Agent for cancellation any Certificates previously
authenticated, executed and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Certificates so delivered shall,
upon Issuer Order, be promptly cancelled by the Agent. No Certificates shall
be authenticated, executed on behalf of the Holder and delivered in lieu of or
in exchange for any Certificates cancelled as provided in this Section, except
as expressly permitted by this Agreement. All cancelled Certificates held by
the Agent shall be destroyed by the Agent unless otherwise directed by Issuer
Order.
If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.
Section 3.13. Substitution of Securities.
A Holder may separate Preferred Securities from the related Purchase
Contracts in respect of an Income PRIDES by substituting for such Preferred
Securities Treasury Securities in an aggregate principal amount equal to the
aggregate Stated Amount of such Preferred Securities (a "Collateral
Substitution") at any time from and after the date of this Agreement and on or
prior to the Business Day immediately preceding the Purchase Contract
Settlement Date by (a) depositing with the Collateral Agent Treasury Securities
and having an aggregate principal amount equal to the aggregate Stated Amount
of the Preferred Securities and (b) transferring the related Income PRIDES
Certificate to the Agent accompanied by a notice to the Agent stating that the
Holder has transferred the
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relevant amount of Treasury Securities to the Collateral Agent and requesting
that the Agent instruct the Collateral Agent to release the Preferred
Securities underlying such Income PRIDES, whereupon the Agent shall promptly
give such instruction to the Collateral Agent. Upon receipt of the Treasury
Securities described in clause (a) above and the instruction described in
clause (b) above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will effect the release of the Preferred Securities having a
corresponding aggregate Stated Amount from the Pledge of the Pledge Agreement
to the Agent free and clear of the Company's security interest therein, and
upon receipt thereof the Agent shall promptly:
(i) cancel the related Income PRIDES Certificates;
(ii) transfer the Preferred Securities to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver a
Growth PRIDES Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Purchase Contracts as were
evidenced by the cancelled Income PRIDES Certificates.
Holders who elect to separate the Preferred Security from the related
Purchase Contract and to substitute Treasury Securities for such Preferred
Securities shall be responsible for any fees or expenses payable to the
Collateral Agent for its services as Collateral Agent in respect of the
substitution, and the Company shall not be responsible for any such fees or
expenses.
Holders may make Collateral Substitutions only in integral multiples of
20 Income PRIDES.
In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the Income PRIDES or
deliver a definitive Income PRIDES Certificate(s) to the Agent after depositing
Treasury Securities with the Collateral Agent, the Preferred Security
constituting a part of such Income PRIDES, and any distributions on such
Preferred Security, shall be held in the name of the Agent or its
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nominee in trust for the benefit of such Holder, until such Income PRIDES
is so transferred or the Income PRIDES Certificate is so delivered, as the case
may be, or, with respect to an Income PRIDES Certificate, such Holder provides
satisfactory evidence that such Income PRIDES Certificate has been destroyed,
lost or stolen, together with any indemnity that may be required by the Agent
and the Company.
Except as described in this Section 3.13, for so long as the Purchase
Contract underlying an Income PRIDES remains in effect, such Income PRIDES
shall not be separable into its constituent parts, and the rights and
obligations of the Holder in respect of the Preferred Security and Purchase
Contract comprising such Income PRIDES may be acquired, and may be transferred
and exchanged, only as an Income PRIDES.
Section 3.14. Reestablishment of Income PRIDES.
A Holder of a Growth PRIDES may at any time on or prior to the Business
Day immediately preceding the Purchase Contract Settlement Date, recreate
Income PRIDES by (a) transferring Preferred Securities having an aggregate
Stated Amount equal to the aggregate principal amount of the Treasury
Securities comprising part of the Growth PRIDES to the Collateral Agent with an
instruction that the Collateral Agent (i) release Treasury Securities having a
corresponding aggregate principal amount and (ii) notify the Agent of
its receipt of such Preferred Securities and (b) delivering the related Growth
PRIDES Certificate(s) to the Agent for cancellation. Upon such transfer as
described in clause (a) above, the Collateral Agent will release to the Agent,
on behalf of the Holder, the relevant aggregate principal amount of Treasury
Securities from the Pledge of the Pledge Agreement, free and clear of the
Company's security interest therein and, upon the receipt of notice from the
Collateral Agent as provided in clause (a) above, the Agent shall promptly
effect the reestablishment of a number of Income PRIDES equal to the number of
Purchase Contracts evidenced by the canceled Growth PRIDES by holding such
Income PRIDES Certificates for the Depositary or depositing to the Depositary,
for the credit of such Holder (or its designee), or, in case of any Income
PRIDES Certificate in definitive form, by
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authenticating and executing on behalf of such Holder and delivering a
definitive Income PRIDES Certificate evidencing such Income PRIDES executed by
the Company in accordance with Section 3.3.
Holders of Growth PRIDES may reestablish Income PRIDES only in integral
multiples of 20 Income PRIDES for each Growth PRIDES.
Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Growth PRIDES remains in effect, such Growth PRIDES shall
not be separable into its constituent parts and obligations of the Holder of
such Growth PRIDES in respect of the Treasury Security and Purchase Contract
constituting such Growth PRIDES may be transferred and exchanged only as a
Growth PRIDES.
Section 3.15. No Consent to Assumption.
Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company or
its trustee in the event that the Company becomes the debtor under the
Bankruptcy Code.
ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions Preserved.
A distribution on any Preferred Security which is paid on any Payment Date
shall, subject to receipt thereof by the Agent from the Collateral Agent as
provided by the terms of the Pledge Agreement, be paid to the Person in whose
name the Income PRIDES Certificate (or one or more Predecessor Income PRIDES
Certificates) of which such Preferred Security is a part is registered at the
close of business on the Record Date for such Payment Date.
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<PAGE> 42
Each Income PRIDES Certificate evidencing Preferred Securities delivered
under this Agreement upon of transfer of or in exchange for or in lieu of any
other Income PRIDES Certificate shall carry the rights to distributions accrued
and unpaid, and to accrue distributions, which were carried by the Preferred
Securities underlying such other Income PRIDES Certificate.
In the case of any Income PRIDES with respect to which Cash Settlement of
the underlying Purchase Contract is effected on a Purchase Contract Settlement
Date, or in respect to which Early Settlement of the underlying Purchase
Contract is effected on an Early Settlement Date, after any Record Date and on
or prior to the next succeeding Payment Date, distributions on the Preferred
Securities underlying such Income PRIDES otherwise payable on such Payment Date
shall be payable on such Payment Date notwithstanding such Cash Settlement or
Early Settlement, and such distributions shall, subject to receipt thereof by
the Agent, be paid to the Person in whose name the Income PRIDES Certificate
(or one or more Predecessor Income PRIDES Certificates) is registered at the
close of business on the Record Date. Except as otherwise expressly provided
in the immediately preceding sentence, in the case of any Income PRIDES with
respect to which Cash Settlement or Early Settlement of the underlying Purchase
Contract is effected on a Purchase Contract Settlement Date, or an Early
Settlement Date, distributions on the related Preferred Securities that would
otherwise be payable after the Purchase Contract Settlement Date or Early
Settlement Date shall not be payable hereunder to the Holder of such Income
PRIDES.
Section 4.2. Transfer of Collateral upon Occurrence of Termination Event
Upon the occurrence of a Termination Event and the transfer to the Agent
of the Preferred Securities and/or the Treasury Securities, as the case may be,
underlying the Income PRIDES and the Growth PRIDES, respectively, pursuant to
the terms of the Pledge Agreement, the Agent shall request transfer
instructions with respect to such Preferred Securities and/or Treasury
Securities, as the case may be, from each Holder by written request mailed to
such Holder at its address as it appears in the Income PRIDES Register or the
Growth PRIDES Register, as the
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case may be. Upon book-entry transfer of the Income PRIDES or Growth PRIDES or
delivery of a definitive Income PRIDES Certificate or Growth PRIDES Certificate
to the Agent with such transfer instructions, the Agent shall transfer the
Preferred Securities or Treasury Securities underlying such Income PRIDES or
Growth PRIDES, as the case may be, to such Holder by book-entry transfer, or
other appropriate procedures, in accordance with such instructions. In the
event a Holder of Income PRIDES or Growth PRIDES fails to effect such transfer
or delivery, the Preferred Securities or Treasury Securities underlying such
Income PRIDES or Growth PRIDES, as the case may be, and any distributions
thereon, shall be held in the name of the Agent or its nominee in trust for the
benefit of such Holder, until such Income PRIDES are transferred or the Income
PRIDES Certificate or Growth PRIDES Certificate is surrendered or such Holder
provides satisfactory evidence that such Income PRIDES Certificate or Growth
PRIDES Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company.
Section 4.3. Notice and Voting.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Preferred
Securities pledged with the Collateral Agent but only to the extent instructed
by the Holders below. Upon receipt of notice of any meeting at which holders
of Preferred Securities are entitled to vote or upon any solicitation of
consents, waivers or proxies of holders of Preferred Securities, the Agent
shall, as soon as practicable thereafter, mail to the Holders a notice (a)
containing such as is contained in the notice or solicitation, (b) stating
that each Holder on the record date set by the Agent therefor (which, to the
extent possible, shall be the same date as the record date for determining the
holders of Preferred Securities entitled to vote) shall be entitled to instruct
the Agent as to the exercise of the voting rights pertaining to the Preferred
Securities underlying their Income PRIDES and (c) stating the manner in which
such instructions may be given. Upon the written request of the Holders on
such record date, the Agent shall endeavor insofar as practicable to vote or
cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Preferred Securi-
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ties as to which any particular voting instructions are received. In the
absence of specific instructions from the Holder of an Income PRIDES, the Agent
shall abstain from voting the Preferred Security underlying such Income PRIDES.
The Company hereby agrees, if applicable, to solicit Holders to timely instruct
the Agent in order to enable the Agent to vote such Preferred Securities or to
cause such Preferred Securities to be voted, and the Trust shall covenant in
the Declaration to take all action which may be deemed necessary by the Agent
in order to enable the Agent to vote such Preferred Securities or to cause such
Preferred Securities to be voted.
Section 4.4. Tax Event; Investment Company Event.
Upon the occurrence of a Tax Event or an Investment Company Event or a
liquidation of the Trust, a principal amount of Junior Subordinated Debentures
constituting the assets of the Trust and underlying the Preferred Securities
equal to the aggregate Stated Amount of the Pledged Preferred Securities shall
be delivered to the Collateral Agent in exchange for the Pledged Preferred
Securities. Thereafter, the Junior Subordinated Debentures will be held by the
Collateral Agent in accordance with the terms of the Pledge Agreement to secure
the obligations of each Holder of an Income PRIDES to purchase the Common Stock
of the Company under the Purchase Contracts constituting a part of such Income
PRIDES. Following the liquidation of the Trust, the Holders and the Collateral
Agent shall have such security interests, rights and obligations with respect
to the Junior Subordinated Debentures as the Holders and the Collateral Agent
had in respect of the Preferred Securities subject to the Pledge thereof as
provided in Articles II, III, IV, V and VI of the Pledge Agreement, and any
reference herein to the Preferred Securities shall be deemed to be a reference
to the Junior Subordinated Debentures. The Company may cause to be made in any
Income PRIDES Certificates thereafter to be issued such change in phraseology
and form (but not in substance) as may be appropriate to reflect the
liquidation of the Trust and the substitution of Junior Subordinated Debentures
for Preferred Securities as Collateral.
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ARTICLE V
The Purchase Contracts
Section 5.1. Purchase of Shares of Common Stock.
Each Purchase Contract shall obligate the Holder of the related Security
to purchase, and the Company to sell, on the Purchase Contract Settlement Date
at a price equal to the Stated Amount (the "Purchase Price"), a number of
shares of Common Stock equal to the Settlement Rate, unless, on or prior to the
Purchase Contract Settlement Date, there shall have occurred a Termination
Event, Cash Settlement or an Early Settlement with respect to the Security of
which such Purchase Contract is a part. The "Settlement Rate" is equal to (a)
if the Applicable Market Value (as defined below) is equal to or greater than
$__________ (the "Threshold Appreciation Price"), _____ shares of Common Stock
per Purchase Contract, (b) if the Applicable Market Value is less than the
Threshold Appreciation Price but is greater than $__________, ______ shares of
Common Stock per Purchase Contract equal to the Stated Amount divided by the
Applicable Market Value (rounded upward or downward to the nearest 1/10,000th
of a share) and (c) if the Applicable Market Value is less than or equal to
$__________, ______ shares of Common Stock per Purchase Contract, in each case
subject to adjustment as provided in Section 5.6. As provided in Section 5.10,
no fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Prices per
share of Common Stock on each of the twenty consecutive Trading Days ending on
the second Trading Day immediately preceding the Purchase Contract Settlement
Date. The "Closing Price" of the Common Stock on any date of determination
means the closing sale price (or, if no closing price is reported, the last
reported sale price) of the Common Stock on the New York Stock Exchange (the
"NYSE") on such date or, if the Common Stock is not listed for trading on the
NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which the Common Stock is so
listed, or if the Common Stock is not so listed on a United States national or
regional securi-
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ties exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock
is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of the Common Stock.
Each Holder of an Income PRIDES or a Growth PRIDES, by its acceptance
thereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contract on its behalf as its attorney-in-fact, agrees to be bound by
the terms and provisions thereof, covenants and agrees to perform its
obligations under such Purchase Contracts, and consents to the provisions
hereof, irrevocably authorizes the Agent as its attorney-in-fact to enter into
and perform the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Preferred Securities or
the Treasury Securities pursuant to the Pledge Agreement; provided that upon a
Termination Event, the rights of the Holder of such Security under the Purchase
Contract may be enforced without regard to any other rights or obligations. Each
Holder of an Income PRIDES or a Growth PRIDES, by its acceptance thereof,
further covenants and agrees, that, to the extent and in the manner provided in
Section 5.4 and the Pledge Agreement, but subject to the terms thereof, payments
in respect of the Stated Amount of the Preferred Securities or the Proceeds of
the Treasury Securities on the Purchase Contract Settlement Date shall be paid
by the Collateral Agent to the Company in satisfaction of such Holder's
obligations under such Purchase Contract and such Holder shall acquire no right,
title or interest in such payments.
Upon registration of transfer of a Certificate, the transferee shall be
bound (without the necessity of any other action on the part of such
transferee), under the
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terms of this Agreement, the Purchase Contracts underlying such Certificate and
the Pledge Agreement and the transferor shall be released from the obligations
under the Purchase Contracts underlying the Certificates so transferred. The
Company covenants and agrees, and each Holder of a Certificate, by its
acceptance thereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
Section 5.2. Contract Adjustment Payments.
Subject to Section 5.3, the Company shall pay, on each Payment Date, the
Contract Adjustment Payments payable in respect of each Purchase Contract to the
Person in whose name a Certificate (or one or more Predecessor Certificates) is
registered at the close of business on the Record Date next preceding such
Payment Date. The Contract Adjustment Payments will be payable at the office of
the Agent in The City of New York maintained for that purpose or, at the option
of the Company, by check mailed to the address of the Person entitled thereto at
such Person's address as it appears on the Income PRIDES Register or Growth
PRIDES Register.
Upon the occurrence of a Termination Event, Contract Adjustment Payments
shall cease to accrue in respect of any period from and after the date of such
Termination Event (unless the Company defaults in the payment of accrued
Contract Adjustment Payments). The Company's obligations to pay any accrued
Contract Adjustment Payments shall be deemed to be fulfilled if the Company
deposits with the Agent funds necessary to pay accrued Contract Adjustment
Payments, in trust with irrevocable instructions and authorization that such
funds shall be delivered to the Holders.
Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the re-establishment of an Income PRIDES) any other
Certificate shall carry the rights to Contract Adjustment Payments accrued and
unpaid, and to accrue Contract Adjustment Payments, which were carried by the
Purchase Contracts underlying such other Certificates.
In the case of any Security with respect to which Early Settlement of the
underlying Purchase Contract is
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effected on an Early Settlement Date after any Record Date and on or prior to
the next succeeding Payment Date, Contract Adjustment Payments otherwise payable
on such Payment Date shall be payable on such Payment Date notwithstanding such
Early Settlement, and such Contract Adjustment Payments shall be paid to the
Person in whose name the Certificate evidencing such Security (or one or more
Predecessor Certificates) is registered at the close of business on such Record
Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Security with respect to which Early Settlement of
the underlying Purchase Contract is effected on an Early Settlement Date,
Contract Adjustment Payments that would otherwise be payable after the Early
Settlement Date with respect to such Purchase Contract shall not be payable.
The Company's obligations with respect to Contract Adjustment Payments are
subordinate and junior in right of payment to all liabilities of the Company.
Section 5.3. Deferral of Payment Dates For Contract Adjustment Payments.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) at least ten Business
Days prior to the earlier of (i) the next succeeding Payment Date or (ii) the
date the Company is required to give notice of the Record Date or Payment Date
with respect to payment of such Contract Adjustment Payments to the New York
Stock Exchange or other applicable self-regulatory organization or to Holders of
the Securities, but in any event not less than two Business Days prior to such
Record Date. Any Contract Adjustment Payments so deferred shall bear additional
Contract Adjustment Payments thereon at the rate of ____% per annum (computed on
the basis of the actual number of days elapsed in a year of 365 or 366 days, as
the case may be), compounding on each succeeding Payment Date, until paid in
full (such deferred installments of Contract Adjustment Payments together with
the additional Contract Adjustment Payments accrued thereon, being referred to
herein as the "De-
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ferred Contract Adjustment Payments"). Deferred Contract Adjustment Payments
shall be due on the next succeeding Payment Date except to the extent that
payment is deferred pursuant to this Section. No Contract Adjustment Payments
may be deferred to a date that is after the Purchase Contract Settlement Date
or, with respect to any particular Purchase Contract, Early Settlement thereof.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each Holder will receive on the Purchase Contract Settlement
Date, in lieu of a cash payment, a number of shares of Common Stock (in addition
to a number of shares of Common Stock equal to the Settlement Rate) equal to (x)
the aggregate amount of Deferred Contract Adjustment Payments payable to a
Holder divided by (y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by the Company with
respect to the payment of Deferred Contract Adjustment Payments on the Purchase
Contract Settlement Date. In lieu of fractional shares otherwise issuable with
respect to such payment of Deferred Contract Adjustment Payments, the Holder
will be entitled to receive an amount in cash as provided in Section 5.10.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been made, (a) the Company shall not declare or pay dividends on,
make distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase shares of Common Stock, (ii) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one class or series of
the Company's capital stock for another class or series of the Company's capital
stock or (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security
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being converted or exchanged) or make any guarantee payments with respect to the
foregoing), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company that rank pari passu with such
Contract Adjustment Payments and (c) the Company shall not make any guarantee
payments with respect to the foregoing.
Section 5.4. Payment of Purchase Price.
(a) Unless a Holder settles the underlying Purchase Contract either
through the early delivery of cash to the Purchase Contract Agent in the manner
described in Section 5.9 or otherwise, the Purchase Price for the shares of
Common Stock purchased pursuant to a Purchase Contract shall be paid by
application of payments received by the Company on the Purchase Contract
Settlement Date from the Collateral Agent pursuant to the Pledge Agreement,
payable at the office of the Collateral Agent in the City of New York maintained
for such purpose, as follows:
(i) A Holder may effect a "Cash Settlement" of a Purchase Contract by
(A) providing the Agent with notice of its election to effect a Cash
Settlement not less than 10 nor more than 30 days prior to the Purchase
Contract Settlement Date and (B) making a payment of the Purchase Price to
the Collateral Agent prior to 9:00 a.m., New York City time, on the
Business Day immediately preceding the Purchase Contract Settlement Date in
lawful money of the United States by certified check or wire transfer in
immediately available funds payable to or upon the order of the Company.
Upon receipt of notice from a Holder electing a Cash Settlement, the Agent
promptly shall notify the Collateral Agent of such Holder's election. The
funds received by the Collateral Agent will be invested promptly by the
Collateral Agent in overnight federal funds and paid to the Company on the
Purchase Date in settlement of the Purchase Contract Settlement Contract in
accordance with the terms of the Pledge Agreement;
(ii) A Holder who does not make an effective Cash Settlement or an
Early Settlement under Section 5.9 hereof shall be deemed to have elected
to pay for the shares of Common Stock to be issued under
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the related Purchase Contract from the proceeds of the related Preferred
Securities or Treasury Securities, as the case may be, underlying its
Income PRIDES or Growth PRIDES, respectively, which will be applied
automatically by the Collateral Agent to pay the Purchase Price for the
Purchase Contract to the Company on the Purchase Contract Settlement Date
as provided in subparagraph (a)(i); and
(iii) A Holder of Growth PRIDES shall pay for the shares of Common
Stock to be issued under the Purchase Contract from the Proceeds of the
related Pledged Treasury Securities held by the Collateral Agent, which
will be applied automatically by the Collateral Agent to pay the Purchase
Price for the Purchase Contract to the Company on the Purchase Contract
Settlement Date without receiving any instruction from the Holder. In the
event the sum of the proceeds from the related Pledged Treasury Securities
and the interest earned from the investment in overnight federal funds is
in excess of the aggregate Purchase Price of the Purchase Contracts being
settled thereby, the Collateral Agent will distribute such excess to the
Agent for the benefit of the Holder of the related Growth PRIDES on the
Purchase Contract Settlement Date.
(b) The Company shall not be obligated to issue any shares of Common
Stock in respect of a Purchase Contract or deliver any certificate therefor to
the Holder unless it shall have received payment in full of the Purchase Price
for the shares of Common Stock to be purchased thereunder in the manner herein
set forth.
(c) Upon Cash Settlement of any Purchase Contract, (i) the
Collateral Agent will in accordance with the terms of the Pledge Agreement cause
the Pledged Preferred Securities or the Pledged Treasury Securities underlying
the relevant Security to be released from the Pledge by the Collateral Agent
free and clear of any security interest of the Company and transferred to the
Agent for delivery to the Holder thereof or its designee as soon as practicable
and (ii) subject to the receipt thereof from the Collateral Agent, the Agent
shall, by book-entry transfer, or other appropriate procedures, in accordance
with instructions provided by the Holder thereof, transfer the Pledged Preferred
Security or the
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Pledged Treasury Securities (or, if no such instructions are given to the Agent
by the Holder, the Agent shall hold the Pledged Preferred Security or the
Pledged Treasury Securities, and any distributions thereon, in the name of the
Agent or its nominee in trust for the benefit of such Holder).
Section 5.5. Issuance of Shares of Common Stock.
Unless a Termination Event shall have occurred on or prior to the Purchase
Contract Settlement Date, on the Purchase Contract Settlement Date, upon its
receipt of payment in full of the Purchase Price for the shares of Common Stock
purchased by the Holders pursuant to the foregoing provisions of this Article,
and in payment of Deferred Contract Adjustment Payments, if any, owed by the
Company to the Holders and subject to Section 5.6(b), the Company shall issue
and deposit with the Agent, for the benefit of the Holders of the Outstanding
Securities, one or more certificates representing the new shares of Common Stock
registered in the name of the Agent (or its nominee) as custodian for the
Holders (such certificates for shares of Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Purchase Contract Settlement Fund") to which the Holders are entitled
hereunder. Subject to the foregoing, upon surrender of a Certificate to the
Agent on or after the Purchase Contract Settlement Date, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Common Stock which such Holder is
entitled to receive pursuant to the provisions of this Article Five (after
taking into account all Securities then held by such Holder) together with cash
in lieu of fractional shares as provided in Section 5.10 and any dividends or
distributions with respect to such shares constituting part of the Purchase
Contract Settlement Fund, but without any interest thereon, and the Certificate
so surrendered shall forthwith be cancelled. Such shares shall be registered in
the name of the Holder or the Holder's designee as specified in the settlement
instructions on the Certificate. If any shares of Common Stock issued in
respect of a Purchase Contract and in payment of any Deferred Contract
Adjustment Payments are to be registered to a Person other than the Person in
whose name the Certificate evidencing such Purchase Contract is registered, no
such registration shall be made unless the Person requesting such registration
has paid any transfer and other taxes required by reason of such registration in
a name other than that of the registered Holder of the Certificate evidencing
such
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Purchase Contract is registered, no such registration shall be made unless the
Person requesting such registration has paid any transfer and other taxes
required by reason of such registration in a name other than that of the
registered Holder of the Certificate evidencing such Purchase Contract or has
established to the satisfaction of the Company that such tax either has been
paid or is not payable.
Section 5.6. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other distribution
on any class of Common Stock of the Company in Common Stock, the Settlement Rate
in effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be increased by dividing such Settlement Rate by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants, to subscribe for or purchase shares of Common Stock
at a price per share less than the Cur-
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rent Market Price per share of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights, options or
warrants (other than pursuant to a dividend reinvestment plan), the Settlement
Rate in effect at the opening of business on the day following the date fixed
for such determination shall be increased by dividing such Settlement Rate by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such Current Market Price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (2), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company shall not issue any such rights, options or warrants in
respect of shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided or split
into a greater number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision, split or
combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock
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evidences of its indebtedness or assets (including securities, but excluding any
rights or warrants referred to in paragraph (2) of this Section, any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in paragraph (1) of this Section), the Settlement Rate shall be adjusted so
that the same shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current Market Price per share of
the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Agent) of the
portion of the assets or evidences of indebtedness so distributed applicable to
one share of Common Stock and the denominator shall all be such Current Market
Price per share of the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such distribution. In
any case in which this paragraph (4) is applicable, paragraph (2) of this
Section shall not be applicable.
(5) In case the Company shall, (I) by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed in
a Reorganization Event to which Section 5.6(b) applies or as part of a
distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (II) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (5) or paragraph (6) of this
Section has been made and (III) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) of consideration payable in
respect of any tender or exchange offer by the Company or any of its
subsidiaries for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of the distribution described in clause (I)
above and in respect of which no adjustment pursuant to this paragraph (5) or
paragraph
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(6) of this Section has been made, exceeds 15% of the product of the Current
Market Price per share of the Common Stock on the date for the determination of
holders of shares of Common Stock entitled to receive such distribution times
the number of shares of Common Stock outstanding on such date, then, and in each
such case, immediately after the close of business on such date for
determination, the Settlement Rate shall be increased so that the same shall
equal the rate determined by dividing the Settlement Rate in effect immediately
prior to the close of business on the date fixed for determination of the
stockholders entitled to receive such distribution by a fraction (i) the
numerator of which shall be equal to the Current Market Price per share of the
Common Stock on the date fixed for such determination less an amount equal to
the quotient of (x) the combined amount distributed or payable in the
transactions described in clauses (I), (II) and (III) above and (y) the number
of shares of Common Stock outstanding on such date for determination and (ii)
the denominator of which shall be equal to the Current Market Price per share of
the Common Stock on such date for determination.
(6) In case (I) a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) that combined together with (II) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (III) the aggregate
amount of any distributions to all holders of the Company's Common Stock made
exclusively in cash within the 12
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months preceding the expiration of such tender or exchange offer and in respect
of which no adjustment pursuant to paragraph (5) of this Section or this
paragraph (6) has been made, exceeds 15% of the product of the Current Market
Price per share of the Common Stock as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender or exchange offer (as it
may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Settlement Rate shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate immediately
prior to the close of business on the date of the Expiration Time by a fraction
(i) the numerator of which shall be equal to (A) the product of (I) the Current
Market Price per share of the Common Stock on the date of the Expiration Time
and (II) the number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time less (B) the amount of cash plus the
fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the transactions described in clauses (I), (II)
and (III) above (assuming in the case of clause (I) the acceptance, up to any
maximum specified in the terms of the tender or exchange offer, of Purchased
Shares), and (ii) the denominator of which shall be equal to the product of (A)
the Current Market Price per share of the Common Stock as of the Expiration Time
and (B) the number of shares of Common Stock outstanding (including any tendered
shares) as of the Expiration Time less the number of all shares validly tendered
and not withdrawn as of the Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.6(b) applies) shall be deemed to involve
(a) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of entitled to receive such
distribution" and the "date fixed for such determination" within the meaning of
paragraph (4) of this Section), and (b) a subdivision,
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split or combination, as the case may be, of the number of shares of Common
Stock outstanding immediately prior to such reclassification into the number
of shares of Common Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day upon which such
subdivision or split becomes effective" or "the day upon which such combination
becomes effective", as the case may be, and "the day upon which such
subdivision, split or combination becomes effective" within the meaning of
paragraph (3) of this Section).
(8) The "Current Market Price" per share of Common Stock on any day means
the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date", when used
with respect to any issuance or distribution, shall mean the first date on
which the Common Stock trades regular way on such exchange or in such market
without the right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share to the next lower 1/10,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require
an increase or decrease of at least one percent therein; provided, however,
that any adjustments which by reason of this subparagraph are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. If an adjustment is made to the Settlement Rate pursuant to
paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a), an
adjustment shall also be made to the Applicable Market Value solely to
determine which of clauses (a), (b) or (c) of the definition of Settlement Rate
in Section 5.1 will apply on the Purchase Contract Settlement Date. Such
adjustment shall be made by multiplying the Applicable Market Value by a
fraction of which the numerator shall be the Settlement Rate immediately after
such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10)
of this Section 5.6(a) and the
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denominator shall be the Settlement Rate immediately before such
adjustment.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of shares of Common
Stock resulting from any dividend or distribution of stock or issuance of
rights or warrants to purchase or subscribe for stock or from any event treated
as such for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of the Company, with or into
another Person (other than a merger or consolidation in which the Company is
the continuing corporation and in which the Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash,
securities or other property of the Company or another corporation), (ii) any
sale, transfer, lease or conveyance to another Person of the property of the
Company as an entirety or substantially as an entirety, (iii) any statutory
exchange of securities of the Company with another Person (other than in
connection with a merger or acquisition) or (iv) any liquidation, dissolution
or winding up of the Company other than as a result of or after the occurrence
of a Termination Event (any such event, a "Reorganization Event"), the
Settlement Rate will be adjusted to provide that each Holder of Securities will
receive on the Purchase Contract Settlement Date with respect to each Purchase
Contract forming a part thereof, the kind and amount of securities, cash and
other property receivable upon such Reorganization Event by a Holder of the
number of shares of Common Stock issuable on account of each Purchase Contract
if the Purchase Contract Settlement Date had occurred immediately prior to such
Reorganization Event, assuming such Holder of Common Stock is not a Person with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an Affiliate of a constituent Person, and failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such Reorganization Event
(provided that if the kind or amount of securities, cash and other property
receivable upon such Reorganization
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Event is not the same for each share of Common Stock held immediately prior to
such Reorganization Event by other than a constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("non-electing share"), then for the purpose of this Section the kind
and amount of securities, cash and other property receivable upon such
Reorganization Event by each non-electing share shall be deemed to be the kind
and amount so receivable per share by a plurality of the non-electing shares).
In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of
the Company or, in the event of a liquidation or dissolution of the Company,
the Company or a liquidating trust created in connection therewith, shall
execute and deliver to the Agent an agreement supplemental hereto providing
that the Holders of each Outstanding Security shall have the rights provided by
this Section 5.6. Such supplemental agreement shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section. The above provisions of this Section
shall similarly apply to successive Reorganization Events.
Section 5.7. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
(i) forthwith compute the adjusted Settlement Rate in accordance
with Section 5.6 and prepare and transmit to the Agent an Officers'
Certificate setting forth the Settlement Rate, the method of calculation
thereof in reasonable detail, and the facts requiring such adjustment
and upon which such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an
event that permits or requires an adjustment to the Settlement
Rate pursuant to Section 5.6 (or if the Company is not aware of such
occurrence, as soon as practicable after becoming so aware), provide a
written notice to the Holders of the Securities of the occurrence of
such event and a
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statement in reasonable detail setting forth the method by which the
adjustment to the Settlement Rate was determined and setting forth the
adjusted Settlement Rate.
(b) The Agent shall not at any time be under any duty or responsibility
to any holder of Securities to determine whether any facts exist which may
require any adjustment of the Settlement Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed in making the same. The Agent shall not be
accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, which may at the
time be issued or delivered with respect to any Purchase Contract; and the
Agent makes no representation with respect thereto. The Agent shall not be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock pursuant to a Purchase Contract or to comply with any of
the duties, responsibilities or covenants of the Company contained in this
Article.
Section 5.8. Termination Event; Notice.
The Purchase Contracts and the obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Agent or the Company, if,
on or prior to the Purchase Contract Settlement Date, a Termination Event shall
have occurred. Upon and after the occurrence of a Termination Event, the
Securities shall thereafter represent the right to receive the Preferred
Securities forming a part of such Securities in the case of Income PRIDES, or
Treasury Securities in the case of Growth PRIDES, in accordance with the
provisions of Section 4.2 and the Pledge Agreement, as applicable. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in the
Register.
Section 5.9. Early Settlement.
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(a) Subject to and upon compliance with the provisions of this
Section 5.9, at the option of the Holder thereof, 20 Purchase Contracts or an
integral multiple thereof may be settled early ("Early Settlement") as provided
herein. In order to exercise the right to effect Early Settlement with
respect to any Purchase Contracts, the Holder of the Certificate evidencing
such Purchase Contracts shall deliver such Certificate to the Agent at the
Corporate Trust Office duly endorsed for transfer to the Company or in blank
with the form of Election to Settle Early on the reverse thereof duly completed
and accompanied by payment in the form of a certified or cashier's check
payable to the order of the Company in immediately available funds in an amount
(the "Early Settlement Amount") equal to (i) the product of (A) the Stated
Amount times (B) the number of Purchase Contracts with respect to which the
Holder has elected to effect Early Settlement plus (ii) if such delivery is
made with respect to any Purchase Contracts during the period from the close of
business on any Record Date next preceding any Payment Date to the opening of
business on such Payment Date, an amount equal to the sum of (x) the Contract
Adjustment Payments payable on such Payment Date with respect to such Purchase
Contracts plus (y) in the case of Income PRIDES Certificate, the distributions
on the related Preferred Securities payable on such Payment Date. Except as
provided in the immediately preceding sentence and subject to the second to
last paragraph of Section 5.2, no payment or adjustment shall be made upon
Early Settlement of any Purchase Contract on account of any Contract Adjustment
Payments accrued on such Purchase Contract or on account of any dividends on
the Common Stock issued upon such Early Settlement. If the foregoing
requirements are first satisfied with respect to Purchase Contracts underlying
any Securities at or prior to 5:00 p.m., New York City time, on a Business Day,
such day shall be the "Early Settlement Date" with respect to such Securities
and if such requirements are first satisfied after 5:00 p.m., New York City
time, on a Business Day or on a day that is not a Business Day, the "Early
Settlement Date" with respect to such Securities shall be the next succeeding
Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Company shall issue, and the Holder shall be entitled
to receive, a number of shares of Common Stock on account of each
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Purchase Contract as to which Early Settlement is effected equal to the Early
Settlement Rate; provided, however, that upon the Early Settlement of the
Purchase Contracts, the Holder of such related Securities will forfeit the
right to receive any Deferred Contract Adjustment Payments. The Early
Settlement Rate shall initially be equal to ___ and shall be adjusted in the
same manner and at the same time as the Settlement Rate is adjusted. As
promptly as practicable after Early Settlement of Purchase Contracts in
accordance with the provisions of this Section 5.9, the Company shall issue and
shall deliver to the Agent at the Corporate Trust Office a certificate or
certificates for the full number of shares of Common Stock issuable upon such
Early Settlement together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(c) The Company shall cause the shares of Common Stock issuable, and the
related Preferred Securities, in the case of Income PRIDES, or the related
Treasury Securities, in the case of Growth PRIDES, deliverable, upon Early
Settlement of Purchase Contracts to be issued and delivered, in the case of
such shares of Common Stock, and released from the Pledge by the Collateral
Agent and transferred, in the case of such Preferred Securities or Treasury
Securities, to the Agent, for delivery to the Holder thereof or its designee,
no later than the third Business Day after the applicable Early Settlement
Date.
(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt thereof from the Company or the Collateral Agent, as applicable, the
Agent shall, in accordance with the instructions provided by the Holder thereof
on the applicable form of Election to Settle Early on the reverse of the
Certificate evidencing the related Securities, (i) transfer the Preferred
Securities or Treasury Securities, as the case may be, forming a part of such
Securities to the Agent, for the benefit of the Holder of such Purchase
Contract, and (ii) deliver to the Agent, for the benefit of the Holder of such
Purchase Contract, a certificate or certificates for the full number of shares
of Common Stock issuable upon such Early Settlement together with payment in
lieu of any fraction of a share, as provided in Section 5.10.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than
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all the Securities evidenced by a Certificate, upon such Early Settlement the
Company shall execute and the Agent shall authenticate, countersign and deliver
to the Holder thereof, at the expense of the Company, a Certificate evidencing
the Securities as to which Early Settlement was not effected.
Section 5.10. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Early Settlement of any Purchase Contracts or with
respect to the payment of Deferred Contract Adjustment Payments, if any, on the
Purchase Contract Settlement Date. If Certificates evidencing more than one
Purchase Contract shall be surrendered for settlement at one time by the same
Holder, the number of full shares of Common Stock which shall be delivered upon
settlement shall be computed on the basis of the aggregate number of Purchase
Contracts evidenced by the Certificates so surrendered. Instead of any
fractional share of Common Stock which would otherwise be deliverable upon
settlement of any Purchase Contracts on the Purchase Contract Settlement Date
or upon Early Settlement or with respect to the payment of any Deferred
Contract Adjustment Payments, the Company, through the Agent, shall make a cash
payment in respect of such fractional interest in an amount equal to the value
of such fractional shares times the Applicable Market Value. The Company shall
provide the Agent from time to time with sufficient funds to permit the Agent
to make all cash payments required by this Section 5.10 in a timely manner.
Section 5.11. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the shares of Common Stock pursuant to the
Purchase Contracts and in payment of any Deferred Contract Adjustment Payments;
provided, however, that the Company shall not be required to pay any such tax
or taxes which may be payable in respect of any exchange of or substitution for
a Certificate evidencing a Purchase Contract or any issuance of a share of
Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Purchase Contracts evidenced thereby,
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other than in the name of the Agent, as custodian for such Holder, and the
Company shall not be required to issue or deliver such share certificates or
Certificates unless or until the Person or Persons requesting the transfer or
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive
Contract Adjustment Payments and to Purchase Common
Stock.
The Holder of any Income PRIDES or Growth PRIDES shall have the right,
which is absolute and unconditional (subject to the right of the Company to
defer payment thereof pursuant to Section 5.3 and subject to the forfeiture of
any Deferred Contract Adjustment Payments upon Early Settlement pursuant to
Section 5.9(b) or upon the occurrence of a Termination Event), to receive
payment of each installment of the Contract Adjustment Payments with respect to
the Purchase Contract constituting a part of such Security on the respective
Payment Date for such Security and to purchase Common Stock pursuant to such
Purchase Contract and, in each such case, to institute suit for the enforcement
of any such payment and right to purchase Common Stock, and such rights shall
not be impaired without the consent of such Holder.
Section 6.2. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or remedy
under this Agreement and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such Holder, then and in every
such case, subject to any determination in such proceeding, the Company and
such Holder shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of such Holder shall
continue as though no such proceeding had been instituted.
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Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy upon a
default shall impair any such right or remedy or constitute a waiver of any
such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of Income PRIDES or
Growth PRIDES, by its acceptance of such Income PRIDES or Growth PRIDES shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Agreement, or in any
suit against the Agent for any action taken, suffered or omitted by it as
Agent, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; provided that the provisions of
this Section shall not apply to any suit instituted by the Company, to any suit
instituted by the Agent, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of distributions on
any Preferred Securities
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or Contract Adjustment Payments on any Purchase Contract on or
after the respective Payment Date therefor in respect of any Security held by
such Holder, or for enforcement of the right to purchase shares of Common Stock
under the Purchase Contracts constituting part of any Security held by such
Holder.
Section 6.6. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Agreement; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Agent or the Holders, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically set
forth in this Agreement and the Pledge Agreement, and no implied
covenants or obligations shall be read into this Agreement against the
Agent; and
(2) in the absence of bad faith or negligence on its part, the
Agent may, with respect to the Securities, conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Agent and
conforming to the requirements of this Agreement, but in the case of any
certificates or opinions which by any provision hereof are specifically
required to be furnished to
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the Agent, the Agent shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Agent was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if adequate indemnity is not provided to
it.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
(d) The Agent is authorized to execute and deliver the Pledge Agreement
in its capacity as Agent.
Section 7.2. Notice of Default.
Within 30 days after the occurrence of any default by the Company
hereunder, of which a Responsible Officer of the Agent has actual knowledge,
the Agent shall transmit by mail to the Company and the Holders of Securities,
as their names and addresses appear in the Register, notice of such default
hereunder, unless such default shall have been cured or waived.
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7.1:
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(a) the Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate of the Company;
(d) the Agent may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters related to the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Agent shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
(f) the Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
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negligence on the part of any agent or attorney or an Affiliate appointed
with due care by it hereunder.
Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall be taken as
the statements of the Company and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities, or of the Pledge Agreement or
the Pledge. The Agent shall not be accountable for the use or application by
the Company of the proceeds in respect of the Purchase Contracts.
Section 7.5. May Hold Securities.
Any Registrar or any other agent of the Company, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Company, the Collateral
Agent or any other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated from
the other funds except to the extent required by law. The Agent shall be under
no obligation to invest or pay interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
Section 7.7. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Agent from time to time reasonable compensation
for all services rendered by it hereunder;
(2) except as otherwise expressly provided herein, to reimburse the
Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Agent in accordance with any
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provision of this Agreement (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except
any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Agent and any predecessor Agent for, and to
hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of its duties
hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a member of a bank
holding company having) a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority and having
a Corporate Trust Office in the Borough of Manhattan, The City of New York, if
there be such a corporation in the Borough of Manhattan, The City of New York
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If
at any time the Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article
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shall become effective until the acceptance of appointment by the successor
Agent in accordance with the applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof
to the Company 60 days prior to the effective date of such resignation. If
the instrument of acceptance by a successor Agent required by Section 7.10
shall not have been delivered to the Agent within 30 days after the giving of
such notice of resignation, the resigning Agent may petition any court of
competent jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent
and the Company.
(d) if at any time
(1) the Agent fails to comply with Section 310(b) of the TIA, as if
the Agent were an indenture trustee under an indenture qualified under the
TIA, after written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six months, or
(2) the Agent shall cease to be eligible under Section 7.8 and shall
fail to resign after written request therefor by the Company or by any
such Holder, or
(3) the Agent shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Agent or of its property
shall be appointed or any public officer shall take charge or control of
the Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
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(e) If the Agent shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Agent for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Agent and shall
comply with the applicable requirements of Section 7.10. If no successor Agent
shall have been so appointed by the Company and accepted appointment in the
manner required by Section 7.10, any Holder who has been a bona fide Holder of
a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to give,
notice of each resignation and each removal of the Agent and each appointment
of a successor Agent by mailing written notice of such event by first-class
mail, postage prepaid, to all Holders as their names and addresses appear in
the applicable Register. Each notice shall include the name of the successor
Agent and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every such
successor Agent so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or
conveyance, shall become vested with all the rights, powers, agencies and
duties of the retiring Agent; but, on the request of the Company or the
successor Agent, such retiring Agent shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Agent all the
rights, powers and trusts of the retiring Agent and shall duly assign, transfer
and deliver to such successor Agent all property and money held by such
retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall execute
any and all instruments for more fully and certainly vesting in and
confirming to such successor Agent all such rights, powers and agencies
referred to in paragraph (a) of this Section.
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(c) No successor Agent shall accept its appointment unless at the time of
such acceptance such successor Agent shall be qualified and eligible under
this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Agent then in office, any successor by merger, conversion or consolidation to
such Agent may adopt such authentication and execution and deliver the
Certificates so authenticated and executed with the same effect as if such
successor Agent had itself authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply in
writing to the Agent, and furnish to the Agent reasonable proof that each such
applicant has owned a Security for a period of at least six months preceding
the date of such application, and such states that the applicants desire to
communicate with other Holders with respect to their rights under this
Agreement or under the Securities and is accompanied by a copy of the form of
proxy or other communication which such applicants propose to transmit, then
the Agent shall, within five Business Days after the receipt of such
application, afford such applicants access to the
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information preserved at the time by the Agent in accordance with Section
7.12(a).
(c) Every Holder agrees with the Company and the Agent that none of the
Company, the Agent nor any agent of any of them shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders in accordance with Section 7.12(b), regardless of the source
from which such information was derived.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligations and shall not be subject to any liability under this
Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be deemed to
have agreed, that the Agent's execution of the Certificates on behalf of the
Holders shall be solely as agent and attorney-in-fact for the Holders, and that
the Agent shall have no obligation to perform such Purchase Contracts on behalf
of the Holders, except to the extent expressly provided in Article Five hereof.
Section 7.14. Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the Company, will comply
with all applicable certification, information reporting and withholding
(including "backup" withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i) any payments made
with respect to the Securities or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Securities. Such
compliance shall include, without limitation, the preparation and timely filing
of required returns and the timely payment of all amounts required to be
withheld to the appropriate taxing authority or its designated agent.
(b) The Agent shall comply with any written direction received from the
Company with respect to the application of such requirements to particular
payments or Holders or in other particular circumstances, and may for
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purposes of this Agreement rely on any such direction in accordance with
the provisions of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available,
on written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the Agent, at any time
and from time to time, may enter into one or more agreements supplemental
hereto, in form satisfactory to the Company and the Agent, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the Company
herein and in the Certificates; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(4) to make provision with respect to the rights of Holders
pursuant to the requirements of Section 5.6(b); or
(5) except as provided for in Section 5.6, to cure any ambiguity,
to correct or supplement any provisions herein which may be inconsistent
with any other provisions herein, or to make any other provisions with
respect to such matters or questions
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arising under this Agreement, provided such action shall not adversely
affect the interests of the Holders.
Section 8.2. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% of the Outstanding
Securities voting together as one Class, by Act of said Holders delivered to the
Company and the Agent, the Company when authorized by a Board Resolution, and
the Agent may enter into an agreement or agreements supplemental hereto for the
purpose of modifying in any manner the terms of the Securities, or the
provisions of this Agreement or the rights of the Holders in respect of the
Securities; provided, however, that no such supplemental agreement shall,
without the consent of the Holder of each Outstanding Security affected thereby,
(1) change any Payment Date;
(2) increase the amount or decrease the type of Collateral required
to be Pledged to secure a Holder's Obligations under the Purchase
Contract, impair the right of the Holder of any Purchase Contract to
receive distributions on the related Collateral or otherwise adversely
affect the Holder's rights in or to such Collateral or adversely alter
the rights of the holders of Preferred Securities;
(3) reduce any Contract Adjustment Payments or any Deferred
Contract Adjustment Payment, or change any place where, or the coin or
currency in which, any Contract Adjustment Payments is payable;
(4) impair the right to institute suit for the enforcement of any
Purchase Contract;
(5) reduce the number of shares of Common Stock to be purchased
pursuant to any Purchase Contract, increase the price to purchase shares
of Common Stock upon settlement of any Purchase Contract, change the
Purchase Contract Settlement Date or otherwise adversely affect the
Holder's rights under any Purchase Contract; or
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(6) reduce the percentage of the Outstanding Securities the consent
of whose Holders is required for any such supplemental agreement.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder shall be bound thereby.
Section 8.6. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and delivered
after the execution of any supplemental agreement pursuant to this Article may,
and shall if required by the Agent, bear a notation in form approved by the
Agent as to any matter provided for in such supplemental agreement. If the
Company shall so determine, new Certificates so modified as to conform, in the
opinion of the Agent and the Company, to any such supplemental agreement may be
prepared and executed by the Company and authenticated, executed on behalf of
the
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Holders and delivered by the Agent in exchange for Outstanding Certificates.
ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.
The Company covenants that it will not merge or consolidate with any other
Person or sell, assign, transfer, lease or convey all or substantially all of
its properties and assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i) either the Company
shall be the continuing corporation, or the successor (if other than the
Company) shall be a corporation organized and existing under the laws of the
United States of America or a State thereof or the District of Columbia and
such corporation shall expressly assume all the obligations of the Company
under the Purchase Contracts, this Agreement and the Pledge Agreement by one or
more supplemental agreements in form satisfactory to the Agent and the
Collateral Agent, executed and delivered to the Agent and the Collateral Agent
by such corporation, and (ii) the Company or such successor corporation, as the
case may be, shall not, immediately after such merger or consolidation, or such
sale, assignment, transfer, lease or conveyance, be in default in the
performance of any covenant or condition hereunder, under any of the Securities
or under the Pledge Agreement.
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by the successor corporation
in accordance with Section 9.1, such successor corporation shall succeed to and
be substituted for the Company with the same effect as if it had been named
herein as the Company. Such successor corporation thereupon may cause to be
signed, and may issue either in its own name or in the
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name of MCN Corporation, any or all of the Certificates evidencing Securities
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Agent; and, upon the order of such successor corporation,
instead of the Company, and subject to all the terms, conditions and limitations
in this Agreement prescribed, the Agent shall authenticate and execute on behalf
of the Holders and deliver any Certificates which previously shall have been
signed and delivered by the officers of the Company to the Agent for
authentication and execution, and any Certificate evidencing Securities which
such successor corporation thereafter shall cause to be signed and delivered to
the Agent for that purpose. All the Certificates so issued shall in all
respects have the same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with the terms of
this Agreement as though all of such Certificates had been issued at the date of
the execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Securities thereafter to be issued
as may be appropriate.
Section 9.3. Opinion of Counsel to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
Covenants
Section 10.1. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from time
to time of the Securities that it
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will duly and punctually perform its obligations under the Purchase Contracts in
accordance with the terms of the Purchase Contracts and this Agreement.
Section 10.2. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New
York an office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement or Early Settlement and
for transfer of Collateral upon occurrence of a Termination Event, where
Certificates may be surrendered for registration of transfer or exchange, for a
Collateral Substitution or re-establishment of an Income PRIDES and where
notices and demands to or upon the Company in respect of the Securities and
this Agreement may be served. The Company will give prompt written notice to
the Agent of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Agent with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Company hereby appoints the Agent as its
agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where Certificates may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company will give
prompt written notice to the Agent of any such designation or rescission and of
any change in the location of any such other office or agency. The Company
hereby designates as the place of payment for the Securities the Corporate
Trust Office and appoints the Agent at its Corporate Trust Office as paying
agent in such city.
Section 10.3. Company to Reserve Common Stock.
The Company shall at all times prior to the Purchase Contract Settlement
Date reserve and keep available, free from preemptive rights, out of its
authorized but unis-
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sued Common Stock the full number of shares of Common Stock issuable (x) against
tender of payment in respect of all Purchase Contracts constituting a part of
the Securities evidenced by Outstanding Certificates and (y) in payment of
Deferred Contract Adjustment Payments, if any, owed by the Company to the
Holders.
Section 10.4. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be issued
against tender of payment in respect of any Purchase Contract constituting a
part of the Outstanding Securities and in payment of any Deferred Contract
Adjustment Payments will, upon issuance, be duly authorized, validly issued,
fully paid and nonassessable.
Section 10.5. Statements of Officers of the Company as to Default.
The Company will deliver to the Agent, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions hereof, and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MCN CORPORATION
Attested by
______________________________ By:__________________________
Senior Vice President, Name: Sebastian Coppola
General Counsel and Title: Senior Vice President and
Secretary Treasurer
THE FIRST NATIONAL BANK OF
CHICAGO
Attested by
______________________________ By:__________________________
Vice President and Name:
Senior Counsel Title: Assistant Vice President
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EXHIBIT A
This Certificate is a Global Certificate within the meaning of the
Purchase Contract Agreement hereinafter referred to and is registered in the
name of the Clearing Agency or a nominee thereof. This Certificate may not be
exchanged in whole or in part for a Certificate registered, and no transfer of
this Certificate in whole or in part may be registered, in the name of any
person other than such Clearing Agency or a nominee thereof, except in the
limited circumstances described in the Purchase Contract Agreement.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
Company or its agent for registration of transfer, exchange or payment, and any
Certificate issued is registered in the name of Cede & Co., or such other name
as requested by an authorized representative of The Depository Trust Company,
and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.
No. ________ Cusip No. __________
Form of Face of Income PRIDES Certificate
_____% Income PRIDES
This Income PRIDES Certificate certifies that ___________ is the
registered Holder of the number of Income PRIDES set forth above. Each Income
PRIDES represents (i) ownership by the Holder of one __% Trust Originated
Preferred Security (the "Preferred Security") of MCN Financing III, a Delaware
statutory business trust (the "Trust"), having a stated liquidation amount of
$50, subject to the Pledge of such Preferred Security by such Holder pursuant
to the Pledge Agreement, and (ii) the rights and obligations of the Holder
under one Purchase Contract with MCN Corporation, a Michigan corporation, doing
business as MCN Energy Group Inc. (the "Company").
The Preferred Securities represented by this Certificate were acquired by
the Underwriters on behalf of
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the Company with the proceeds of the offering of FELINE PRIDES in respect of
which this Certificate has been issued and are being conveyed to the Holder of
this Certificate and pledged pursuant to the Pledge Agreement simultaneously
therewith.
Pursuant to the Pledge Agreement, the Preferred Securities constituting
part of each Income PRIDES evidenced hereby have been pledged to the Collateral
Agent to secure the obligations of the Holder under the Purchase Contract
comprising a portion of such Income PRIDES.
The Pledge Agreement provides that all payments of the Stated Amount of,
or cash distributions on, any Pledged Preferred Securities (as defined in the
Pledge Agreement) constituting part of the Income PRIDES received by the
Collateral Agent shall be paid by the Collateral Agent by wire transfer in same
day funds (i) in the case of (A) cash distributions with respect to Pledged
Preferred Securities and (B) any payments of the Stated Amount with respect to
any Preferred Securities that have been released from the Pledge pursuant to
the Pledge Agreement, to the Agent to the account designated by the Agent, no
later than 1:00 p.m., New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such payment is
received by the Collateral Agent on a day that is not a Business Day or after
1:00 p.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:00 a.m., New York City time, on the next Business Day)
and (ii) in the case of payments of the Stated Amount of any Pledged Preferred
Securities, to the Company on the relevant Payment Date (as defined herein) in
accordance with the terms of the Pledge Agreement, in full satisfaction of the
respective obligations of the Holders of the Income PRIDES of which such
Pledged Preferred Securities are a part under the Purchase Contracts forming a
part of such Income PRIDES. Distributions on any Preferred Security forming
part of an Income PRIDES evidenced hereby which are payable quarterly in
arrears on March 31, June 30, September 30 and December 31 each year,
commencing __________ (a "Payment Date"), shall, subject to receipt thereof by
the Agent from the Collateral Agent, be paid to the Person in whose name this
Income PRIDES Certificate (or a Predecessor Income PRIDES
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Certificate) is registered at the close of business on the Record Date for such
Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this
Income PRIDES Certificate to purchase, and the Company to sell, on May __,
2000 (the "Purchase Contract Settlement Date"), at a price equal to $50 (the
"Stated Amount"), a number of shares of Common Stock, par value $.01 per share
("Common Stock"), of the Company, equal to the Settlement Rate, unless on or
prior to the Purchase Contract Settlement Date there shall have occurred a
Termination Event, a Cash Settlement or an Early Settlement with respect to the
Income PRIDES of which such Purchase Contract is a part, all as provided in the
Purchase Contract Agreement and more fully described on the reverse hereof.
The purchase price (the "Purchase Price") for the shares of Common Stock
purchased pursuant to each Purchase Contract evidenced hereby, if not paid
earlier, shall be paid on the Purchase Contract Settlement Date by application
of payment received in respect of the Stated Amount of the Pledged Preferred
Securities pledged to secure the obligations under such Purchase Contract of
the Holder of the Income PRIDES of which such Purchase Contract is a part. A
Holder may cause the Preferred Security pledged to secure the obligations under
the Purchase Contract of the Holder of the Income PRIDES of which such Purchase
Contract is a part to be repaid and the proceeds therefrom to be used to pay
the Purchase Price of the shares of Common Stock of the Company.
The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of an Income PRIDES evidenced hereby an amount (the
"Contract Adjustment Payments") equal to ___% per annum of the Stated Amount,
computed on the basis of the actual number of days elapsed in a year of 365 or
366 days, as the case may be, subject to deferral at the option of the Company
as provided in the Purchase Contract Agreement and more fully described on the
reverse hereof. Such Contract Adjustment Payments shall be payable to the
Person in whose name this Income PRIDES Certificate (or a Predecessor Income
PRIDES Certificate) is registered at the close of business on the Record Date
for such Payment Date.
Distributions on the Preferred Securities and Contract Adjustment Payments
will be payable at the office
A-3
<PAGE> 87
of the Agent in The City of New York or, at the option of the Company, by check
mailed to the address of the Person entitled thereto as such address appears on
the Income PRIDES Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Agent by manual signature, this Income PRIDES Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
A-4
<PAGE> 88
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
MCN CORPORATION
By:
----------------------------
Name: Sebastian Coppola
Title: Senior Vice President and
Treasurer
By:
---------------------------
Name: Daniel L. Schiffer
Title: Senior Vice President,
General Counsel and Secretary
Attest:
- --------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: THE FIRST NATIONAL BANK OF CHICAGO,
not individually but solely as
Attorney-in-Fact of such Holder
By:
----------------------------------
Name:
Title:
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Income PRIDES Certificates referred to in the within
mentioned Purchase Contract Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:
---------------------------------
A-5
<PAGE> 89
(Form of Reverse of Income PRIDES Certificate]
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of March __, 1997 (as supplemented from time to time, the
"Purchase Contract Agreement"), between the Company and The First National Bank
of Chicago, as Purchase Contract Agent (herein called the "Agent"), to which
Purchase Contract Agreement and supplemental agreements thereto reference is
hereby made for a description of the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Agent, the Company, and
the Holders and of the terms upon which the Income PRIDES Certificates are, and
are to be, executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this
Income PRIDES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount, a number of
shares of Common Stock of the Company equal to the Settlement Rate, unless, on
or prior to the Purchase Contract Settlement Date, there shall have occurred a
Termination Event, a Cash Settlement or an Early Settlement with respect to the
Security of which such Purchase Contract is a part. The "Settlement Rate" is
equal to (a) if the Applicable Market Value (as defined below) is equal to or
greater than $_____ (the "Threshold Appreciation Price"), ____ shares of
Common Stock per Purchase Contract, (b) if the Applicable Market Value is less
than the Threshold Appreciation Price but is greater than $__________, _____
shares of Common Stock per Purchase Contract equal to the Stated Amount divided
by the Applicable Market Value and (c) if the Applicable Market Amount is
less than or equal to $__________, _____ shares of Common Stock per Purchase
Contract, in each case subject to adjustment as provided in the Purchase
Contract. No fractional shares of Common Stock will be issued upon settlement
of Purchase Contracts, as provided in the Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing Prices per
share of Common Stock on each of the twenty consecutive Trading Days ending on
the second Trading Day immediately preceding the Purchase Contract Settlement
Date. The "Closing Price" of the Common Stock on any date of determination
means the closing sale price (or, if no closing price is reported, the last
reported sale price) of the
A-6
<PAGE> 90
Common Stock on the New York Stock Exchange (the "NYSE") on such date or, if
the Common Stock is not listed for trading on the NYSE on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the
Common Stock is not so listed on a United States national or regional
securities exchange, as reported by The Nasdaq Stock Market, or, if the Common
Stock is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Income PRIDES Certificate shall pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting a Cash Settlement on the Purchase Contract Settlement Date
or an Early Settlement. A Holder of an Income PRIDES who fails to make an
effective Cash Settlement or an Early Settlement in respect of a Purchase
Contract prior to a Purchase Contract Settlement Date will be deemed to have
elected to have requested the Trust to deliver to the Company a principal
amount of the Junior Subordinated Debentures, underlying the Preferred
Securities equal to the Stated Amount of the Purchase Contract for application
to the Purchase Price of the Common Stock.
The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.
Each Purchase Contract evidenced hereby and the obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall have occurred.
A-7
<PAGE> 91
Upon the occurrence of a Termination Event, the Company shall give written
notice to the Agent and to the Holders, at their addresses as they appear in
the Income PRIDES Register. Upon and after the occurrence of a Termination
Event, the Collateral Agent shall release the Pledged Preferred Security (as
defined in the Pledge Agreement) forming a part of each Income PRIDES, or the
Liquidation Distribution received in respect of such Pledged Preferred
Security, from the Pledge. An Income PRIDES shall thereafter represent the
right to receive the Preferred Security forming a part of such Income PRIDES,
or the Liquidation Distribution received in respect of such Preferred Security,
and any accrued Contract Adjustment Payments on the Purchase Contract forming a
part of such Income PRIDES in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement. Contract Adjustment Payments
shall cease to accrue in respect of any period from and after the date of a
Termination Event.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Pledged
Preferred Securities. Upon receipt of notice of any meeting at which holders
of Preferred Securities are entitled to vote or solicitation of consents,
waivers or proxies of holders of Preferred , the Agent shall, as soon as
practicable thereafter, mail to the Income PRIDES holders a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Income PRIDES holder on the record date set by the Agent
therefor (which, to the extent possible, shall be the same date as the record
date for determining the holders of Preferred Securities entitled to vote)
shall be entitled to instruct the Agent as to the exercise of the voting rights
pertaining to the Preferred Securities constituting a part of such holder's
Income PRIDES and (c) stating the manner in which such instructions may be
given. Upon the written request of the Income PRIDES holders on such record
date, the Agent shall endeavor insofar as practicable to vote or cause to be
voted, in accordance with the instructions set forth in such requests, the
maximum number of Preferred Securities as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of an Income PRIDES, the Agent shall abstain from voting the Preferred
Security evidenced by such Income PRIDES.
Upon the occurrence of a Tax Event, Investment Company Event or
liquidation of the Trust, a principal amount of the
A-8
<PAGE> 92
Junior Subordinated Debentures constituting the assets of the Trust and
underlying the Preferred Securities equal to the aggregate Stated Amount
of the Pledged Preferred Securities shall be delivered to the Collateral Agent
in exchange for Pledged Preferred Securities. Thereafter, the Junior
Subordinated Debentures shall be held by the Collateral Agent to secure the
obligations of each Holder of Income PRIDES to purchase shares of Common Stock
under the Purchase Contracts constituting a part of such Income PRIDES.
Following the liquidation of the Trust, the Holders and the Collateral Agent
shall have such security interests, rights and obligations with respect to the
Junior Subordinated Debentures as the Holders and the Collateral Agent had in
respect of the Pledged Preferred Securities, and any reference in the Purchase
Contract Agreement or Pledge Agreement to the Preferred Securities shall be
deemed to be a reference to the Junior Subordinated Debentures.
The Income PRIDES Certificates are issuable only in registered form and
only in denominations of a single Income PRIDES and any integral multiple
thereof. The transfer of any Income PRIDES Certificate will be registered and
Income PRIDES Certificates may be exchanged as provided in the Purchase
Contract Agreement. The Income PRIDES Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such registration of transfer or exchange, but the Company and
the Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Except as provided in the
Purchase Contract Agreement, for so long as the Purchase Contract underlying an
Income PRIDES remains in effect, such Income PRIDES shall not be separable into
its constituent parts, and the rights and obligations of the Holder of such
Income PRIDES in respect of the Preferred Security and Purchase Contract
constituting such Income PRIDES may be transferred and exchanged only as an
Income PRIDES. The holder of an Income PRIDES may substitute for the Pledged
Preferred Securities securing its obligation under the related Purchase
Contract Treasury Securities in an aggregate principal amount equal to the
aggregate Stated Amount of the Pledged Preferred Securities in accordance with
the terms of the Purchase Contract Agreement and the Pledge Agreement. From
and after such Collateral Substitution, the Security for which such Pledged
Treasury Securities secures the holder's obligation under the Purchase Contract
shall be referred to as a "Growth PRIDES."
A-9
<PAGE> 93
A Holder of a Growth PRIDES may recreate an Income PRIDES by delivering to
the Collateral Agent Preferred Securities with a Stated Amount equal to the
aggregate principal amount of the Pledged Treasury Securities in exchange for
the release of such Pledged Treasury Securities in accordance with the terms of
the Purchase Contract Agreement and the Pledge Agreement.
Subject to the next succeeding paragraph, the Company shall pay, on each
Payment Date, the Contract Adjustment Payments payable in respect of each
Purchase Contract to the Person in whose name the Income PRIDES Certificate
evidencing such Purchase Contract is registered at the close of business on the
Record Date for such Payment Date. Contract Adjustment Payments will be
payable at the office of the Agent in The City of New York or, at the option of
the Company, by check mailed to the address of the Person entitled thereto at
such address as it appears on the Income PRIDES Register.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments so deferred
shall bear additional Contract Adjustment Payments thereon at the rate of ____%
per annum (computed on the basis of the actual number of days elapsed in a year
of 365 or 366 days, as the case may be), compounding on each succeeding Payment
Date, until paid in full (such deferred installments of Contract Adjustment
Payments together with the additional Contract Adjustment Payments accrued
thereon, are referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments shall be due on the next
succeeding Payment Date except to the extent that payment is deferred pursuant
to the Purchase Contract Agreement. No Contract Adjustment Payments may be
deferred to a date that is after the Purchase Contract Settlement Date.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, the Holder of this Income PRIDES Certificate will receive on
the Purchase Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock (in addition to a number
A-10
<PAGE> 94
of shares of Common Stock equal to the Settlement Rate) equal to (x) the
aggregate amount of Deferred Contract Adjustment Payments payable to the Holder
of the Income PRIDES Certificate of Securities divided by (y) the Applicable
Market Value. No fractional shares of Common Stock will be issued with respect
to the payment of Deferred Contract Adjustment Payments on the Purchase
Contract Settlement Date, as provided in the Purchase Contract Agreement.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, (a) the Company shall not declare or pay dividends on,
make distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchase or acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase shares of Common Stock, (ii) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one class or series of
the Company's capital stock for another class or series of the Company's
capital stock or (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged) or make any
guarantee payments with respect to the foregoing), (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company that rank pari passu with such Contract Adjustment Payments and (c) the
Company shall not make any guarantee payments with respect to the foregoing.
The Purchase Contracts and the obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments or any Deferred Contract Adjustment Payments, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Agent or the Company, if, on or prior to the Purchase
Contract Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
after two business days thereafter give
A-11
<PAGE> 95
written notice to the Agent, the Collateral Agent and to the Holders, at
their addresses as they appear in the Income PRIDES Register. Upon and after
the occurrence of a Termination Event, the Collateral Agent shall release the
Treasury Securities from the Pledge in accordance with the provisions of the
Pledge Agreement. The Growth PRIDES shall thereafter represent the right to
receive the Treasury Securities forming a part of such Securities in accordance
with the provisions of the Purchase Contract Agreement and the Pledge
Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement at the option of the Holder thereof, 20 Purchase Contracts
or an integral multiple thereof may be settled early ("Early Settlement") as
provided in the Purchase Contract Agreement. In order to exercise the right to
effect Early Settlement with respect to any Purchase Contracts evidenced by this
Income PRIDES Certificate, the Holder of this Income PRIDES Certificate shall
deliver this Income PRIDES Certificate to the Agent at the Corporate Trust
Office duly endorsed for transfer to the Company or in blank with the form of
Election to Settle Early set forth below duly completed and accompanied by
payment in the form of a certified or cashier's check payable to the order of
the Company in immediately available funds in an amount (the "Early Settlement
Amount") equal to (i) the product of (A) the Stated Amount times (B) the number
of Purchase Contracts with respect to which the Holder has elected to effect
Early Settlement, plus (ii) if such delivery is made with respect to any
Purchase Contracts during the period from the close of business on any Record
Date for any Payment Date to the opening of business on such Payment Date, an
amount equal to the sum of (x) the Contract Adjustment Payments payable on such
Payment Date with respect to such Purchase Contracts plus (y) the distributions
with respect to the related Pledged Preferred Securities payable on such
Payment Date. Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Pledged Preferred Securities underlying such Securities
shall be released from the Pledge as provided in the Pledge Agreement and the
Holder shall be entitled to receive, a number of shares of Common Stock on
account of each Purchase Contract forming part of a Income PRIDES as to which
Early Settlement is effected equal to the Early Settlement Rate; provided
however, that upon the Early Settlement of the Purchase Contracts, the Holder
thereof will forfeit the right to receive any Deferred Contract
A-12
<PAGE> 96
Adjustment Payments on such Purchase Contracts. The Early Settlement Rate
shall initially be equal to _____ and shall be adjusted in the same manner and
at the same time as the Settlement Rate is adjusted as provided in the Purchase
Contract Agreement.
Upon registration of transfer of this Income PRIDES Certificate, the
transferee shall be bound (without the necessity of any other action on the
part of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract
Agreement and the Purchase Contracts evidenced hereby and the transferor shall
be released from the obligations under the Purchase Contracts evidenced by this
Income PRIDES Certificate. The Company covenants and agrees, and the Holder,
by his acceptance hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
The Holder of this Income PRIDES Certificate, by his acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Income PRIDES evidenced hereby on his behalf as his
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the
event that the Company becomes the subject of a case under the Bankruptcy Code,
agrees to be bound by the terms and provisions thereof, covenants and agrees to
perform his obligations under such Purchase Contracts, consents to the
provisions of the Purchase Contract Agreement, authorizes the Agent to enter
into and perform the Pledge Agreement on his behalf as his attorney-in-fact,
and consents to the Pledge of the Preferred Securities underlying this Income
PRIDES Certificate pursuant to the Pledge Agreement. The Holder further
covenants and agrees, that, to the extent and in the manner provided in the
Purchase Contract Agreement and the Pledge Agreement, but subject to the terms
thereof, payments in respect to the Stated Amount of the Pledged Preferred
Securities on the Purchase Contract Settlement Date shall be paid by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% of
the Outstanding Securities.
A-13
<PAGE> 97
All terms used herein which are defined in the Purchase Contract Agreement
have the meanings set forth therein.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company or
the Agent may treat the Person in whose name this Income PRIDES Certificate is
registered as the owner of the Income PRIDES evidenced hereby for the purpose
of receiving payments of distributions payable quarterly on the Preferred
Securities, receiving payments of Contract Adjustment Payments and any Deferred
Contract Adjustment Payments, performance of the Purchase Contracts and for all
other purposes whatsoever, whether or not any payments in respect thereof be
overdue and notwithstanding any notice to the contrary, and neither the
Company, the Agent nor any such agent shall be affected by notice to the
contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Agent.
A-14
<PAGE> 98
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
---------------------
TEN ENT - as tenants by the (Cust) (Minor) entire-
ties Under Uniform Gifts
JT TEN - as joint tenants with
to Minors Act right of survivorship and
not as tenants in common
(State)
---------------------
Additional abbreviations may also be used though not in the above list.
_____________________________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
________________________________________________________________________________
Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Postal Zip Code
________________________________________________________________________________
of Assignee the within Income PRIDES Certificates and all rights
________________________________________________________________________________
thereunder, hereby irrevocably constituting and appointing
________________________________________________________________________________
attorney to transfer said Income PRIDES Certificates on the books of MCN
Corporation with full power of substitution in the premises.
Dated: _________________ Signature __________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Income PRIDES
Certificates in every particular,
without alteration or enlargement or
any change whatsoever.
A-15
<PAGE> 99
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Income PRIDES evidenced
by this Income PRIDES Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned
at the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable
incident thereto.
Dated: _________________________ _________________________
Signature
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the Holder,
please print such Person's name
and address:
Please print name and address of
Registered Holder:
___________________________ ___________________________
Name Name
___________________________ ___________________________
Address Address
_____________________________________________ ____________________________
_______________________________________ __________________________
Social Security or other
Taxpayer Identification
Number, if any ____________________________
A-16
<PAGE> 100
ELECTION TO SETTLE EARLY
The undersigned Holder of this Income PRIDES Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Income PRIDES evidenced by this Income
PRIDES Certificate specified below. The option to effect Early Settlement may
be exercised only with respect to Purchase Contracts underlying Income PRIDES
in 20 or an integral multiple thereof. The undersigned Holder directs that a
certificate for shares of Common Stock deliverable upon such Early
Settlement be registered in the name of, and delivered, together with a check
in payment for any fractional share and any Income PRIDES Certificate
representing any Income PRIDES evidenced hereby as to which Early Settlement of
the related Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have been indicated
below. Pledged Preferred Securities deliverable upon such Early Settlement
will be transferred in accordance with the transfer instructions set forth
below. If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated: ____________________________ ____________________________
Signature
A-17
<PAGE> 101
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If shares of Common Stock REGISTERED HOLDER
or Income PRIDES Certificates
are to be registered in the name
of and delivered to and Pledged
Preferred Securities are to be
transferred to a Person other
than the Holder, please print
such Person's name and address:
Please print name and address of
Registered Holder:
______________________________ ______________________________
Name Name
______________________________ ______________________________
Address Address
______________________________ ______________________________
______________________________ ______________________________
Social Security or other
Taxpayer Identification
Number, if any ______________________________
Transfer Instructions for Pledged Preferred Securities Transferable Upon Early
Settlement or a Termination Event:
__________________________________________________________
__________________________________________________________
__________________________________________________________
A-18
<PAGE> 102
EXHIBIT B
No. ______________ Cusip No. _______
Form of Face of Growth PRIDES Certificate
_____% Growth PRIDES
This Growth PRIDES Certificate certifies that __________ is the registered
Holder of the number of Purchase Contracts set forth above. Each Purchase
Contract evidenced hereby obligates the Holder of this Growth PRIDES
Certificate to purchase, and MCN Corporation, a Michigan corporation, doing
business as MCN Energy Group Inc. (the "Company"), to sell, on May __, 2000
(the "Purchase Contract Settlement Date"), at a price equal to $50 (the "Stated
Amount"), a number of shares of Common stock, par value $.01 per share ("Common
Stock"), of the Company equal to the Settlement Rate, unless on or prior to the
Purchase Contract Settlement Date there shall have occurred a Termination
Event, a Cash Settlement or an Early Settlement with respect to the Growth
PRIDES of which such Purchase Contract is a part, all as provided in the
Purchase Contract Agreement and more fully described on the reverse hereof.
The purchase price for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby will be paid by application of the Proceeds
from the Treasury Securities pledged to secure the obligations under such
Purchase Contract in accordance with the terms of the Pledge Agreement.
The Company shall pay quarterly in arrears on each March 31, June 30,
September 30 and December 31, commencing on ____________, 1997 (each, a
"Payment Date"), in respect of each Purchase Contract evidenced hereby an
amount (the "Contract Adjustment Payments") equal to __% per annum of the
Stated Amount, from ____________, 1997, computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as the case may be,
subject to deferral at the option of the Company as provided in the Purchase
Contract Agreement and more fully described on the reverse hereof. Such
Contract Adjustment Payments shall be payable to the Person in whose name this
Growth PRIDES Certificate (or a Predecessor Growth PRIDES Certificate) is
registered at the close of business on the Record Date for such Payment Date.
B-1
<PAGE> 103
Contract Adjustment Payments will be payable at the office of the Agent in
The City of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto as such address appears on the Growth
PRIDES Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Agent by manual signature, this Growth PRIDES Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
B-2
<PAGE> 104
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
MCN CORPORATION
By:___________________________________
Name: Daniel L. Schiffer
Title: Senior Vice President,
General Counsel and Secretary
By:___________________________________
Name: Sebastian Coppola
Title: Senior Vice President and
Treasurer
Attest:
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder
under the Purchase Contracts
evidenced hereby)
By: THE FIRST NATIONAL BANK
OF CHICAGO not individually but
solely as Attorney-in-Fact
of such Holder
By:___________________________________
Name:
Title:
Dated:
_____________________________________________
B-3
<PAGE> 105
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Growth PRIDES referred to in the
within-mentioned Purchase Contract Agreement.
By: THE FIRST NATIONAL BANK
OF CHICAGO as Agent
By:_________________________________
Authorized Officer
B-4
<PAGE> 106
Form of Reverse of
Growth PRIDES Certificate
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of March __, 1997 (as supplemented from time to time, the
"Purchase Contract Agreement") between the Company and The First National Bank
of Chicago, as Purchase Contract Agent (including its successors thereunder,
herein called the "Agent"), to which the Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Agent, the Company and the Holders of Growth
PRIDES and of the terms upon which the Growth PRIDES Certificates are, and are
to be, executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this
Growth PRIDES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount, a number of
shares of Common Stock of the Company equal to the Settlement Rate, unless, on
or prior to the Purchase Contract Settlement Date, there shall have occurred a
Termination Event, a Cash Settlement or an Early Settlement with respect to the
Security of which such Purchase Contract is a part. The "Settlement Rate" is
equal to (a) if the Applicable Market Value (as defined below) is equal to or
greater than $_____ (the "Threshold Appreciation Price"), ____ shares of Common
Stock per Purchase Contract, (b) if the Applicable Market Value is less than
the Threshold Appreciation Price but is greater than $__________, _____ shares
of Common Stock per Purchase Contract equal to the Stated Amount divided by the
Applicable Market Value and (c) if the Applicable Market Amount is less than or
equal to $___________, _____ shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase Contract. No
fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing Prices per
share of Common Stock on each of the twenty consecutive Trading Days ending on
the second Trading Day immediately preceding the Purchase Contract Settlement
Date. The "Closing Price" of the Common Stock on any date of determination
means the closing sale price (or, if no closing price is reported, the last
reported sale price) of the Common Stock on the New York Stock Exchange (the
"NYSE") on such date or, if the Common Stock is not listed for trading
B-5
<PAGE> 107
on the NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which the Common Stock is so
listed, or if the Common Stock is not so listed on a United States national or
regional securities exchange, as reported by The Nasdaq Stock Market, or, if
the Common Stock is not so reported, the last quoted bid price for the Common
Stock in the over-the-counter market as reported by the National Quotation
Bureau or similar organization, or, if such bid price is not available, the
market value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company. A "Trading Day" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Growth PRIDES Certificate shall pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting either a Cash Settlement prior to the Purchase Contract
Settlement Date or an Early Settlement of each such Purchase Contract. A
Holder of a Growth PRIDES who fails to make an effective Cash Settlement or an
Early Settlement in respect of a Purchase Contract prior to the Purchase
Contract Settlement Date will be deemed to have requested the Agent to apply a
principal amount of the Pledged Treasury Securities underlying such Holder's
Growth PRIDES equal to the Stated Amount of such Purchase Contract to the
purchase of the Common Stock.
The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.
Each Purchase Contract evidenced hereby and the obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall have occurred. Upon the occurrence of a Termination Event, the Company
shall give written notice to the Agent and to the Holders, at their addresses
as they appear in the Growth PRIDES Register. Upon and after the occurrence of
a Termination Event, the Collateral Agent shall release the Pledged Treasury
Securities (as
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<PAGE> 108
defined in the Pledge Agreement) forming a part of each Growth PRIDES. A
Growth PRIDES shall thereafter represent the right to receive any accrued
Contract Adjustment Payments on the Purchase Contract forming a part of such
Growth PRIDES in accordance with the terms of the Purchase Contract Agreement
and the Pledge Agreement. Contract Adjustment Payments shall cease to accrue
in respect of any period from and after the date of a Termination Event.
The Growth PRIDES Certificates are issuable only in registered form and
only in denominations of a single Growth PRIDES and any integral multiple
thereof. The transfer of any Growth PRIDES Certificate will be registered and
Growth PRIDES Certificates may be exchanged as provided in the Purchase
Contract Agreement. The Growth PRIDES Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such registration of transfer or exchange, but the Company and
the Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Except as provided in the
Purchase Contract Agreement, for so long as the Purchase Contract underlying a
Growth PRIDES remains in effect, such Growth PRIDES shall not be separable into
its constituent parts, and the rights and obligations of the Holder of such
Growth PRIDES in respect of the Treasury Security and Purchase Contract
constituting such Growth PRIDES may be transferred and exchanged only as a
Growth PRIDES. The holder of a Growth PRIDES may substitute for the Pledged
Treasury Securities securing its obligations under the related Purchase
Contract Preferred Securities with an aggregate Stated Amount equal to the
aggregate principal amount of the Pledged Treasury Securities in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement.
From and after such substitution, the holder's Security shall be referred to as
an "Income PRIDES."
A Holder of an Income PRIDES may recreate a Growth PRIDES by delivering to
the Collateral Agent Treasury Securities in an aggregate principal amount equal
to the aggregate Stated Amount of the Pledged Preferred Securities in exchange
for the release of such Pledged Preferred Securities in accordance with the
terms of the Purchase Contract Agreement and the Pledge Agreement. Any such
recreation of a Growth PRIDES may be effected only in multiples of 20 Income
PRIDES for each Growth PRIDES.
Subject to the next succeeding paragraph, the Company shall pay, on each
Payment Date, the Contract Adjustment Payments payable in respect of each
Purchase Contract to the
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<PAGE> 109
Person in whose name the Growth PRIDES Certificate evidencing such Purchase
Contract is registered at the close of business on the Record Date for such
Payment Date. Contract Adjustment Payments will be payable at the office of
the Agent in The City of New York or, at the option of the Company, by check
mailed to the address of the Person entitled thereto at such address as it
appears on the Growth PRIDES Register.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments so deferred
shall bear additional Contract Adjustment Payments thereon at the rate of ____%
per annum (computed on the basis of the actual number of days elapsed in a year
of 365 or 366 days, as the case may be), compounding on each succeeding Payment
Date, until paid in full (such deferred installments of Contract Adjustment
Payments together with the additional Contract Adjustment Payments accrued
thereon, are referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments shall be due on the next
succeeding Payment Date except to the extent that payment is deferred pursuant
to the Purchase Contract Agreement. No Contract Adjustment Payments may be
deferred to a date that is after the Purchase Contract Settlement Date.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, the Holder of this Growth PRIDES Certificate will receive on
the Purchase Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock (in addition to a number of shares of Common Stock equal
to the Settlement Rate) equal to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to the Holder of the Growth PRIDES Certificate of
Securities divided by (y) the Applicable Market Value. No fractional shares of
Common Stock will be issued with respect to the payment of Deferred Contract
Adjustment Payments on the Purchase Contract Settlement Date, as provided in
the Purchase Contract Agreement.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, (a) the Company shall not declare or pay dividends on,
make distributions with respect to, or redeem, purchase or acquire, or
B-8
<PAGE> 110
make a liquidation payment with respect to, any of its capital stock (other
than (i) purchase or acquisitions of shares of Common Stock in connection with
the satisfaction by the Company of its obligations under any employee
benefit plans or the satisfaction by the Company of its obligations to any
contract or security outstanding on the date of such event requiring the
Company to purchase shares of Common Stock, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion
of one class or series of the Company's capital stock for another class or
series of the Company's capital stock or (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged) or make any guarantee payments with respect to the foregoing), (b)
the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Company that rank pari passu with or junior to such
Contract Adjustment Payments and (c) the Company shall not make any guarantee
payments with respect to the foregoing.
The Purchase Contracts and the obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments or any Deferred Contract Adjustment Payments, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Agent or the Company, if, on or prior to the Purchase
Contract Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
after two business days thereafter give written notice to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in the
Growth PRIDES Register. Upon and after the occurrence of a Termination Event,
the Collateral Agent shall release the Treasury Securities from the Pledge in
accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement at the option of the Holder thereof, Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $1,000 or an
integral multiple thereof may be settled early ("Early Settlement") as provided
in the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this
Growth PRIDES Certificate, the Holder of this Growth PRIDES Certificate shall
B-9
<PAGE> 111
deliver this Growth PRIDES Certificate to the Agent at the Corporate Trust
Office duly endorsed for transfer to the Company or in blank with the form of
Election to Settle Early set forth below duly completed and accompanied by
payment in the form of a certified or cashier's check payable to the order of
the Company in immediately available funds in an amount (the "Early Settlement
Amount") equal to (i) the product of (A) the Stated Amount times (B) the number
of Purchase Contracts with respect to which the Holder has elected to effect
Early Settlement, plus (ii) if such delivery is made with respect to any
Purchase Contracts during the period from the close of business on any Record
Date for any Payment Date to the opening of business on such Payment Date, an
amount equal to the Contract Adjustment Payments payable on such Payment Date
with respect to such Purchase Contracts. Upon Early Settlement of Purchase
Contracts by a Holder of the related Securities, the Pledged Treasury Securities
underlying such Securities shall be released from the Pledge as provided in the
Pledge Agreement and the Holder shall be entitled to receive, a number of shares
of Common Stock on account of each Purchase Contract forming part of a Growth
PRIDES as to which Early Settlement is effected equal to the Early Settlement
Rate; provided however, that upon the Early Settlement of the Purchase
Contracts, the Holder thereof will forfeit the right to receive any Deferred
Contract Adjustment Payments on such Purchase Contracts. The Early Settlement
Rate shall initially be equal to _____ and shall be adjusted in the same manner
and at the same time as the Settlement Rate is adjusted as provided in the
Purchase Contract Agreement.
Upon registration of transfer of this Growth PRIDES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Growth
PRIDES Certificate. The Company covenants and agrees, and the Holder, by his
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Growth PRIDES Certificate, by his acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Growth PRIDES evidenced hereby on his behalf as his
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the
B-10
<PAGE> 112
subject of a case under the Bankruptcy Code, agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform his obligations under such
Purchase Contracts, consents to the provisions of the Purchase Contract
Agreement, authorizes the Agent to enter into and perform the Pledge Agreement
on his behalf as his attorney-in-fact, and consents to the Pledge of the
Treasury Securities underlying this Growth PRIDES Certificate pursuant to the
Pledge Agreement. The Holder further covenants and agrees, that, to the extent
and in the manner provided in the Purchase Contract Agreement and the Pledge
Agreement, but subject to the terms thereof, payments in respect to the Stated
Amount of the Pledged Treasury Securities on the Purchase Contract Settlement
Date shall be paid by the Collateral Agent to the Company in satisfaction of
such Holder's obligations under such Purchase Contract and such Holder shall
acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% of
the Outstanding Securities.
All terms used herein which are defined in the Purchase Contract Agreement
have the meanings set forth therein.
The Purchase Contracts shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company or
the Agent may treat the Person in whose name this Growth PRIDES Certificate is
registered as the owner of the Growth PRIDES evidenced hereby for the purpose of
receiving payments of interest on the Treasury Securities, receiving payments of
Contract Adjustment Payments and any Deferred Contract Adjustment Payments,
performance of the Purchase Contracts and for all other purposes whatsoever,
whether or not any payments in respect thereof be overdue and notwithstanding
any notice to the contrary, and neither the Company, the Agent nor any such
agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Agent.
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<PAGE> 113
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
------------------------
TEN ENT - as tenants by the (Cust) (Minor)
entireties Under Uniform Gifts
JT TEN - as joint tenants with
to Minors Act right of survivorship and
not as tenants in common
(State)
------------------------
Additional abbreviations may also be used though not in the above list.
_____________________________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_____________________________________________________________
_____________________________________________________________________________
Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee_____________________________________________________________________
_____________________________________________________________________________
Please Print or Type Name and Address Including Postal Zip Code
_____________________________________________________________________________
of Assignee the within Growth PRIDES Certificates and all rights
_____________________________________________________________________________
thereunder, hereby irrevocably constituting and appointing
_____________________________________________________________________________
attorney to transfer said Growth PRIDES Certificates on the books of MCN
Corporation with full power of substitution in the premises.
Dated: _________________ Signature ______________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Growth PRIDES Certificates in
every particular, without alteration or enlargement
or any change whatsoever.
B-12
<PAGE> 114
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Growth PRIDES evidenced
by this Growth PRIDES Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned
at the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable
incident thereto.
Dated:
---------------------------- --------------------------
Signature
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the Holder,
please print such Person's name
and address:
Please print name and address of
Registered Holder:
- ---------------------------------- ---------------------------
Name Name
- ---------------------------------- ---------------------------
Address Address
- ----------------------------------------- --------------------------
- ------------------------------------- ------------------------
Social Security or other
Taxpayer Identification
Number, if any
--------------------------
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<PAGE> 115
ELECTION TO SETTLE EARLY
The undersigned Holder of this Growth PRIDES Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Growth PRIDES evidenced by this Growth
PRIDES Certificate specified below. The option to effect Early Settlement may
be exercised only with respect to Purchase Contracts underlying Growth PRIDES
with an aggregate Stated Amount equal to $1,000 or an integral multiple
thereof. The undersigned Holder directs that a certificate for shares of
Common Stock deliverable upon such Early Settlement be registered in the name
of, and delivered, together with a check in payment for any fractional share
and any Growth PRIDES Certificate representing any Growth PRIDES evidenced
hereby as to which Early Settlement of the related Purchase Contracts is not
effected, to the undersigned at the address indicated below unless a different
name and address have been indicated below. Pledged Treasury Securities
deliverable upon such Early Settlement will be transferred in accordance with
the transfer instructions set forth below. If shares are to be registered in
the name of a Person other than the undersigned, the undersigned will pay any
transfer tax payable incident thereto.
Dated:_____________________________ _____________________________
Signature
B-14
<PAGE> 116
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If shares of Common Stock REGISTERED HOLDER
or Growth PRIDES Certifi-
cates are to be registered
in the name of and delivered
to and Pledged Treasury
Securities are to be
transferred to a Person
other than the Holder,
please print such Person's
name and address:
Please print name and address of
Registered Holder:
- ------------------------ ---------------------------
Name Name
- ------------------------ ---------------------------
Address Address
- ------------------------ ---------------------------
- ------------------------ ---------------------------
Social Security or other
Taxpayer Identification
Number, if any
--------------------------
Transfer Instructions for Pledged Treasury Securities Transferable Upon Early
Settlement or a Termination Event:
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
B-15
<PAGE> 117
EXHIBIT C
INSTRUCTION TO COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust
Administration Department
Re: FELINE PRIDES (the "Securities"), at issuance,
consisting of __% Trust Originated Preferred Securities
(the "Preferred Securities") of MCN Financing Trust III
and Purchase Contracts (the "Purchase Contracts") of MCN
Corporation, doing business as MCN Energy Group Inc. (the
"Company")
The First National Bank of Chicago (the "Purchase Contract Agent") hereby
notifies you (the "Collateral Agent"), with reference to the Pledge Agreement
dated as of March , 1997 (the "Pledge Agreement"; any capitalized term used
herein and not defined shall have its respective meaning set forth in the Pledge
Agreement) among the Company, the Collateral Agent and the Purchase Contract
Agent, as purchase contract agent and as attorney-in-fact of the Holders from
time to time, pursuant to which the Purchase Contract Agent, on behalf of such
Holders, has pledged the Preferred Securities constituting part of the
Securities as security for such Holders' obligations under the related Purchase
Contracts, that [holder of securities] (the "Holder") has elected to substitute
for the aggregate Stated Amount of the Pledged Preferred Securities an equal
aggregate principal amount of Treasury Securities in accordance with the Pledge
Agreement, and has delivered Income PRIDES to the Purchase Contract Agent,
together with a notice stating that the holder of securities has transferred
such Treasury Securities to the Collateral Agent. The Purchase Contract Agent
hereby instructs the Collateral Agent, upon receipt of such Pledged Treasury
Securities, to release the Pledged Preferred Securities related to such Income
PRIDES to the Purchase Contract Agent on behalf of the Holder in accordance with
the Holder's instructions.
C-1
<PAGE> 118
IN WITNESS WHEREOF, the undersigned, on behalf of the Purchase Contract
Agent, has executed and delivered this Instruction as of the _____ day of
_______, ____.
THE FIRST NATIONAL BANK OF CHICAGO
By:__________________________
Name:
Title:
C-2
<PAGE> 1
EXHIBIT 4.14
MCN CORPORATION
AND
THE CHASE MANHATTAN BANK
PLEDGE AGREEMENT
Dated as of March __, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Pledge; Control and Perfection . . . . . . . . . . . . . 6
Section 2.1. The Pledge . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Control and Perfection . . . . . . . . . . . . . . . . . 7
Section 3. Distributions on Pledged Collateral . . . . . . . . . . 8
Section 4. Substitution, Release, Repledge and
Early Settlement of Preferred Securi-
ties . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.1. Substitution of Preferred Securities and
the Establishment of Growth PRIDES . . . . . . . . . . 10
Section 4.2. Pledge of Preferred Securities and Re-
establishment of Income PRIDES . . . . . . . . . . . . . 10
Section 4.3. Termination Event . . . . . . . . . . . . . . . . . . . 11
Section 4.4. Cash Settlement . . . . . . . . . . . . . . . . . . . . 12
Section 4.5. Early Settlement . . . . . . . . . . . . . . . . . . . . 12
Section 5. Voting Rights -- Preferred Securities . . . . . . . . . 14
Section 6. Rights and Remedies; Investment Company
Event; Tax Event etc. . . . . . . . . . . . . . . . . . 14
Section 6.1. Rights and Remedies of Collateral Agent . . . . . . . . 14
Section 6.2. Tax Event, Investment Company Event, etc. . . . . . . . 16
Section 7. Representation and Warranties; Covenants . . . . . . . . 16
Section 7.1. Representations and Warranties . . . . . . . . . . . . . 16
Section 7.2. Covenants . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8. The Collateral Agent . . . . . . . . . . . . . . . . . . 18
Section 8.1. Appointment, Powers and Immunities . . . . . . . . . . . 18
Section 8.2. Instructions of the Company . . . . . . . . . . . . . . 19
Section 8.3. Reliance by Collateral Agent . . . . . . . . . . . . . . 19
Section 8.4. Rights in Other Capacities . . . . . . . . . . . . . . . 20
Section 8.5. Non-Reliance on Collateral Agent . . . . . . . . . . . . 20
Section 8.6. Compensation and Indemnity . . . . . . . . . . . . . . . 20
Section 8.7. Failure to Act . . . . . . . . . . . . . . . . . . . . . 21
Section 8.8. Resignation of Collateral Agent . . . . . . . . . . . . 21
i
<PAGE> 3
Page
----
Section 8.9. Right to Appoint Agent or Advisor . . . . . . . . . . . 22
Section 8.10. Survival . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.11. Indemnity . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9. Amendment . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9.1. Amendment Without Consent of Holders . . . . . . . . . . 23
Section 9.2. Amendment with Consent of Holders . . . . . . . . . . . 24
Section 9.3. Execution of Amendments . . . . . . . . . . . . . . . . 24
Section 9.4. Effect of Amendments . . . . . . . . . . . . . . . . . . 25
Section 9.5. Reference to Amendments . . . . . . . . . . . . . . . . 25
Section 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 25
Section 10.1. No Waiver . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.2. Governing Law . . . . . . . . . . . . . . . . . . . . . 26
Section 10.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 10.4. Successors and Assigns . . . . . . . . . . . . . . . . . 26
Section 10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.6. Severability . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.7. Expenses, etc. . . . . . . . . . . . . . . . . . . . . . 27
Section 10.8. Security Interest Absolute . . . . . . . . . . . . . . . 28
ii
<PAGE> 4
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of March __, 1997 (this "Agreement"), among
MCN Corporation, a Michigan corporation, doing business as MCN Energy Group
Inc. (the "Company"), The Chase Manhattan Bank, a New York banking corporation,
not individually but solely as collateral agent (in such capacity, together
with its successors in such capacity, the "Collateral Agent"), and The First
National Bank of Chicago, not individually but solely as purchase contract
agent and as attorney-in-fact of the Holders (as hereinafter defined) from time
to time of the Securities (as hereinafter defined) (in such capacity, together
with its successors in such capacity, the "Purchase Contract Agent") under the
Purchase Contract Agreement (as hereinafter defined) and The Chase Manhattan
Bank in its capacity as a "securities intermediary" as defined in Section
8.102(a)(14) of Revised Article F.
RECITALS
The Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there will be issued _____ FELINE PRIDES (the
"Securities").
Each Security, at issuance, consists of a unit (the "Income PRIDES")
comprised of (a) one Purchase Contract (as hereinafter defined) and (b) a ____%
Trust Originated Preferred Security (the "Preferred Securities") issued by MCN
Financing III (the "Trust"), having a stated liquidation amount equal to $50
(the "Stated Amount") and maturing on May __, 2002, unless settled earlier.
The Company has caused the Underwriters, on its behalf, to purchase
the Preferred Securities, with the proceeds of the offering of the Securities.
The Company will convey such Preferred Securities to the Holders as a part of
the Securities. Upon such conveyance the Preferred Securities will be
beneficially owned by the Holders but will be owned of record by the Purchase
Contract Agent subject to the Pledge hereunder.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders (as
<PAGE> 5
defined in the Purchase Contract Agreement), from time to time, of the
Securities have irrevocably authorized the Purchase Contract Agent, as
attorney-in-fact of such Holders, among other things, to execute and deliver
this Agreement on behalf of such Holders and to grant the pledge provided
hereby of the Preferred Securities and any Treasury Securities (as defined
below) delivered in exchange therefor to secure each Holder's obligations under
the related Purchase Contract, as provided herein and subject to the terms
hereof.
Accordingly, the Company, the Collateral Agent and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact of the Holders from
time to time of the Securities, agree as follows:
Section 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular; and
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision.
(c) the following terms have the meanings assigned to them in
the Purchase Contract Agreement: (i) Act, (ii) Board Resolution, (iii)
Cash Settlement, (iv) Certificate, (v) Collateral Settlement, (vi)
Common Stock, (vii) Opinion of Counsel, (viii) Purchase Price, (ix)
Repayment Price, (x) Purchase Contract Settlement Date, (xi) Junior
Subordinated Debentures, (xii) Termination Event, (xiii) Early
Settlement, (xiv) Early Settlement Amount, (xv) Early Settlement Date,
(xvi) Outstanding Securities, (xvii) Purchase Contract, (xviii)
Certificate and (xix) Income PRIDES.
(d) the following terms have the meanings assigned to them in
the Declaration: (i) Investment Company Event, (ii) Liquidation
Distribution, (iii) Institutional Trustee, and (iv) Tax Event.
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<PAGE> 6
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in The City of New York (in the State
of New York) are permitted or required by any applicable law to close.
"Cash" means (i) any coin or currency of the United States as at the
time shall be legal tender for payment of public and private debts and (ii)
immediately available federal funds deposited in a trust account for the sole
and exclusive benefit of the Collateral Agent maintained with the Chase
Manhattan Bank (or any successor Collateral Agent) in its commercial banking
capacity which funds are on deposit at the Federal Reserve Bank of New York.
"Code" has the meaning set forth in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the account maintained at The Chase
Manhattan Bank in the name "The Chase Manhattan Bank as Collateral Agent of MCN
Corporation as pledgee of the First National Bank of Chicago as Purchase
Contract Agent".
"Collateral Agent" has the meaning specified in the first paragraph of
this instrument.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor
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<PAGE> 7
shall have become such, and thereafter "Company" shall mean such successor.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of the date hereof, among the Company as sponsor, the trustees named
therein and the holders from time to time of undivided beneficial interests in
the assets of the Trust.
"Growth PRIDES" means Purchase Contracts with respect to which
Treasury Securities have been substituted for Preferred Securities as
collateral to secure the Holder's obligations under such Purchase Contracts.
"Holder" when used with respect to a Security, or a Purchase Contract
constituting a part thereof, means an Income PRIDES holder and/or a Growth
PRIDES holder, as the case may be.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" has the meaning specified in Section 2 hereof.
"Pledged Preferred Securities" has the meaning specified in Section
2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in Section 8-102(a)(9) of Revised
Article 8) and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Collateral.
"Purchase Contract Agent" has the meaning specified in the first
paragraph of this instrument.
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<PAGE> 8
"Revised Article 8" means the 1994 Official Text of Revised Article 8
of the Uniform Commercial Code, together with conforming and miscellaneous
amendments to Articles 1, 3, 4, 5, 9 and 10, 1994 Official Text, as adopted by
the American Law Institute and the National Conference of Commissioners on
Uniform State Laws and approved by the American Bar Association on February 14,
1995.
"Securities" has the meaning specified in the Recitals.
"Stated Amount" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
"TRADES Regulations" means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 257, as amended from
time to time. Unless otherwise defined herein, all terms defined in the TRADES
Regulations are used herein as therein defined.
"Transfer" means, with respect to the Collateral and in accordance
with the instructions of the Collateral Agent, the Purchase Contract Agent or
the Holder, as applicable:
(i) in the case of Collateral consisting of Preferred Securities
which cannot be delivered by book-entry or which the parties
agree are to be delivered in physical form, delivery in
appropriate physical form to the recipient accompanied by
any duly executed instruments of transfer, assignments in
blank, transfer tax stamps and any other documents necessary
to constitute a legally valid transfer to the recipient;
(ii) in the case of Collateral consisting of Preferred Securities
maintained in book-entry form by (A) causing such Preferred
Securities to be credited to a book-entry securities account
of the recipient or an Intermediary and (B) causing such
Intermediary, if any, (i) to send to the recipient
confirmation of the
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<PAGE> 9
transfer of the relevant interest in such Collateral to
the recipient and (ii) to identify by book-entry or
otherwise such Collateral as subject to the relevant
security interest in favor of the recipient, or causing such
Preferred Securities to be transferred to the recipient in
such other manner as the recipient may reasonably request;
and
(iii) in the case of securities issued by the United States in
book-entry form, by causing a "securities intermediary" (as
defined in Section 8.102(a)(14) of Revised Article 8) to
credit a "securities entitlement" (as defined in Section
8.102(a)(17) of Revised Article 8) to a securities account
maintained by or on behalf of such person.
"Treasury Security" means a zero-coupon U.S. Treasury Security
maturing on May 15, 2000 (Cusip Number 912820 AW7) (collectively, the
"Treasury Securities").
"Value" with respect to any item of Collateral on any date means, as
to (i) a Preferred Security, the Stated Amount, (ii) Cash, the face amount
thereof and (iii) Treasury Securities, the aggregate principal amount thereof
at maturity.
Section 2. Pledge; Control and Perfection.
Section 2.1. The Pledge. The Holders from time to time acting through
the Purchase Contract Agent, as their attorney-in-fact, hereby pledge and grant
to the Collateral Agent, for the benefit of the Company, as collateral security
for the performance when due by such Holders of their respective obligations
under the related Purchase Contracts, a security interest in all of the right,
title and interest of such Holders in the Preferred Securities constituting a
part of the FELINE PRIDES and all Proceeds thereof (including any Proceeds from
the repayment of the Preferred Securities by the Trust) and any Treasury
Securities delivered in exchange therefor, in each case that have been
Transferred to or received by the Collateral Agent and not released by the
Collateral Agent to such Holders under the provisions of this Agreement (the
"Collateral"), in payments made by Holders pursuant to Section 4.4 and in the
Collateral Account, in any Trea-
6
<PAGE> 10
sury Securities substituted for any Pledged Preferred Securities in accordance
with Section 4 and any Junior Subordinated Debentures upon the occurrence of a
Tax Event or an Investment Company Event as provided in Section 6.3. Prior to
or concurrently with the execution and delivery of this Agreement, the Purchase
Contract Agent, on behalf of the initial Income PRIDES holders, shall cause the
Preferred Securities to be delivered to the Collateral Agent by book-entry
transfer through the facilities of The Depository Trust Company to the account
of the Collateral Agent designated by it for such purpose. In the event an
Income PRIDES holder so elects, such Income PRIDES holders may Transfer
Treasury Securities to the Collateral Agent for the benefit of the Company in
exchange for the release by the Collateral Agent for the benefit of the Company
of a Preferred Security to the Purchase Contract Agent on behalf of such Income
PRIDES holder. Treasury Securities shall be Transferred to the Collateral
Account maintained by the Collateral Agent by book-entry transfer to the
account of the Collateral Agent or its Intermediary with the Federal Reserve
Bank of New York in accordance with the TRADES Regulations. For purposes of
perfecting the Pledge under applicable law, including, to the extent
applicable, TRADES Regulations, the Uniform Commercial Code as adopted and in
effect in any applicable jurisdiction or Revised Article 8 as made applicable
by the TRADES Regulations, the Collateral Agent shall be the Agent of the
Company as provided herein. The pledge provided in this Section 2.1 is herein
referred to as the "Pledge" and the Preferred Securities or Treasury Securities
subject to the Pledge, excluding any Preferred Securities or Treasury
Securities released from the Pledge as provided in Section 4 hereof, are
hereinafter referred to as "Pledged Preferred Securities" or the "Pledged
Treasury Securities," respectively. Subject to the Pledge and the provisions
of Section 2.2 hereof, the Holders from time to time shall have full beneficial
ownership of the Collateral.
Section 2.2. Control and Perfection. In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase Contract Agent, as
their attorney-in-fact, hereby authorize and direct the Securities Intermediary
(without the necessity of obtaining the further consent of the Purchase
Contract
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<PAGE> 11
Agent or any of the Holders), to comply with and follow any instructions and
entitlement orders (as defined in Section 8-102(a)(8) of Revised Article 8)
that the Company or the Collateral Agent on behalf of the Company may or the
Collateral Agent on behalf of the Company in writing give with respect to the
Collateral Account, the Collateral credited thereto and any security
entitlements with respect to any thereof. Such instructions and entitlement
orders may, without limitation, direct the Securities Intermediary to transfer,
redeem, sell, liquidate, assign, deliver or otherwise dispose of the Preferred
Securities, the Treasury Securities and any security entitlements with respect
thereto and to pay and deliver any income, proceeds or other funds derived
therefrom to the Company. The Holders from time to time acting through the
Purchase Contract Agent hereby further authorize and direct the Collateral
Agent, as agent of the Company, to itself issue instructions and entitlement
orders, and to otherwise take action, with respect to the Collateral Account,
the Collateral credited thereto and any security entitlements with respect to
any thereof, pursuant to the terms and provisions hereof, all without the
necessity of obtaining the further consent of the Purchase Contract Agent or
any of the Holders. In addition, to further protect and perfect the Pledge,
the Collateral Agent agrees that it will, until New York adopts Revised Article
8, at all times mark its books with respect to the Collateral Account to show
that all securities credited thereto are subject to the Pledge in favor of the
Company.
Section 3. Distributions on Pledged Collateral. All payments of the
Stated Amount of, or cash distributions on, any Pledged Preferred Securities
and all payments of the principal of, or cash distribution on, any Pledged
Treasury Securities received by the Collateral Agent and that are properly
payable hereunder shall be paid by the Collateral Agent by wire transfer in
same day funds:
(i) In the case of (A) cash distributions with respect
to Pledged Preferred Securities and (B) any payments of the Stated
Amount with respect to any Preferred Securities that have been
released from the Pledge pursuant to Section 4 hereof, to the Purchase
Contract Agent, for the benefit of the relevant Holders of Securities,
to the account
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<PAGE> 12
designated by the Purchase Contract Agent for such purpose no later
than 2:00 p.m., New York City time, on the Business Day such payment
is received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with respect
to any Treasury Securities that have been released from the Pledge
pursuant to Section 4 hereof, to the Holders of the Growth PRIDES to
the accounts designated by them in writing for such purpose no later
than 2:00 p.m., New York City time, on the Business Day such payment
is received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of any
Pledged Preferred Securities or the principal of any Pledged Treasury
Securities, to the Company on the relevant Payment Date in accordance
with the procedure set forth in Section 6.2(a) or 6.2(b) hereof, in
full satisfaction of the respective obligations of the Holders under
the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided herein shall
be applied by the Purchase Contract Agent pursuant to the provisions of the
Purchase Contract Agreement. If, notwithstanding the foregoing the Purchase
Contract Agent shall receive any payments of the Stated Amount on account of
any Preferred Security that, at the time of such payment, is a Pledged
Preferred Security or a Holder of a Growth PRIDES shall receive any payments of
principal on account of any Treasury Securities that, at the time of such
payment, is Pledged Treasury Securities, the Purchase Contract Agent or such
Holder shall hold the same as trustee of an express trust for the benefit of
the Company (and promptly deliver the same over to the Company) for application
to the obliga-
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<PAGE> 13
tions of the Holders under the related Purchase Contracts, and the Holders
shall acquire no right, title or interest in any such payments of Stated Amount
or principal so received.
Section 4. Substitution, Release, Repledge and Early Settlement of
Preferred Securities.
Section 4.1. Substitution of Preferred Securities and the
Establishment of Growth PRIDES. At any time on or prior to the Business
Day immediately preceding the Purchase Contract Settlement Date, an Income
PRIDES holder shall have the right to substitute Treasury Securities for the
Pledged Preferred Securities securing such Holder's obligations under the
Purchase Contract(s) comprising a part of its Income PRIDES in integral
multiples of 20 Income PRIDES by (a) Transferring to the Collateral Agent
Treasury Securities having a Value equal to the Stated Amount of the Pledged
Preferred Securities and (b) delivering the related Income PRIDES to the
Purchase Contract Agent, accompanied by a notice to the Purchase Contract Agent
stating that the Income PRIDES holder has Transferred Treasury Securities to
the Collateral Agent pursuant to clause (a) above and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release from the
Pledge the Pledged Preferred Securities related to such Income PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form
provided in Exhibit A. Upon receipt of the Treasury Securities from the Income
PRIDES holder and the instruction from the Purchase Contract Agent, the
Collateral Agent shall release the Preferred Securities and shall promptly
Transfer such Preferred Securities, free and clear of any lien, pledge or
security interest created hereby, to the Purchase Contract Agent.
Section 4.2. Pledge of Preferred Securities and Re-establishment of
Income PRIDES. At any time on or prior to the Business Day immediately
preceding the Purchase Contract Settlement Date, a holder of Growth PRIDES
shall have the right to establish or reestablish Income PRIDES consisting of
the Purchase Contracts and Preferred Securities in integral multiples of 20
Income PRIDES by (a) Transferring Preferred Securities to the Collateral Agent
with an instruction that the Collateral Agent (i) release Treasury Securities
having a Value equal to the product of the Stated Amount and the number of
related
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<PAGE> 14
Purchase Contracts and (ii) notify the Purchase Contract Agent of the receipt
of the Preferred Securities and (b) delivering the certificates evidencing the
Growth PRIDES to the Purchase Contract Agent. Upon receipt of the Preferred
Securities and the instruction from the Growth PRIDES Holder, the Collateral
Agent shall release the Treasury Securities requested by such Holder and shall
promptly Transfer such Treasury Securities, free and clear of any lien, pledge
or security interest created hereby, to the Purchase Contract Agent.
Section 4.3. Termination Event. Upon receipt by the Collateral Agent
of notice from the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release all Collateral
from the Pledge and shall promptly Transfer any Pledged Preferred Securities
and Pledged Treasury Securities to the Purchase Contract Agent for the benefit
of the Holders of the Income PRIDES and the Growth PRIDES, respectively, free
and clear of any lien, pledge or security interest created hereby.
If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail immediately to effectuate the release and transfer of all Pledged
Preferred Securities or of the Pledged Treasury Securities, as the case may be,
as provided by this Section 4.3, the Purchase Contract Agent shall (i) use its
best efforts to obtain an opinion of a nationally recognized law firm
reasonably acceptable to the Collateral Agent to the effect that, as a result
of the Company's being the debtor in such a bankruptcy case, the Collateral
Agent will not be prohibited from releasing or transferring the Collateral as
provided in this Section 4.3, and shall deliver such opinion to the Collateral
Agent within ten days after the occurrence of such Termination Event, and if
(y) the Purchase Contract Agent shall be unable to obtain such opinion within
ten days after the occurrence of such Termination Event or (z) the Collateral
Agent shall continue, after delivery of such opinion, to refuse to effectuate
the release and transfer of all Pledged Preferred Securities or of the Pledged
Treasury Securities, as the case may be, as provided in this Section 4.3, then
the Purchase Contract Agent shall within fifteen days after the occurrence of
such Termination Event commence an action or proceeding in the
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<PAGE> 15
court with jurisdiction of the Company's case under the Bankruptcy Code seeking
an order requiring the Collateral Agent to effectuate the release and transfer
of all Pledged Preferred Securities or of the Pledged Treasury Securities, as
the case may be, as provided by this Section 4.3 or (ii) commence an action or
proceeding like that described in subsection (i)(z) hereof within ten days
after the occurrence of such Termination Event.
Section 4.4. Cash Settlement. Upon receipt by the Collateral Agent of
(a) notice from the Purchase Contract Agent prior to the Purchase Contract
Settlement Date that a Holder elects to effect a Cash Settlement with respect
to some or all of such Holder's Purchase Contracts in accordance with the terms
of the Purchase Contracts and the Purchase Contract Agreement and (b) payment
by such Holder prior to 9:00 a.m., New York City time, on the Business Day
immediately preceding the Purchase Contract Settlement Date, of the Purchase
Price of such Purchase Contracts by certified check or wire transfer in
immediately available funds payable to or upon the order of the Company, then
the Collateral Agent shall, after payment of the Purchase Price to the Company
on the Purchase Contract Settlement Date, release from the Pledge and promptly
Transfer to the Purchase Contract Agent Pledged Preferred Securities or Pledged
Treasury Securities with a principal amount equal to the product of the Stated
Amount and the number of Purchase Contracts as to which such Holder has elected
to effect a Cash Settlement. The Collateral Agent shall promptly invest any
funds received from a Holder in connection with a Cash Settlement in overnight
federal funds and pay such funds to the Company on the Purchase Contract
Settlement Date. The Collateral Agent shall distribute any funds received in
respect of the interest earned from the investment in overnight Federal funds
to the Purchase Contract Agent on the Purchase Date, for payment to the
relevant Holders.
Section 4.5. Early Settlement. Upon written notice to the Collateral
Agent by the Purchase Contract Agent that one or more Holders of Securities
have elected to effect Early Settlement of their respective obligations under
the Purchase Contracts forming a part of such Securities in accordance with the
terms of the Purchase Contracts and the Purchase Contract Agreement (setting
forth the number of such Purchase Contracts as to which such Holders have
elected to effect Early Settlement),
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<PAGE> 16
and that the Purchase Contract Agent has received from such Holders, and paid
to the Company, the related Early Settlement Amounts pursuant to the terms of
the Purchase Contracts and the Purchase Contract Agreement and that all
conditions to such Early Settlement have been satisfied, then the Collateral
Agent shall release from the Pledge, Pledged Preferred Securities or Pledged
Treasury Securities, as the case may be, with a principal amount equal to the
product of (i) the Stated Amount times (ii) the number of such Purchase
Contracts as to which such Holders have elected to effect Early Settlement and
shall Transfer all such Pledged Preferred Securities or Pledged Treasury
Securities, as the case may be, free and clear of the Pledge created hereby, to
the Purchase Contract Agent for the benefit of the Holders.
In the event a Holder has not made an effective Cash Settlement or an
Early Settlement of such Purchase Contract, the Collateral Agent shall, by
10:00 a.m., New York City time, on the Business Day immediately preceding the
Purchase Contract Settlement Date, present the related Preferred Securities to
the Institutional Trustee for repayment at the Repayment Price and apply an
amount equal to the product of the Stated Amount and the number of related
Purchase Contracts to the Settlement of such Purchase Contracts. The
Collateral Agent shall promptly invest any funds received in respect of the
repayment of the Pledged Preferred Securities in overnight federal funds and
pay such funds to the Company on the Purchase Contract Settlement Date. The
Collateral Agent shall distribute any funds received (a) in excess of the
aggregated Purchase Price of the Purchase Contract being settled hereby or (b)
in respect of the interest earned from the investment in overnight federal
funds to the Purchase Contract Agent on the Purchase Contract Settlement Date
for payment to the relevant Holders.
Without receiving any instruction from the Holder of Growth PRIDES,
the Collateral Agent shall automatically apply the proceeds of the related
Pledged Treasury Securities to the settlement of such Purchase Contracts on the
Purchase Contract Settlement Date. On the Business Day immediately prior to
the Purchase Contract Settlement Date, the Collateral Agent shall invest the
maturing Pledged Treasury Securities in overnight federal funds and pay such
funds to the Company on the Purchase Contract Settlement Date.
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<PAGE> 17
In the event the sum of the proceeds from the related Pledged Treasury
Securities and the interest earned from the investment in overnight federal
funds is in excess of the aggregate Purchase Price of the Purchase Contracts
being settled thereby, the Collateral Agent shall distribute such excess to the
Purchase Contract Agent for the benefit of the holder of the related Purchase
Contracts on the Purchase Contract Settlement Date.
Section 5. Voting Rights -- Preferred Securities. The Purchase
Contract Agent may exercise, or refrain from exercising, any and all voting and
other consensual rights pertaining to the Pledged Preferred Securities or any
part thereof for any purpose not inconsistent with the terms of this Agreement
and in accordance with the terms of the Purchase Contract Agreement; provided,
that the Purchase Contract Agent shall not exercise or, as the case may be,
shall not refrain from exercising such right if, in the judgment of the Company
or the Collateral Agent, such action would impair or otherwise have a material
adverse effect on the value of all or any of the Pledged Preferred Securities;
and provided, further, that the Purchase Contract Agent shall give the Company
and the Collateral Agent at least five days' prior written notice of the manner
in which it intends to exercise, or its reasons for refraining from exercising,
any such right. Upon receipt of any notices and other communications in
respect of any Pledged Preferred Securities, including notice of any meeting at
which holders of Preferred Securities are entitled to vote or solicitation of
consents, waivers or proxies of holders of Preferred Securities, the Collateral
Agent shall use reasonable efforts to send promptly to the Purchase Contract
Agent such notice or communication, and as soon as reasonably practicable after
receipt or a written request therefor from the Purchase Contract Agent, deliver
to the Purchase Contract Agent such proxies and other instruments in respect of
such Pledged Preferred Securities (in form and substance satisfactory to the
Collateral Agent) as shall be so requested.
Section 6. Rights and Remedies; Investment Company Event; Tax Event
etc.
Section 6.1. Rights and Remedies of Collateral Agent. (a) The
Collateral Agent shall have all of the rights and remedies with respect to the
Collateral of a
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<PAGE> 18
secured party under the Uniform Commercial Code as in effect in the State of
New York (the "Code") (whether or not the Code is in effect in the jurisdiction
where the rights and remedies are asserted), Revised Article 8 and the TRADES
Regulations and such additional rights and remedies to which a secured party is
entitled under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted.
(b) Without limiting any rights or powers otherwise granted by
this Agreement to the Collateral Agent, in the event the Collateral Agent is
unable to make payments to the Company on account of principal payments of any
Pledged Treasury Securities as provided in Section 3 hereof in satisfaction of
the obligations of the Holder of the Securities of which such Pledged Treasury
Securities is a part under the related Purchase Contracts, the Collateral Agent
shall have and may exercise, with reference to such Pledged Treasury Securities
and such obligations of such Holder, any and all of the rights and remedies
available to a secured party under the Code, Revised Article 8 and the TRADES
Regulations after default by a debtor, and as otherwise granted herein or under
any other law.
(c) Without limiting any rights or powers otherwise granted by
this Agreement to the Collateral Agent, the Collateral Agent is hereby
irrevocably authorized to receive and collect all payments of (i) the Stated
Amount of, or cash distributions on, the Pledged Preferred Securities, or (ii)
the principal of the Pledged Treasury Securities, subject, in each case, to the
provisions of Section 3, and as otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of Securities, in
the event such Holder becomes the holder of a Growth PRIDES, agrees that, from
time to time, upon the written request of the Collateral Agent, the Purchase
Contract Agent or such Holder shall execute and deliver such further documents
and do such other acts and things as the Collateral Agent may reasonably
request in order to maintain the Pledge, and the perfection and priority
thereof, and to confirm the rights of the Collateral Agent hereunder. The
Purchase Contract Agent shall have no liability to any Holder for executing any
documents or taking any such acts requested by the Collateral Agent hereunder,
except for liability for its own negligent
15
<PAGE> 19
act, its own negligent failure to act or its own willful misconduct.
Section 6.2. Tax Event, Investment Company Event, etc. Upon the
occurrence of a Tax Event or an Investment Company Event or a liquidation of
the Trust, a principal amount of the Junior Subordinated Debentures
constituting the assets of the Trust and underlying the Preferred Securities
equal to the aggregated Stated Amount of the Pledged Preferred Securities shall
be delivered to the Collateral Agent in exchange for the Pledged Preferred
Securities. In the event the Collateral Agent receives such Junior
Subordinated Debentures in respect of Pledged Preferred Securities upon the
occurrence of a Tax Event, Investment Company Event or liquidation of the
Trust, the Collateral Agent shall Transfer the Junior Subordinated Debentures
to the Collateral Account in the manner specified herein for Pledged Preferred
Securities to secure the obligations of the Holders of Income PRIDES to
purchase the Company's Common Stock under the related Purchase Contracts.
Thereafter, the Collateral Agent shall have such security interests, rights and
obligations with respect to the Junior Subordinated Debentures as it had in
respect of the Pledged Preferred Securities as provided in Articles II, III,
IV, V and VI hereof.
Section 7. Representation and Warranties; Covenants.
Section 7.1. Representations and Warranties. The Holders from time to
time, acting through the Purchase Contract Agent as their attorney-in-fact (it
being understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby represent
and warrant to the Collateral Agent, which representations and warranties shall
be deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security
interest in and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the
Collateral and, in the case of Collateral delivered
in physical form, is the sole holder of such
Collateral and is
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<PAGE> 20
the sole beneficial owner of, or has the right
to Transfer, the Collateral it Transfers to the
Collateral Agent, free and clear of any security
interest, lien, encumbrance, calls, liabilities to
pay money or other restrictions other than the
security interest and lien granted under Section 2
hereof;
(c) upon the Transfer of the Collateral to the
Collateral Agent, the Collateral Agent, for the
benefit of the Company, will have a valid and
perfected first priority security interest therein
(assuming that any central clearing operation or any
Intermediary or other entity not within the control
of the Holder involved in the Transfer of the
Collateral, including the Collateral Agent, gives
the notices and takes the action required of it
hereunder and under applicable law for perfection of
that interest and assuming the establishment and
exercise of control pursuant to Section 2.2 hereof);
and
(d) the execution and performance by the Holder of its
obligations under this Agreement will not result in
the creation of any security interest, lien or other
encumbrance on the Collateral other than the
security interest and lien granted under Section 2
hereof or violate any provision of any existing law
or regulation applicable to it or of any mortgage,
charge, pledge, indenture, contract or undertaking
to which it is a party or which is binding on it or
any of its assets.
Section 7.2. Covenants. The Holders from time to time, acting through
the Purchase Contract Agent as their attorney-in-fact (it being understood that
the Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long
as the Collateral remains subject to the Pledge:
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<PAGE> 21
(a) neither the Purchase Contract Agent nor such Holders
will create or purport to create or allow to subsist
any mortgage, charge, lien, pledge or any other
security interest whatsoever over the Collateral or
any part of it; and
(b) neither the Purchase Contract Agent nor such Holders
will sell or otherwise dispose (or attempt to
dispose) of the Collateral or any part of it except
for the beneficial interest therein, subject to the
pledge hereunder, transferred in connection with the
transfer of the PRIDES.
Section 8. The Collateral Agent. It is hereby agreed as follows:
Section 8.1. Appointment, Powers and Immunities. The Collateral Agent
shall act as agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. The
Collateral Agent: (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants or obligations
shall be inferred from this Agreement against the Collateral Agent, nor shall
the Collateral Agent be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof; (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or other document
referred to or provided for in, or received by it under, this Agreement, the
Securities or the Purchase Contract Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or the Purchase
Contract Agreement or any other document referred to or provided for herein or
therein or for any failure by the Company or any other Person (except the
Collateral Agent) to perform any of its obligations hereunder or thereunder;
(c) shall not be required to initiate or conduct any litigation or collection
proceedings hereunder (except pursuant to directions furnished under Section
8.2 hereof); (d) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other document or instrument referred to or
18
<PAGE> 22
provided for herein or in connection herewith or therewith, except for its own
negligence; and (e) shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect to, any
securities or other property deposited hereunder. Subject to the foregoing,
during the term of this Agreement, the Collateral Agent shall take all
reasonable action in connection with the safekeeping and preservation of the
Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the Value of the Collateral.
Notwithstanding the foregoing, the Collateral Agent and the Securities
Intermediary in its individual capacity hereby waive any right of setoff,
bankers lien, liens or perfection rights as securities intermediary or any
counterclaim with respect to any of the Collateral.
Section 8.2. Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or refraining from taking of any action authorized by
this Agreement; provided, however, that (i) such direction shall not conflict
with the provisions of any law or of this Agreement and (ii) the Collateral
Agent shall be adequately indemnified as provided herein. Nothing in this
Section 8.2 shall impair the right of the Collateral Agent in its discretion to
take any action or omit to take any action which it deems proper and which is
not inconsistent with such direction.
Section 8.3. Reliance by Collateral Agent. The Collateral Agent shall
be entitled to rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof by telephone,
telecopy, telex or facsimile) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of
19
<PAGE> 23
any fact stated therein), and upon advice and statements of legal counsel and
other experts selected by the Collateral Agent. As to any matters not
expressly provided for by this Agreement, the Collateral Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions given by the Company in accordance with this
Agreement.
Section 8.4. Rights in Other Capacities. The Collateral Agent and its
affiliates may (without having to account therefor to the Company) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Purchase Contract Agent and
any Holder of Securities (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent, and the
Collateral Agent and its affiliates may accept fees and other consideration
from the Purchase Contract Agent and any Holder of Securities without having to
account for the same to the Company; provided that the Collateral Agent
covenants and agrees with the Company that the Collateral Agent shall not
accept, receive or permit there to be created in its favor any security
interest, lien or other encumbrance of any kind in or upon the Collateral.
Section 8.5. Non-Reliance on Collateral Agent. The Collateral Agent
shall not be required to keep itself informed as to the performance or
observance by the Purchase Contract Agent or any Holder of Securities of this
Agreement, the Purchase Contract Agreement, the Securities or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Purchase Contract Agent or any Holder of Securities.
The Collateral Agent shall not have any duty or responsibility to provide the
Company with any credit or other information concerning the affairs, financial
condition or business of the Purchase Contract Agent or any Holder of
Securities (or any of their respective affiliates) that may come into the
possession of the Collateral Agent or any of its affiliates.
Section 8.6. Compensation and Indemnity. The Company agrees: (i) to
pay the Collateral Agent from time to time such compensation as shall be agreed
in writing between the Company and the Collateral Agent for all services
rendered by it hereunder and (ii) to indemnify the
20
<PAGE> 24
Collateral Agent for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of its powers and duties
under this Agreement, including the costs and expenses (including reasonable
fees and expenses of counsel) of defending itself against any claim or
liability in connection with the exercise or performance of such powers and
duties.
Section 8.7. Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto and/or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent shall be entitled, at its
sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and the Collateral Agent shall not be or become liable
in any way to any of the parties hereto for its failure or refusal to comply
with such conflicting claims, demands or instructions. The Collateral Agent
shall be entitled to refuse to act until either (i) such conflicting or adverse
claims or demands shall have been finally determined by a court of competent
jurisdiction or settled by agreement between the conflicting parties as
evidenced in a writing, satisfactory to the Collateral Agent or (ii) the
Collateral Agent shall have received security or an indemnity satisfactory to
the Collateral Agent sufficient to save the Collateral Agent harmless from and
against any and all loss, liability or expense which the Collateral Agent may
incur by reason of its acting. The Collateral Agent may in addition elect to
commence an interpleader action or seek other judicial relief or orders as the
Collateral Agent may deem necessary. Notwithstanding anything contained herein
to the contrary, the Collateral Agent shall not be required to take any action
that is in its opinion contrary to law or to the terms of this Agreement, or
which would in its opinion subject it or any of its officers, employees or
directors to liability.
Section 8.8. Resignation of Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as provided below,
(a) the Collateral Agent may resign at any time by giving notice thereof to the
Company and the Purchase Contract Agent as attorney-
21
<PAGE> 25
in-fact for the Holders of Securities, (b) the Collateral Agent may be removed
at any time by the Company and (c) if the Collateral Agent fails to perform any
of its material obligations hereunder in any material respect for a period of
not less than 20 days after receiving written notice of such failure by the
Purchase Contract Agent and such failure shall be continuing, the Collateral
Agent may be removed by the Purchase Contract Agent. The Purchase Contract
Agent shall promptly notify the Company of any removal of the Collateral Agent
pursuant to clause (c) of the immediately preceding sentence. Upon any such
resignation or removal, the Company shall have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been so appointed
and shall have accepted such appointment within 30 days after the retiring
Collateral Agent's giving of notice of resignation or such removal, then the
retiring Collateral Agent may petition any court of competent jurisdiction for
the appointment of a successor Collateral Agent. The Collateral Agent shall be
a bank which has an office in New York, New York with a combined capital and
surplus of at least $50,000,000. Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall take all appropriate action to transfer any
money and property held by it hereunder (including the Collateral) to such
successor Collateral Agent. The retiring Collateral Agent shall, upon such
succession, be discharged from its duties and obligations as Collateral Agent
hereunder. After any retiring Collateral Agent's resignation hereunder as
Collateral Agent, the provisions of this Section 8 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Collateral Agent.
Section 8.9. Right to Appoint Agent or Advisor. The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of
its duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of, such agents or
advisors selected in good faith. The appointment of agents pursuant to this
Section 8.9 shall be subject to prior consent of the Company, which consent
shall not be unreasonably withheld.
22
<PAGE> 26
Section 8.10. Survival. The provisions of this Section 8.10 shall
survive termination of this Agreement and the resignation or removal of the
Collateral Agent.
Section 8.11. Indemnity. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or its officers,
employees or agents be liable under this Agreement to any third party for
indirect, special, punitive, or consequential loss or damage of any kind
whatsoever, including lost profits, whether or not the likelihood of such loss
or damage was known to the Collateral Agent, or any of them, incurred without
any act or deed that is found to be attributable to gross negligence on the
part of the Collateral Agent.
Section 9. Amendment.
Section 9.1. Amendment Without Consent of Holders. Without the
consent of any Holders, the Company, the Collateral Agent and the Purchase
Contract Agent, at any time and from time to time, may amend this Agreement, in
form satisfactory to the Company, the Collateral Agent and the Purchase
Contract Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of
the Company; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company so long as such covenants or such surrender do not
adversely affect the validity, perfection or priority of the security
interests granted or created hereunder; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent or Purchase Contract Agent;
or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other such
provisions herein, or to make any other provisions with respect to
such matters or questions arising under this Agreement,
23
<PAGE> 27
provided such action shall not adversely affect the interests of the
Holders.
Section 9.2. Amendment with Consent of Holders. With the consent of
the Holders of not less than 66 2/3% of the Outstanding Securities, by Act of
said Holders delivered to the Company, the Purchase Contract Agent and the
Collateral Agent, the Company, when authorized by a Board Resolution, the
Purchase Contract Agent and the Collateral Agent may amend this Agreement for
the purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Securities; provided, however, that no
such supplemental agreement shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the amount or type of Collateral underlying a
Security, impair the right of the Holder of any Security to receive
distributions on the underlying Collateral or otherwise adversely
affect the Holder's rights in or to such Collateral; or
(2) otherwise effect any action that would require the consent
of the Holder of each Outstanding Security affected thereby pursuant
to the Purchase Contract Agreement if such action were effected by an
agreement supplemental thereto; or
(3) reduce the percentage of Outstanding Securities the
consent of whose Holders is required for any such amendment; or
(4) materially and adversely alter the rights of the holders
of Preferred Securities.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 9.3. Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent and the Purchase Contract Agent
shall be entitled to receive and (subject to Section 6.1 hereof, with respect
to the Collateral Agent, and Section 7.1 of the Purchase Contract Agreement,
with respect to the Purchase
24
<PAGE> 28
Contract Agent) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent, if any, to the execution and
delivery of such amendment have been satisfied.
Section 9.4. Effect of Amendments. Upon the execution of any
amendment under this Section, this Agreement shall be modified in accordance
therewith, and such amendment shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby.
Section 9.5. Reference to Amendments. Security Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any amendment pursuant to this Section may, and shall if required
by the Collateral Agent or the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent and the Collateral Agent as to any
matter provided for in such amendment. If the Company shall so determine, new
Security Certificates so modified as to conform, in the opinion of the
Collateral Agent, the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract Agent
in accordance with the Purchase Contract Agreement in exchange for Outstanding
Security Certificates.
Section 10. Miscellaneous.
Section 10.1. No Waiver. No failure on the part of the Collateral
Agent or any of its agents to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Collateral Agent or any of its agents of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
25
<PAGE> 29
Section 10.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without
limiting the foregoing, the above choice of law is expressly agreed to by the
Securities Intermediary, the Collateral Agent and the Holders from time to time
acting through the Agent, as their attorney-in-fact, in connection with the
establishment and maintenance of the Collateral Account. The Company, the
Collateral Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, hereby submit to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. The Company, the
Collateral Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
Section 10.3. Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof or, as to any party, at such other address as shall
be designated by such party in a notice to the other parties. Except as
otherwise provided in this Agreement, all such communications shall be deemed
to have been duly given when transmitted by telecopier or personally delivered
or, in the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
Section 10.4. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the Company, the Collateral Agent and the Purchase Contract Agent, and the
Holders from time to time of the Securities, by their
26
<PAGE> 30
acceptance of the same, shall be deemed to have agreed to be bound by the
provisions hereof and to have ratified the agreements of, and the grant of the
Pledge hereunder by, the Purchase Contract Agent.
Section 10.5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
Section 10.6. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
Section 10.7. Expenses, etc. The Company agrees to reimburse the
Collateral Agent for: (a) all reasonable out-of-pocket costs and expenses of
the Collateral Agent (including, without limitation, the reasonable fees and
expenses of counsel to the Collateral Agent), in connection with (i) the
negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any of the terms
of this Agreement; (b) all reasonable costs and expenses of the Collateral
Agent (including, without limitation, reasonable fees and expenses of counsel)
in connection with (i) any enforcement or proceedings resulting or incurred in
connection with causing any Holder of Securities to satisfy its obligations
under the Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 10.7; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any other document referred
to herein and all costs, expenses, taxes, assessments and other charges
incurred in connection with any filing, registration, recording or perfection
of any security interest contemplated hereby.
27
<PAGE> 31
Section 10.8. Security Interest Absolute. All rights of the
Collateral Agent and security interests hereunder, and all obligations of the
Holders from time to time hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any provision of
the Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of the
obligations of Holders of Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase
Contract Agreement or any Purchase Contract or any other agreement or
instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
28
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
MCN CORPORATION
By:_________________________
Name: Sebastian Coppola
Title: Senior Vice President
and Treasurer
Address for Notices:
MCN CORPORATION
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
Telecopy: (313) 256-5871
The First National Bank of Chicago
as Purchase Contract Agent and as
attorney-in-fact of the Holders
from time to time of the Securities
By:__________________________
Name:
Title:
Address for Notices:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Ser-
vices Division
Telecopy: (312) 407-1708
29
<PAGE> 33
The Chase Manhattan Bank
as Collateral Agent and as
Securities Intermediary
By:_____________________
Name: L. O'Brien
Title: Senior Trust Officer
Address for Notices:
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust Admin-
istration Department
Telecopy: (212) 946-7800
30
<PAGE> 34
EXHIBIT A
INSTRUCTION TO COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust
Administration Department
Re: FELINE PRIDES (the "Securities") consisting of, at
issuance, __% Trust Originated Preferred Securities
(the "Preferred Securities") of MCN Financing III
and Purchase Contracts (the "Purchase Contracts") of
MCN Corporation doing business as MCN Energy Group
Inc. (the "Company")
The First National Bank of Chicago (the "Purchase Contract Agent")
hereby notifies you (the "Collateral Agent"), with reference to the Pledge
Agreement dated as of March , 1997 (the "Pledge Agreement"; any capitalized
term used herein and not defined shall have its respective meaning set forth in
the Pledge Agreement) among the Company, the Collateral Agent and the
Purchase Contract Agent, as purchase contract agent and as attorney-in-fact for
the Holders from time to time, pursuant to which the Purchase Contract Agent,
on behalf of such Holders, has pledged the Pledged Preferred Securities
constituting part of the Securities as security for such Holders' obligations
under the related Purchase Contracts, that [holder of securities] (the
"Holder") has elected to substitute $_______ aggregate principal amount of
Treasury Securities in exchange for the Pledged Preferred Securities in
accordance with the Pledge Agreement and has delivered such Treasury Securities
and 20 Income PRIDES to the Purchase Contract Agent, together with a notice
stating that the holder of securities has Transferred Treasury Securities to
the Collateral Agent. The Purchase Contract Agent hereby instructs the
Collateral Agent, upon receipt of such Pledged Treasury Securities, to release
the Preferred Securities related to such Income PRIDES to the Purchase Contract
Agent for the benefit of the Holder in accordance with the Holder's
instructions.
IN WITNESS WHEREOF, the undersigned, on behalf of the Purchase
Contract Agent, has executed and delivered this Instruction as of the _____ day
of _______, ____.
THE FIRST NATIONAL BANK OF CHICAGO
By:______________________
Name:
Title:
A-1
<PAGE> 1
EXHIBIT 4.19
================================
DECLARATION OF TRUST
MCN FINANCING III
Dated as of February 3, 1997
================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.6 Powers of the Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.7 Filing of Certificate of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.8 Duration of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.9 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.10 Declaration Binding on Securities Holders . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.4 Institutional Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 Not Responsible for Recitals or Sufficiency of Declaration. . . . . . . . . . . . . . . . . 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Outside Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
DECLARATION OF TRUST
OF
MCN FINANCING III
February 3, 1997
DECLARATION OF TRUST ("Declaration") dated and effective as of
February 3, 1997 by the undersigned Trustees (together with all other persons
from time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), MCN Corporation, a Michigan
corporation, as trust sponsor (the "Sponsor"), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Delaware Business Trust Act for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as hereinafter defined);
and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration of Trust as modified, supplemented or
amended from time to time;
<PAGE> 4
(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified; and
(e) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means MCN Corporation in its capacity as
the issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means NBD Bank, N.A., as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
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<PAGE> 5
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of September 1, 1994,
among MCN Corporation and NBD Bank, N.A., as trustee and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing an
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means MCN Corporation in its capacity as sponsor of
the Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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<PAGE> 6
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "MCN Financing
III." The Trust's activities may be conducted under the name of the Trust or
any other name deemed advisable by the Regular Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o MCN
Coprporation, 500 Griswold Street, Detroit, Michigan 48226. At any time, the
Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Regular Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Regular Trustees as set forth in this
Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the Trust.
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<PAGE> 7
SECTION 2.6 Powers of the Trustees.
The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided,
however , that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common Securities,
and, provided further, that there shall be no interests in the Trust
other than the Securities and the issuance of the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register all or part of
the Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Preferred Securities
for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock Exchange or any other
national stock exchange or the Nasdaq Stock Market's National
Market for listing upon notice of issuance of any Preferred
Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor relating to the registration
of the Preferred Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into an underwriting
agreement and pricing agreement providing for the sale of the
Preferred Securities;
(c) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and provide for reasonable
compensation for such services;
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<PAGE> 8
(d) to incur expenses which are necessary or incidental
to carry out any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in
the form attached hereto as Exhibit A with the Secretary of State of the State
of Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for seven (7) years from the date hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be
executed and filed by the Trust, as the Sponsor deems necessary or
advisable in order to comply with the applicable laws of any such
States;
(c) to prepare for filing by the Trust an application to
the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Preferred Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the class of Preferred Securities under Section 12(b)
of the Exchange Act, including any amendments thereto; and
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<PAGE> 9
(e) to negotiate the terms of an underwriting agreement
and pricing agreement providing for the sale of the Preferred
Securities.
Section 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security
or any interest therein in accordance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided further that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); provided further that there shall be at
least one trustee who is an employee or officer of, or is affiliated with the
Sponsor (a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be:
Daniel L. Schiffer
Sebastian Coppola
(a) Except as expressly set forth in this Declaration, any
power of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees,
and except as otherwise required by the Business Trust Act, any Regular Trustee
is authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by a majority of
the Regular Trustees; and
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<PAGE> 10
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Business Trust Act. Notwithstanding anything herein to
the contrary, the Delaware Trustee shall not be liable for the acts or
omissions to act of the Trust, of the Sponsor or of the Regular Trustees except
such acts as the Delaware Trustee is expressly obligated or authorized to
undertake under this Declaration or the Business Trust Act and except for the
gross negligence or willful misconduct of the Delaware Trustee.
SECTION 3.4 Institutional Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Institutional Trustee")
meeting the requirements of an eligible trustee of the Trust Indenture Act of
1939, as amended, by the execution of an amendment to this Declaration executed
by the Regular Trustees, the Sponsor, the Institutional Trustee and the
Delaware Trustee.
Section 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration.
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<PAGE> 11
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions; and
(b) an Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which distributions to holders of Securities might properly be
paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity, are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between Covered Persons; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
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provides terms that are, fair and reasonable to the Trust or any
holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another
express standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer shall indemnify,
to the full extent permitted by law, any Company Indemnified Person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or
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<PAGE> 13
its equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circum- stances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 4.3(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by
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independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 4.3(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 4.3(a).
Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made
(i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 4.3(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.
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(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others,
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similar or dissimilar to the business of the Trust, and the Trust and the
Holders of Securities shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor or the Delaware Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor and the Delaware Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person and the Delaware Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for or may act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by
all of the Regular Trustees and the Sponsor; provided, however, if the
amendment effects the rights, powers, duties, obligation or immunities of the
Delaware Trustee, the amendment shall also be approved by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force
or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or
the revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the
consent of all of the Regular Trustees and the Sponsor; and
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(b) as soon as is practicable after the occurrence of an
event referred to in Section 5.2(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused this
Declaration of Trust of MCN Financing III to be executed as of the day and year
first above written.
/s/ Daniel L. Schiffer
----------------------------------
Name: Daniel L. Schiffer
Title: Regular Trustee
/s/ Sebastian Coppola
----------------------------------
Name: Sebastian Coppola
Title: Regular Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Emmett R. Harmon
------------------------------
Name: Emmett R. Harmon
Title: Vice President
MCN CORPORATION, as Sponsor
By: /s/ Sebastian Coppola
------------------------------
Name: Sebastian Coppola
Title: Vice President
and Treasurer
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EXHIBIT A
CERTIFICATE OF TRUST
The undersigned, the trustees of MCN Financing III, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
(a) The name of the business trust being formed hereby
(the "Trust") is "MCN Financing III."
(b) The name and business address of the trustee of the
Trust which has its principal place of business in
the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(c) This Certificate of Trust shall be effective as of
the date of filing.
Dated: February 3, 1997
-----------------------------------
Daniel L. Schiffer, as Trustee
-----------------------------------
Sebastian Coppola, as Trustee
WILMINGTON TRUST COMPANY, as
Trustee
By:
-------------------------------
Name:
--------------------------
Title:Vice President
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EXHIBIT 4.20
================================
DECLARATION OF TRUST
MCN FINANCING IV
Dated as of February 3, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Purpose . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Authority . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Title to Property of the Trust . . . . . . . . . 4
SECTION 2.6 Powers of the Trustees . . . . . . . . . . . . . 4
SECTION 2.7 Filing of Certificate of Trust . . . . . . . . . 6
SECTION 2.8 Duration of Trust. . . . . . . . . . . . . . . . 6
SECTION 2.9 Responsibilities of the Sponsor . . . . . . . . . 6
Section 2.10 Declaration Binding on Securities Holders . . . . 7
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3 Delaware Trustee . . . . . . . . . . . . . . . . 8
SECTION 3.4 Institutional Trustee . . . . . . . . . . . . . . 8
Section 3.5 Not Responsible for Recitals or Suffici-
ency of Declaration . . . . . . . . . . . . . . . 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Fiduciary Duty . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Indemnification . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Outside Businesses . . . . . . . . . . . . . . . 13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Termination of Trust . . . . . . . . . . . . . . 14
SECTION 5.3 Governing Law . . . . . . . . . . . . . . . . . . 15
SECTION 5.4 Headings . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Successors and Assigns . . . . . . . . . . . . . 15
SECTION 5.6 Partial Enforceability . . . . . . . . . . . . . 15
SECTION 5.7 Counterparts . . . . . . . . . . . . . . . . . . 15
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DECLARATION OF TRUST
OF
MCN FINANCING IV
February 3, 1997
DECLARATION OF TRUST ("Declaration") dated and effective as of
February 3, 1997 by the undersigned Trustees (together with all other persons
from time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), MCN Corporation, a Michigan
corporation, as trust sponsor (the "Sponsor"), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Delaware Business Trust Act for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as hereinafter defined);
and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration of Trust as modified, supplemented or amended from
time to time;
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(d) all references in this Declaration to Articles and Sections are to
Articles and Sections of this Declaration unless otherwise
specified; and
(e) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common undivided
beneficial interest in the assets of the Trust with such terms as may be set
out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means MCN Corporation in its capacity as the
issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means NBD Bank, N.A., as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
4.3(b).
"Holder" means the person in whose name a certificate representing a
Security is registered.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of September 1, 1994, among
MCN Corporation and NBD Bank, N.A., as trustee and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Security" means a security representing an undivided
beneficial interest in the assets of the Trust with such terms as may be set
out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Sponsor" means MCN Corporation in its capacity as sponsor of the
Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "MCN Financing
IV." The Trust's activities may be conducted under the name of the Trust or
any other name deemed advisable by the Regular Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o MCN
Coprporation, 500 Griswold Street, Detroit, Michigan 48226. At any time, the
Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Regular Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Regular Trustees as set forth in this
Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the Trust.
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SECTION 2.6 Powers of the Trustees.
The Regular Trustees shall have the exclusive power and authority to
cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided, however,
that the Trust may issue no more than one series of Preferred Securities
and no more than one series of Common Securities, and, provided further,
that there shall be no interests in the Trust other than the Securities and
the issuance of the Securities shall be limited to a one-time, simultaneous
issuance of both Preferred Securities and Common Securities;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a registration
statement on Form S-3 prepared by the Sponsor, including any
amendments thereto in relation to the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Preferred Securities in any
State in which the Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application, prepared by the Sponsor,
to the New York Stock Exchange or any other national stock exchange or
the Nasdaq Stock Market's National Market for listing upon notice of
issuance of any Preferred Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by
the Sponsor relating to the registration of the Preferred Securities
under Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities;
(c) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and provide for reasonable compensation for such services;
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(d) to incur expenses which are necessary or incidental to carry
out any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the Trustees
shall cause the filing of the Certificate of Trust for the Trust in the form
attached hereto as Exhibit A with the Secretary of State of the State of
Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of Section
5.2, shall have existence for forty-five (45) years from the date hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
(b) to determine the States in which to take appropriate action
to qualify or register for sale all or part of the Preferred Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
class of Preferred Securities under Section 12(b) of the Exchange Act,
including any amendments thereto; and
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(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.
Section 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security or
any interest therein in accordance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided further that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); provided further that there shall be at
least one trustee who is an employee or officer of, or is affiliated with the
Sponsor (a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be:
Daniel L. Schiffer
Sebastian Coppola
(a) Except as expressly set forth in this Declaration, any power of
the Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act, any Regular Trustee is
authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by a majority of
the Regular Trustees; and
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(c) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Business Trust Act. Notwithstanding anything herein to
the contrary, the Delaware Trustee shall not be liable for the acts or
omissions to act of the Trust, of the Sponsor or of the Regular Trustees except
such acts as the Delaware Trustee is expressly obligated or authorized to
undertake under this Declaration or the Business Trust Act and except for the
gross negligence or willful misconduct of the Delaware Trustee.
SECTION 3.4 Institutional Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Institutional Trustee")
meeting the requirements of an eligible trustee of the Trust Indenture Act of
1939, as amended, by the execution of an amendment to this Declaration executed
by the Regular Trustees, the Sponsor, the Institutional Trustee and the
Delaware Trustee.
Section 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration.
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ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions; and
(b) an Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which distributions to holders of Securities might properly be
paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity, are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or
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provides terms that are, fair and reasonable to the Trust or any
holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust or
any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different standard
imposed by this Declaration or by applicable law.
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the
full extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Trust) by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or
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its equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 4.3(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by
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independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 4.3(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 4.3(a).
Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made
(i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 4.3(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.
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(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others,
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similar or dissimilar to the business of the Trust, and the Trust and the
Holders of Securities shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor or the Delaware Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor and the Delaware Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person and the Delaware Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for or may act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this Declaration may
be amended by, and only by, a written instrument executed by all of the
Regular Trustees and the Sponsor; provided, however, if the amendment effects
the rights, powers, duties, obligation or immunities of the Delaware Trustee,
the amendment shall also be approved by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or the
revocation of the Sponsor's charter or of the Trust's certificate of
trust;
(iii) upon the entry of a decree of judicial dissolution
of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the consent
of all of the Regular Trustees and the Sponsor; and
14
<PAGE> 17
(b) as soon as is practicable after the occurrence of an
event referred to in Section 5.2(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
15
<PAGE> 18
IN WITNESS WHEREOF, the undersigned has caused this Declaration of
Trust of MCN Financing IV to be executed as of the day and year first above
written.
/s/ Daniel L. Schiffer
--------------------------------
Name: Daniel L. Schiffer
Title: Regular Trustee
/s/ Sebastian Coppola
--------------------------------
Name: Sebastian Coppola
Title: Regular Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Emmett R. Harmon
----------------------------
Name: Emmett R. Harmon
Title: Vice President
MCN CORPORATION, as Sponsor
By: /s/ Sebastian Coppola
----------------------------
Name: Sebastian Coppola
Title: Vice President
and Treasurer
16
<PAGE> 19
EXHIBIT A
CERTIFICATE OF TRUST
The undersigned, the trustees of MCN Financing IV, desiring to
form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
(a) The name of the business trust being formed hereby
(the "Trust") is "MCN Financing IV."
(b) The name and business address of the trustee of the
Trust which has its principal place of business in
the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(c) This Certificate of Trust shall be effective as of
the date of filing.
Dated: February 3, 1997
___________________________________
Daniel L. Schiffer, as Trustee
___________________________________
Sebastian Coppola, as Trustee
WILMINGTON TRUST COMPANY, as
Trustee
By:_________________________________
Name: ______________
Title: Vice President
17
<PAGE> 1
EXHIBIT 4.22
====================================
AMENDED AND RESTATED DECLARATION
OF TRUST
MCN FINANCING III
Dated as of March __, 1997
====================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . 8
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . 9
SECTION 2.3 Reports by the Institutional Trustee . . . . . . . . . 9
SECTION 2.4 Periodic Reports to Institutional Trustee . . . . . . . 9
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . 9
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . 10
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . 12
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . 14
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . 14
SECTION 3.7 Prohibition of Actions by the Trust
and the Trustees . . . . . . . . . . . . . . . . 17
SECTION 3.8 Powers and Duties of the Institutional Trustee . . . 18
SECTION 3.9 Certain Duties and Responsibilities of the
Institutional Trustee . . . . . . . . . . . . . . 20
SECTION 3.10 Certain Rights of Institutional Trustee . . . . . . . 22
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . 24
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . 24
SECTION 3.13 Not Responsible for Recitals or Issuance
of Securities . . . . . . . . . . . . . . . . . 25
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . 25
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . 27
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . 27
i
<PAGE> 3
Page
----
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees . . . . . . . . . . . . . . . . . . 28
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . 28
SECTION 5.3 Institutional Trustee; Eligibility . . . . . . . . . . 29
SECTION 5.4 Certain Qualifications of Regular Trust-
ees and Delaware Trustee Generally . . . . . . . . . . 30
SECTION 5.5 Regular Trustees . . . . . . . . . . . . . . . . . . . 30
SECTION 5.6 Appointment, Removal and Resignation of Trustees . . . 31
SECTION 5.7 Vacancies among Trustees . . . . . . . . . . . . . . . 32
SECTION 5.8 Effect of Vacancies . . . . . . . . . . . . . . . . . . 32
SECTION 5.9 Meetings . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.10 Delegation of Power . . . . . . . . . . . . . . . . . . 33
Section 5.11 Merger, Conversion, Consolidation or Suc-
cession to Business . . . . . . . . . . . . . . . . . . 34
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . 34
SECTION 7.2 Paying Agent . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . 36
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . 37
SECTION 9.2 Transfer of Certificates . . . . . . . . . . . . . . . 37
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . 38
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . . 38
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . 39
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . . 39
SECTION 9.7 Definitive Preferred Security Certificates . . . . . . 39
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . 40
ii
<PAGE> 4
Page
----
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . 42
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . 43
SECTION 10.5 Outside Businesses . . . . . . . . . . . . . . . . . 46
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . 47
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . 48
SECTION 12.2 Meetings of the Holders of Securities; Action
by Written Consent . . . . . . . . . . . . . . . . . 50
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of
Institutional Trustee . . . . . . . . . . . . . . . . 52
SECTION 13.2 Representations and Warranties of
Delaware Trustee . . . . . . . . . . . . . . . . . . 53
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . 55
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . 55
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . 55
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . 55
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . A-2
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . B-1
EXHIBIT C UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . C-1
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
310(a) . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . 3.6(e)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
iv
<PAGE> 6
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MCN FINANCING III
March __, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of March __, 1997, by the Trustees (as defined herein),
the Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the assets of the Trust to be issued pursuant
to this Declaration;
WHEREAS, the Trustees and the Sponsor established MCN
Financing III (the "Trust"), a trust under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of February 3, 1997 (as amended by
the Amendment to Declaration of Trust, dated as of March __, 1997, as so
amended the "Original Declaration") and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on February 3, 1997, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE> 7
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
2
<PAGE> 8
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the "Closing Time" and each "Date of
Delivery" under the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to
be dated as of March __, 1997 of the Sponsor in respect of the Common
Securities.
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
3
<PAGE> 9
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means MCN Corporation, a Michigan
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means NBD Bank, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Institutional
Trustee, a specimen certificate for such series of Debentures being Exhibit B.
"Debenture Repayment Price" means, with respect to any
Debentures put to the Sponsor on the Put Option Exercise Date for repayment, a
price equal to 100% of the principal amount of the Debentures tendered for
repayment plus any accrued and unpaid interest thereon, including additional
interest, if any, to the date of such repayment.
"Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.4.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one
or more Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
4
<PAGE> 10
"FELINE PRIDES" means a security which, upon issuance, will
consist of a unit (referred to as an Income PRIDES) comprised of (i) a stock
purchase contract under which (a) the holder of the unit will purchase from the
Sponsor, for an amount in cash, a certain number of shares of common stock of
the Sponsor and (b) the Sponsor will pay the holder contract adjustment
payments, and (ii) a ____% Preferred Security. After issuance, FELINE PRIDES
units with respect to which Treasury Securities have been substituted for
Preferred Securities will be referred to as Growth PRIDES.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of September 1, 1994,
among the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in
Section 3.8(c).
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex
I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context
5
<PAGE> 11
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 7.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Pledge Agreement" means the Pledge Agreement dated as of
March __, 1997 among the Sponsor, The Chase Manhattan Bank, as collateral agent
(the "Collateral Agent") and The First National Bank of Chicago as purchase
contract agent (the "Purchase Contract Agent").
6
<PAGE> 12
"Preferred Securities Guarantee" means the guarantee agreement
to be dated as of March __, 1997, of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A- 1.
"Pricing Agreement" means the pricing agreement between the
Trust, the Debenture Issuer, and the underwriters designated by the Regular
Trustees with respect to the offer and sale of the Preferred Securities.
"Purchase Contract Agreement" means the Purchase Contract
Agreement dated as of March __, 1997 among The First National Bank of Chicago,
as Purchase Contract Agent, and the Sponsor.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Regular Trustee" has the meaning set forth in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
7
<PAGE> 13
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means MCN Corporation, a Michigan corporation doing
business as MCN Energy Group Inc., or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of 10% or more of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant
class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
8
<PAGE> 14
"Underwriting Agreement" means the Underwriting Agreement for
the offering and sale of Preferred Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this Declaration and shall,
to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Section
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide the Institutional Trustee (i) within 14 days
after each record date for payment of Distributions, a list, in such form as
the Institutional Trustee may reasonably require, of the names and addresses of
the Holders of the Securities ("List of Holders") as of such record date,
provided that neither the Sponsor nor the Regular Trustees, on behalf of the
Trust, shall be obligated to provide such List of Holders at any time the List
of Holders does not differ from the most recent List of Holders given to the
Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Institutional Trustee. The Institutional
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity) provided that the
Institutional Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
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(b) The Institutional Trustee shall comply with its
obligations under Section Section 311(a), 311(b) and 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after May 1 of each year, the Institutional Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees, on behalf of the Trust,
shall provide to the Institutional Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees, on behalf of the Trust,
shall provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the underlying
Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Preferred Securities that the
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relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the
Preferred Securities or impair any right consequent thereon. Any waiver by the
Holders of the Preferred Securities of an Event of Default with respect to the
Preferred Securities shall also be deemed to constitute a waiver by the Holders
of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Declaration without any further act,
vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated,
and until such Events of Default have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securi-
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ties and only the Holders of the Preferred Securities will have the right to
direct the Institutional Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu
of Section Section 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act
and such Section Section 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture
Act are hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act. Subject to the foregoing provisions of
this Section 2.6(b), upon such waiver, any such default shall cease to exist
and any Event of Default with respect to the Common Securities arising
therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture
by the Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default with
respect to the Preferred Securities under this Declaration. Any waiver of an
Event of Default under the Indenture by the Institutional Trustee at the
direction of the Holders of the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of the
corresponding Event of Default under this Declaration with respect to the
Common Securities for all purposes of this Declaration without further act,
vote or consent of the Holders of the Common Securities. The foregoing
provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of
the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture
Act is hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities actually known to a Responsible Officer of the Institutional
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Event of Default as defined in the Indenture, not including
any periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures or in
the payment of any sinking fund installment established for the Debentures, the
Institutional Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Institutional Trustee in good faith deter-
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mines that the withholding of such notice is in the interests of the Holders of
the Securities.
(b) The Institutional Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 501 and 503 of the
Indenture; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible Officer
of the Institutional Trustee charged with the administration of the
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "MCN Financing III," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o MCN
Corporation, 500 Griswold Street, Detroit, Michigan 48226. On ten Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
The Trust will be classified as a grantor trust for United
States federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Preferred Securities and the Common
Securities will be the owners of the Trust for United States federal income tax
purposes, and such owners will include directly in their gross income the
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income, gain, deduction or loss of the Trust as if the Trust did not exist. By
the acceptance of this Trust neither the Trustees, the Sponsor nor the owners
of the Preferred Securities or Common Securities will take any position for
United States federal income tax purposes which is contrary to the
classification of the Trust as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Institutional Trustee, the Regular Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Institutional Trustee Account or as otherwise provided in
this Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided,
however , that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common Securities,
and, provided further, that there shall be no interests in the Trust
other than the Securities, and the issuance of Securities shall be
limited to a simultaneous issuance of both Preferred Securities and
Common Securities on each Closing Date;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
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(i) execute and file with the Commission the
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto, pertaining to the Preferred
Securities;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be
necessary in order to qualify or register all or part of the
FELINE PRIDES in any State in which the Sponsor has determined
to qualify or register such Preferred Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the New York Stock Exchange, Inc. or any other
national stock exchange or the Nasdaq Stock Market's National
Market for listing upon notice of issuance of any part of the
FELINE PRIDES;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the registration
of any part of the FELINE PRIDES under Section 12(b) of the
Exchange Act; and
(v) execute and enter into the Underwriting
Agreement and Pricing Agreement providing for the sale of the
FELINE PRIDES;
(c) to acquire the Debentures with the proceeds of the
sale of the Preferred Securities and the Common Securities; provided,
however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional
Trustee for the benefit of the Holders of the Preferred Securities and
the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee
prompt written notice of the occurrence of a Special Event; provided
that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any
Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes of
Section 316(c) of the Trust Indenture Act, Distributions, voting
rights, repayments and exchanges, and to issue relevant notices to the
Holders of Preferred Securities and Holders of Common Securities as to
such actions and applicable record dates;
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(f) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to
bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable compensation
for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by Section
314(a)(4) of the Trust Indenture Act to the Institutional Trustee,
which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary, appropriate,
convenient or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's
valid existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of each
other jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Preferred Securities or to
enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying
out the activities of the Trust as set out in this Section 3.6,
including, but not limited to:
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(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be classified for United
States federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated as indebtedness of
the Debenture Issuer for United States federal income tax
purposes,
provided that such action does not adversely affect the interests of
Holders;
(p) to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be filed
with respect to the Trust to be duly prepared and filed by the Regular
Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing;
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust
set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Institutional Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the
Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall not, engage in any activity other than as required
or authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Institutional Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such pro-
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ceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex I,
(A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is waivable under the Indenture, (C) exercise any right
to rescind or annul any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an insubstantial risk
that for United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by
and held of record in the name of the Institutional Trustee in trust for the
benefit of the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 5.6. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its
right, title and interest in the Debentures to the Regular Trustees or to the
Delaware Trustee (if the Institutional Trustee does not also act as Delaware
Trustee).
(c) The Institutional Trustee shall:
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(i) establish and maintain a segregated non-interest
bearing trust account (the "Institutional Trustee Account") in the
name of and under the exclusive control of the Institutional Trustee
on behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the
Institutional Trustee, deposit such funds into the Institutional
Trustee Account and make payments to the Holders of the Preferred
Securities and Holders of the Common Securities from the Institutional
Trustee Account in accordance with Section 6.1. Funds in the
Institutional Trustee Account shall be held uninvested until disbursed
in accordance with this Declaration. The Institutional Trustee
Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness is
rated at least "A" or above by a "nationally recognized statistical
rating organization", as that term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the repayment of the Preferred
Securities and the Common Securities to the extent the Debentures
mature or the Put Option is exercised; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain special events (as may be
defined in the terms of the Securities) arising from a change in law
or a change in legal interpretation or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and
perform such duties as may be specifically required of the Institutional
Trustee pursuant to the terms of the Securities.
(e) The Institutional Trustee shall take any Legal Action
which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act; provided, however, that if the Institutional Trustee fails
to enforce its rights under the Debentures after a holder of Preferred
Securities has made a written request, such holder of record of Preferred
Securities may institute a legal proceeding against the Debenture Issuer
without first instituting any legal proceeding against the Institutional
Trustee or any other person or entity. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to
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pay interest or principal on the Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then such holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder (a "Direct
Action") on or after the respective due date specified in the Debentures. In
connection with such Direct Action, the rights of the holders of Common
Securities will be subrogated to the rights of the holders of Preferred
Securities. In connection with such Direct Action, the Debenture Issuer shall
be subrogated to the rights of such holder of Preferred Securities with respect
to payments on the Preferred Securities under this Declaration to the extent of
any payment made by the Debenture Issuer to such holder of Preferred Securities
in such Direct Action. Except as provided in the preceding sentences, the
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
(f) The Institutional Trustee shall not resign as a
Trustee unless either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed
and has accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power
to exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a Responsible
Officer of the Institutional Trustee occurs and is continuing, the
Institutional Trustee shall, for the benefit of Holders of the Securities,
enforce its rights as holder of the Debentures subject to the rights of the
Holders pursuant to the terms of such Securities.
(h) Subject to this Section 3.8, the Institutional
Trustee shall have none of the duties, liabilities, powers or the authority of
the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth
in this Section 3.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Institutional Trustee
shall not take any action that is inconsistent with the purposes and functions
of the Trust set out in Section 3.3.
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SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee.
(a) The Institutional Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed
to relieve the Institutional Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the
Institutional Trustee shall be determined solely by the
express provisions of this Declaration and the Institutional
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall be
read into this Declaration against the Institutional Trustee;
and
(B) in the absence of bad faith on the part of
the Institutional Trustee, the Institutional Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional
Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Institutional Trustee, unless it shall be
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proved that the Institutional Trustee was negligent in ascertaining
the pertinent facts;
(iii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Institutional
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Institutional Trustee Account shall be to deal with such property
in a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and
limitations on liability afforded to the Institutional Trustee under
this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Sponsor. Money held by the Institutional Trustee need not be
segregated from other funds held by it except in relation to the
Institutional Trustee Account maintained by the Institutional Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable
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for any default or misconduct of the Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall
be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see to
any recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or
other experts and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Institutional
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation
to exercise any of the rights or powers vested in
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it by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Institutional Trustee
security and indemnity, reasonably satisfactory to the Institutional
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Institutional Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it
in complying with such request or direction, including such reasonable
advances as may be requested by the Institutional Trustee provided,
that, nothing contained in this Section 3.10(a)(vi) shall be taken to
relieve the Institutional Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or attorneys
and the Institutional Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its
agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Institutional Trustee or its
agents alone shall be sufficient and effective to perform any such
action and no third party shall be required to inquire as to the
authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Institutional Trustee (i) may request
instructions from the Holders of the Securities which instructions may
only be given by the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in respect of
such
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remedy, right or action, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or
acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Institutional Trustee to perform any act
or acts or exercise any right, power, duty or obligation conferred or imposed
on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts, or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Institutional Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Institutional Trustee described
in this Declaration. Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, a majority of or, if
there are only two, any Regular Trustee or, if there is only one, such Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or
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condition of the property of the Trust or any part thereof. The Trustees make
no representations as to the validity or sufficiency of this Declaration or the
Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for seven (7) years from the Closing
Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular
Trustees or, if there are more than two, a majority of the Regular Trustees and
without the consent of the Holders of the Securities, the Delaware Trustee or
the Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments
upon liquidation, repayment and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of
the Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(iii) if necessary, the Preferred Securities or any Successor
Securities will be listed, or any Successor Securities will be listed
upon notification of issuance, on any national securities exchange or
with an other organization on which the Preferred Securities are then
listed or quoted;
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(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect to any
dilution of such Holders' interests in the Preferred Securities as a
result of such merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that
of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new
entity); and
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes and such merger,
consolidation, amalgamation, or replacement does not result in
a taxable event to any Holders of Preferred Securities or
FELINE PRIDES or otherwise effect the United States federal
income tax consequences of any investment in the Preferred
Securities or FELINE PRIDES; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other
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entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the Trust or
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the FELINE
PRIDES and to do any and all such acts, other than actions which must
be taken by the Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to be executed and
filed by the Trust, as the Sponsor deems necessary or advisable in
order to comply with the applicable laws of any such States;
(c) if necessary, to prepare for filing by the Trust of an
application to the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing upon notice of
issuance of any Preferred Securities;
(d) if necessary, to prepare for filing by the Trust with
the Commission of a registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b) of the
Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement
and Pricing Agreement providing for the sale of the FELINE PRIDES.
SECTION 4.3 Right to Proceed.
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The Sponsor acknowledges the rights of Holders to institute a
Direct Action as set forth in Section 3.8(e) hereto.
SECTION 4.4 Expenses.
In connection with the offering, sale and issuance of the
Debentures to the Institutional Trustee and in connection with the sale of the
Securities by the Trust, the Debenture Issuer, in its capacity as borrower with
respect to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale
and issuance of the Debentures, including commissions to the underwriter
payable pursuant to the Underwriting Agreement and compensation of the Trustee
under the Indenture in accordance with the provisions of the Indenture;
(b) be responsible for and shall pay all debts and
obligations (other than with respect to the Securities) and all costs and
expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization, maintenance and dissolution of the Trust, the
offering, sale and issuance of the Securities (including commissions to the
underwriters in connection therewith), the fees and expenses (including
reasonable counsel fees and expenses) of the Institutional Trustee, the
Delaware Trustee and the Regular Trustees (including any amounts payable under
Article X of this Declaration), the costs and expenses relating to the
operation of the Trust, including, without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets and the enforcement
by the Institutional Trustee of the rights of the Holders of the Preferred
Securities);
(c) be primarily liable for any indemnification obligations
arising with respect to this Declaration; and
(d) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
The Debenture Issuer's obligations under this Section 4.4
shall be for the benefit of, and shall be enforceable by, any person to whom
such debts, obligations, costs, expenses and taxes are owned (a "Creditor")
whether or not such Creditor has received notice hereof. Any such Creditor may
enforce the Debenture Issuer's obligations under this Section 4.4 directly
against
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the Debenture Issuer and the Debenture Issuer irrevocably waives any right of
remedy to require that any such Creditor take any action against the Trust or
any other Person before proceeding against the Debenture Issuer. The Debenture
Issuer agrees to execute such additional agreements as may be necessary or
desirable in order to give full effect to the provisions of this Section 4.4.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be three(3), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; provided,
however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the "Delaware
Trustee"); (2) there shall be at least one Trustee who is an employee
or officer of, or is affiliated with the Sponsor (a "Regular
Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture
under the Trust Indenture Act, and such Trustee may also serve as
Delaware Trustee if it meets the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law,
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provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable law,
then the Institutional Trustee shall also be the Delaware Trustee and Section
3.11 shall have no application.
(c) The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall
act as Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 5.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Institutional Trustee shall cease
to be eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Institutional Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in Section 310(b) of the
Trust Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
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(d) The Preferred Securities Guarantee shall be deemed to
be specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Regular Trustees.
The initial Regular Trustees shall be:
Daniel L. Schiffer
Sebastian Coppola
c/o MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees,
and except as otherwise required by the Business Trust Act or applicable law,
any Regular Trustee is authorized to execute on behalf of the Trust any
documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that, the registration
statement referred to in Section 3.6, including any amendments thereto, shall
be signed by a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of
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signing any documents which the Regular Trustees have power and authority to
cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed
or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall
not be removed in accordance with Section 5.6(a) until a Successor Institutional
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Institutional Trustee and delivered to the
Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with this Section 5.6(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect upon
such delivery or upon such later date as is specified therein; provided,
however, that:
(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Institutional Trustee and delivered
to the Trust, the Sponsor and the resigning Institutional
Trustee; or
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(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their
best efforts to promptly appoint a Successor Delaware Trustee or Successor
Institutional Trustee as the case may be if the Institutional Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Institutional Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Institutional Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Institutional
Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Institutional Trustee
or successor Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a
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Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees
by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of
the Regular Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Regular Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
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Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the
Delaware Trustee, as the case may be, may be merged or converted or with which
either may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be a party, or any corporation succeeding to
all or substantially all the corporate trust business of the Institutional
Trustee or the Delaware Trustee, as the case may be, shall be the successor of
the Institutional Trustee or the Delaware Trustee, as the case may be,
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Debentures held by the Institutional Trustee (the amount of any such
payment being a "Payment Amount"), the Institutional Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall, on behalf of the Trust,
issue one class of preferred securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Preferred Securities") and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities.") The Trust
shall issue no securities or other interests in the assets of the
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Trust other than the Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the
Trust by a Regular Trustee. Such signature shall be the manual signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the Regular Trustees of the
Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage.
(c) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or
a Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 7.2 Paying Agent.
In the event that the Preferred Securities are not in
book-entry only form, the Trust shall maintain in the borough of Manhattan,
City of New York, State of New York, an office or agency where the Preferred
Securities may be presented for payment ("Paying Agent"), and any such Paying
Agent shall comply with Section 317(b) of the Trust Indenture Act. The Trust
may appoint the Paying Agent and may appoint one or more additional paying
agents in such other locations as it shall determine. The term "Paying Agent"
includes any additional paying agent. The Trust may change any Paying Agent
without prior notice to any
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Holder. The Trust shall notify the Institutional Trustee of the name and
address of any Agent not a party to this Declaration. If the Trust fails to
appoint or maintain another entity as Paying Agent, the Institutional Trustee
shall act as such. The Trust or any of its Affiliates may act as Paying Agent.
The Trust shall initially act as Paying Agent for the Preferred Securities and
the Common Securities.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor; the filing of a certificate of
cancellation with respect to the Trust after having obtained the
consent of a majority in liquidation amount of the Securities voting
together as a single class to file such certificate of cancellation or
the revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor or the Trust;
(iv) upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance
with the terms of the Securities and all of the Debentures endorsed
thereon shall have been distributed to the Holders of Securities in
exchange for all of the Securities; or
(v) before the issuance of any Securities, with the consent
of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 8.1(a) and upon completion of the winding-up of
the Trust and its termination, the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
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ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities
shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any
Related Party may only transfer Common Securities to the Sponsor or a Related
Party of the Sponsor; provided that, any such transfer is subject to the
condition precedent that the transferor obtain the written opinion of
nationally recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
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SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust shall
have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance, will
be issued in the form of one or more, fully registered, global Preferred
Security Certificates (each a "Global Certificate"), to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificate(s) shall initially be registered on the books and records of the
Trust in the name of Cede & Co., the nominee of DTC, and no Preferred Security
Beneficial Owner will receive a definitive Preferred Security Certificate
representing such Preferred Security Beneficial Owner's interests in such
Global Certificate(s), except as provided in Section 9.7. Unless and until
definitive, fully registered Preferred Security Certificates (the "Definitive
Preferred Security Certificates") have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Certificate(s)
and receiving approvals, votes or consents hereunder) as the Holder of
the Preferred Securities and the sole holder of the Global
Certificate(s) and shall have no obligation to the Preferred Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions
of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial
Owners shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants
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and receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants. DTC will make book
entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, unless and until
Definitive Preferred Security Certificates shall have been issued to the
Preferred Security Beneficial Owners pursuant to Section 9.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Preferred Security Holders to the Clearing Agency, and shall have
no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services
as securities depositary with respect to the Preferred Securities and
a successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with
the Sponsor to terminate the book entry system through the Clearing
Agency with respect to the Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect
to such Preferred Securities; and
(d) upon surrender of the Global Certificate(s) by the
Clearing Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions
and each of them may
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conclusively rely on and shall be protected in relying on, said
instructions of the Clearing Agency. The Definitive Preferred
Security Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may
have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees
may deem appropriate, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Preferred Securities may be
listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to
the Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees such
security or indemnity as may be required by them to keep each of them
harmless.
then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration,
the Debentures, the Securities Guarantees and the terms of the Securities, the
Sponsor shall not be:
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(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust;
and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable
for all of the debts and obligations of the Trust (other than with respect to
the Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Preferred Securities shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall
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not be liable to the Trust or to any other Covered Person for its good faith
reliance on the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person
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who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(includ-
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ing attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by
the Debenture Issuer in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section
10.4(a). Notwithstanding the foregoing, no advance shall be made by
the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
10.4(a) shall not be deemed exclusive of any
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other rights to which those seeking indemnification and advancement of
expenses may be entitled under any agreement, vote of stockholders or
disinterested directors of the Debenture Issuer or Preferred Security
Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 10.4(a)
shall be deemed to be provided by a contract between the Debenture
Issuer and each Company Indemnified Person who serves in such capacity
at any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Institutional Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Institutional Trustee and the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees, representatives,
custodians, nominees or agents of the Institutional Trustee and the Delaware
Trustee (each of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any loss, liability or expense incurred
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without gross negligence( or, in the case of the Institutional Trustee,
pursuant to Section 3.9, negligence) or bad faith on its part, arising out of
or in connection with the acceptance or administration or the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
10.4(b) shall survive the satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated
to present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Institutional Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect
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in reasonable detail, each transaction of the Trust. The books of account
shall be maintained on the accrual method of accounting, in accordance with
generally accepted accounting principles, consistently applied. The Trust
shall use the accrual method of accounting for United States federal income tax
purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm
of independent certified public accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be duly prepared
and delivered to each of the Holders of Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the
Code to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Regular Trustees shall cause to be duly prepared
and filed with the appropriate taxing authority, an annual United States
federal income tax return, on a Form 1041 or such other form required by United
States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Institutional Trustee shall be
made directly to the Institutional Trustee Account and no other funds of the
Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Institutional Trustee shall designate the
signatories for the Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions
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and, unless an exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to withhold and pay
over any amounts to any authority with respect to distributions or allocations
to any Holder, the amount withheld shall be deemed to be a distribution in the
amount of the withholding to the Holder. In the event of any claimed over
withholding, Holders shall be limited to an action against the applicable
jurisdiction. If the amount required to be withheld was not withheld from
actual Distributions made, the Trust may reduce subsequent Distributions by the
amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or
by any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two
Regular Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Institutional Trustee, the Institutional Trustee shall have first
received:
(A) an Officers' Certificate from each of the Trust
and the Sponsor that such amendment is permitted
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by, and conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms
of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified
for purposes of United States federal income taxation as a
grantor trust;
(B) reduce or otherwise adversely affect the powers of
the Institutional Trustee in contravention of the Trust Indenture
Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(c) at such time after the Trust has issued any Securities
that remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of
the Holders of a Majority in liquidation amount of the Common Securities and;
(f) the rights of the holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
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(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change
in interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the right, preferences or
privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the
Amended Declaration to such extent as may be necessary.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may
be called at any time by the Regular Trustees (or as provided in the terms of
the Securities) to consider and act on any matter on which Holders of such class
of Securities are entitled to act under the terms of this Declaration, the terms
of the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing
the Security Certificates held by the Holders of Securities exercising the right
to call a meeting and only those Securities specified shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders
of Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which the Preferred Securities are listed or admitted for trading,
such vote, consent or approval may be given at a meeting of the
Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent
in writing setting forth the action so taken is signed by the Holders
of Securities owning not
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less than the minimum amount of Securities in liquidation amount that
would be necessary to authorize or take such action at a meeting at
which all Holders of Securities having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a
meeting shall be given to the Holders of Securities entitled to vote
who have not consented in writing. The Regular Trustees may specify
that any written ballot submitted to the Security Holder for the
purpose of taking any action without a meeting shall be returned to
the Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law
of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing rules
of any stock exchange on which the Preferred Securities are then
listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
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ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Institutional Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Institutional
Trustee's acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration;
(b) the Institutional Trustee satisfies the requirements
set forth in Section 5.3(a);
(c) the execution, delivery and performance by the
Institutional Trustee of the Declaration has been duly authorized by
all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the
Institutional Trustee, and it constitutes a legal, valid and binding
obligation of the Institutional Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity
or at law);
(d) the execution, delivery and performance of the
Declaration by the Institutional Trustee does not conflict with or
constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee;
(e) no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration; and
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(f) the Institutional Trustee, pursuant to this
Declaration, shall hold legal title and a valid ownership interest in
the Debentures.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform
its obligations under the Certificate of Trust and the Declaration.
The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and
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shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders of the
Securities):
MCN Financing III
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may
give notice of to the Holders of the Securities):
(c) if given to the Institutional Trustee, at its
Corporate Trust Office to the attention of Corporate Trust
Administration (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice to the
Trust):
MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
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This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
______________________________
Daniel L. Schiffer, as Regular
Trustee
_______________________________
Sebastian Coppola, as Regular
Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By:____________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Institutional Trustee
By:____________________________
Name:
Title:
MCN CORPORATION, as Sponsor
By:____________________________
Name: Sebastian Coppola
Title: Senior Vice President
and Treasurer
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ANNEX I
TERMS OF
___% TRUST ORIGINATED PREFERRED SECURITIES
___% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of March __, 1997 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. _________ Preferred Securities
of the Trust with an aggregate liquidation amount with respect to the assets of
the Trust of ______ ($__________) and a liquidation amount with respect to the
assets of the Trust of $50 per preferred security, are hereby designated for
the purposes of identification only as "_____% Trust Originated Preferred
SecuritiesSM ('TOPrS'SM)" (the "Preferred Securities"). The Preferred Security
Certificates evidencing the Preferred Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or practice
or to conform to the rules of any stock exchange on which the Preferred
Securities are listed.
(b) Common Securities. ______ Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of __________ ($_________) and a liquidation amount with respect to the
assets of the Trust of $50 per common security, are hereby designated for the
purposes of identification only as "_____% Trust Originated Common Securities"
(the "Common Securities"). The Common Security Certificates evidencing the
Common Securities shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
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2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of _____% (the "Coupon Rate") of the stated liquidation
amount of $50 per Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
(b) Distributions on the Securities will be cumulative,
will accrue from March __, 1997, and will be payable quarterly in arrears, on
March 31, June 30, September 30, and December 31 of each year, commencing on
__________, 1997, except as otherwise described below. The Debenture Issuer
has the right under the Indenture to defer payments of interest by extending
the interest payment period from time to time on the Debentures for a period
not exceeding 20 consecutive quarters (each an "Extension Period"), during
which Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall last beyond the date of maturity of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the
Coupon Rate compounded quarterly during any such Extension Period. Payments of
accrued Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Debenture Issuer may commence a new Extension
Period; provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters.
(c) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust at the
close of business on the Business Day immediately preceding each of the
relevant payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of
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the Preferred Securities will be made as described under the heading
"Description of the FELINE PRIDES -- Book-Entry System" in the Prospectus
Supplement dated March __, 1997, to the Prospectus dated March __, 1997
(together, the "Prospectus"), of the Trust included in the Registration
Statement on Form S-3 (file no. 333-21175) of the Sponsor, the Trust and
certain other business trusts. The relevant record dates for the Common
Securities shall be the same record date as for the Preferred Securities. If
the Preferred Securities shall not continue to remain in book-entry only form,
the relevant record dates for the Preferred Securities, shall conform to the
rules of any securities exchange on which the securities are listed and, if
none, shall be selected by the Regular Trustees, which dates shall be at least
one Business Day but less than 60 Business Days before the relevant payment
dates, which payment dates correspond to the interest payment dates on the
Debentures. Distributions payable on any Securities that are not punctually
paid on any Distribution payment date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures, will cease to be payable
to the Person in whose name such Securities are registered on the relevant
record date, and such defaulted Distribution will instead be payable to the
Person in whose name such Securities are registered on the special record date
or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a Business
Day, then payment of the Distribution payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. So long as the Holder of any Preferred Securities is
the Collateral Agent, the payment of Distributions on such Preferred Securities
held by the Collateral Agent will be made at such place and to such account as
may be designated by the Collateral Agent.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination, as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of liabilities of creditors
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Securities, with an
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interest rate equal to the Coupon Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, such
Securities, shall be distributed on a Pro Rata basis to the Holders of the
Securities in exchange for such Securities (such amount being "Liquidation
Distribution").
If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Repayment and Distribution.
(a) Upon the repayment of the Debentures in whole (but
not in part), at maturity, the proceeds from such repayment shall be
simultaneously applied to repay Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Debentures so repaid at a
repayment price of $50 per Security plus an amount equal to accrued and unpaid
Distributions thereon at the date of the repayment, payable in cash (the
"Repayment Price"). Holders will be given not less than 30 nor more than 60
days notice of such repayment.
(b) Upon the distribution of the Debentures (after
satisfaction of creditors), in whole (but not in part), pursuant to a Special
Event (as described below) Debentures with an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to the Coupon Rate of, and accrued and unpaid interest equal to accrued and
unpaid Distributions on, and having the same record date for payment as the
Securities, shall be distributed to the Holders of the Securities in
liquidation of such Holders' interests in the Trust on a Pro Rata basis, within
90 days following the occurrence of such Special Event.
(c) If a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") shall occur and be continuing the
Regular Trustees shall dissolve the Trust and, after satisfaction of creditors,
cause Debentures held by the Institutional Trustee, having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on, and having the same record date
for payment as the Securities, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in the Trust on a Pro Rata
basis, within 90 days following the occurrence of such Special Event (the "90
Day Period"); and provided, however, that, if at the time there is available to
the Trust the opportunity to eliminate, within the 90 Day Period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing
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some other similar reasonable measure that has no adverse effect on the Trust,
the Debenture Issuer, the Sponsor or the Holders of the Securities
("Ministerial Action"), the Trust will pursue such Ministerial Action in lieu
of dissolution.
"Tax Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Tax Event Opinion") to the effect that on or
after the date of the Prospectus Supplement, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority therefor or therein, or (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is
taken, in each case on or after the date of the Prospectus Supplement, there is
more than an insubstantial risk that (i) the Trust is or will be within 90 days
of the date thereof, subject to United States federal income tax with respect
to interest accrued or received on the Debentures, (ii) the Trust is, or will
be within 90 days of the date thereof, subject to more than a de minimis amount
of taxes, duties or other governmental charges, or (iii) interest payable by
the Debenture Issuer to the Trust on the Debentures is not, or within 90 days
of the date thereof will not be, deductible, in whole or in part, by the
Debenture Issuer for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act (an "Investment
Company Event Opinion") that, as a result of the occurrence of a change in law
or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is a more than an insubstantial
risk that the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after the date of the Prospectus
Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depository") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Debentures to be
delivered upon such distribution and any certificates repre-
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senting Securities, except for certificates representing Preferred Securities
held by the Depository or its nominee (or any successor Clearing Agency or its
nominee), will be deemed to represent beneficial interests in the Debentures
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued
and unpaid interest equal to accrued and unpaid Distributions on such
Securities until such certificates are presented to the Debenture Issuer or its
agent for transfer or reissue.
(d) Repayment or Distribution Procedures.
(i) Notice of any repayment of, or notice of distribution
of Debentures in exchange for the Securities (a "Repay-
ment/Distribution Notice") will be given by the Trust by mail to each
Holder of Securities to be repaid or exchanged not fewer than 30 nor
more than 60 days before the date fixed for repayment or exchange
thereof which, in the case of a repayment, will be the date fixed for
repayment of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are
given pursuant to this Section 4(d)(i), a Repayment/Distribution
Notice shall be deemed to be given on the day such notice is first
mailed by first-class mail, postage prepaid, to Holders of Securities.
Each Repayment/Distribution Notice shall be addressed to the Holders
of Securities at the address of each such Holder appearing in the
books and records of the Trust. No defect in the
Repayment/Distribution Notice or in the mailing of either thereof with
respect to any Holder shall affect the validity of the repayment or
exchange proceedings with respect to any other Holder.
(ii) If Securities are to be repaid and the Trust gives a
Repayment/Distribution Notice, which notice may only be issued if the
Debentures are repaid as set out in this Section 4 (which notice will
be irrevocable), then (A) while the Preferred Securities are in
book-entry only form, with respect to the Preferred Securities, by
12:00 noon, New York City time, on the repayment date, provided that
the Debenture Issuer has paid the Institutional Trustee a sufficient
amount of cash in connection with the related repayment on maturity of
the Debentures, the Institutional Trustee will deposit irrevocably
with the Depository or its nominee (or successor Clearing Agency or
its nominee) funds sufficient to pay the applicable Repayment Price
with respect to the Preferred Securities and will give the Depository
irrevocable instructions and authority to pay the Repayment Price to
the Holders of the Preferred Securities, and (B) with respect to
Preferred Securities issued in definitive form and Common Securities,
provided that the Debenture Issuer has paid the Institutional Trustee
a sufficient amount of cash
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in connection with the related repayment on maturity of the
Debentures, the Institutional Trustee will pay the relevant Repayment
Price to the Holders of such Securities by check mailed to the address
of the relevant Holder appearing on the books and records of the Trust
on the repayment date. If a Repayment/Distribution Notice shall have
been given and funds deposited as required, if applicable, then
immediately prior to the close of business on the date of such
deposit, or on the repayment date, as applicable, distributions will
cease to accrue on the Securities so repaid and all rights of Holders
of such Securities so repaid will cease, except the right of the
Holders of such Securities to receive the Repayment Price, but without
interest on such Repayment Price. Neither the Regular Trustees nor
the Trust shall be required to register or cause to be registered the
transfer of any Securities that have been so repaid. If any date
fixed for repayment of Securities is not a Business Day, then payment
of the Repayment Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date fixed for repayment. If
payment of the Repayment Price in respect of any Securities is
improperly withheld or refused and not paid either by the
Institutional Trustee or by the Sponsor as guarantor pursuant to the
relevant Securities Guarantee, Distributions on such Securities will
continue to accrue from the original repayment date to the actual date
of payment, in which case the actual payment date will be considered
the date fixed for repayment for purposes of calculating the Repayment
Price.
(iii) Repayment/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in respect of the
Preferred Securities, the Depository or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been
issued or, if Definitive Preferred Security Certificates have been
issued, to the Holder thereof, and (B) in respect of the Common
Securities to the Holder thereof.
(iv) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), provided
the acquiror is not the Holder of the Common Securities or the obligor
under the Indenture, the Sponsor or any of its subsidiaries may at any
time and from time to time purchase outstanding Preferred Securities
by tender, in the open market or by private agreement.
5. Repayment at Option of Holders
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(a) Each Holder of Preferred Securities, including the
Collateral Agent, shall have the right to require the Trust to repay all or a
portion of the Preferred Securities owned or pledged with such Holder (the "Put
Option") on or before [May 16], 2000, which shall be the Business Day
immediately preceding the Purchase Contract Settlement Date (the "Put Option
Exercise Date") at a repayment price of $50 per Security plus an amount equal
to accrued Distributions thereon to the date of payment (the "Put Option
Repayment Price").
(b) The Trust will obtain funds to pay the Put Option
Repayment Price of Preferred Securities being repaid under the Put Option by
presenting to the Debenture Issuer, pursuant to the Trust's right under the
Debentures to require the Debenture Issuer to repay all or a portion of the
Debenture on the Put Option Exercise Date, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Preferred
Securities for repayment on the Put Option Exercise Date at the Debenture
Repayment Price.
(c) In order for the Preferred Securities to be repaid on
the Put Option Exercise Date, the Trust must receive at the Corporate Trust
Office of the Institutional Trustee, either (i) not less than [10] nor more
than [30] days prior to the Put Option Exercise Date, the Preferred Securities
to be repaid with the form entitled "Option to Elect Repayment" on the reverse
thereof or otherwise accompanying such Preferred Security duly completed. Any
such notice received by the Trust shall be irrevocable. All questions as to
the validity, eligibility (including time of receipt) and acceptance of the
Preferred Securities for repayment shall be determined by the Trust, whose
determination shall be final and binding. Notwithstanding the foregoing, so
long as the Holder is the Collateral Agent, such notice to elect repayment may
be delivered to the Trust at any time prior to 10:00 a.m., New York City time,
on the Put Option Exercise Date and in the form and manner as may be designated
by the Collateral Agent.
(d) Payment of the Put Option Repayment Price to Holders
of Preferred Securities shall be made at the Corporate Trust Office of the
Institutional Trustee, provided that the Debenture Issuer has paid the
Institutional Trustee a sufficient amount of cash in connection with the
related repayment of the Debenture. Notwithstanding the foregoing, so long as
the Holder of any Preferred Securities is the Collateral Agent, the payment of
the Put Option Repayment Price in respect of such Preferred Securities held by
the Collateral Agent shall be made no later than 1:00 p.m., New York City time,
on the Put Option Exercise Date by check or wire transfer in immediately
available funds at such place and to such account as may be designated by the
Collateral Agent. If the Institutional Trustee holds immediately available
funds sufficient to pay the Put Option Repayment Price
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<PAGE> 72
of such Preferred Securities, then, immediately prior to the close of business
on the Put Option Exercise Date, such Preferred Securities will cease to be
outstanding and distributions thereon will cease to accrue, whether or not
Preferred Securities are delivered to the Institutional Trustee, and all other
rights of the Holder in respect of the Preferred Securities, including the
Holder's right to require the Trust to repay such Preferred Securities, shall
terminate and lapse (other than the right to receive the Put Option Repayment
Price but without interest on such Put Option Repayment Price). Neither the
Regular Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Preferred Securities for which repayment has
been elected. If payment of the Put Option Repayment Price in respect of
Preferred Securities is (i) improperly withheld or refused and not paid either
by the Institutional Trustee or by the Sponsor as guarantor pursuant to the
Preferred Securities Guarantee, or (ii) not paid by the Institutional Trustee
as the result of an Event of Default with respect to the Debentures presented
for repayment as described in paragraph 5(b), Distributions on such Preferred
Securities will continue to accrue, from the original Put Option Exercise Date
to the actual date of payment, in which case the actual payment date will be
considered the Put Option Exercise Date for purposes of calculating the Put
Option Repayment Price.
6. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 6(b) and 8 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class may direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with
respect to the Debentures, (ii) waive any past default and its consequences
that is waivable under the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and
payable, provided, however, that, where a consent under the Indenture would
require the consent or act of the Holders of greater than a majority of the
Holders in principal amount of Debentures affected thereby (a "Super
Majority"), the Institutional Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant Super
Majority represents of the aggregate principal
67
<PAGE> 73
amount of the Debentures outstanding. The Institutional Trustee shall not
revoke any action previously authorized or approved by a vote of the Holders of
the Preferred Securities. Other than with respect to directing the time,
method and place of conducting any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of
the Preferred Securities under this paragraph unless the Institutional Trustee
has obtained an opinion of tax counsel to the effect that for the purposes of
United States federal income tax the Trust will not be classified as other than
a grantor trust on account of such action. If the Institutional Trustee fails
to enforce its rights under the Declaration, any Holder of Preferred Securities
may institute a legal proceeding directly against any person to enforce the
Institutional Trustee's rights under the Declaration without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such Holder of the
principal of or interest on the Debentures having a principal amount equal to
the aggregate liquidation amount of the Preferred Securities of such holder on
or after the respective due date specified in the Debentures. Except as
provided in the preceding sentence, the Holders of Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Debentures.
Any approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of
any meeting at which Holders of Preferred Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to repay and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
68
<PAGE> 74
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
7. Voting Rights - Common Securities.
(a) Except as provided under Sections 7(b), (c) and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Preferred Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under Section 513 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable, provided that,
where a consent or action under the Indenture would require the consent or act
of the Holders of greater than a majority in principal amount of Debentures
affected thereby (a "Super Majority"), the Institutional Trustee may only give
such consent or take such action at the written direction of the Holders of at
least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Pursuant to this Section 7(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a vote
of the Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting any remedy available to the
Institutional Trustee or the Debenture Trustee as set forth above, the
Institutional Trustee shall not take any action in accordance with the
directions of the Holders of the Common Securities under this paragraph unless
the Institutional Trustee has obtained an opinion of tax counsel to the effect
that for the
69
<PAGE> 75
purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action. If the Institutional
Trustee fails to enforce its rights under the Declaration, any Holder of Common
Securities may institute a legal proceeding directly against any Person to
enforce the Institutional Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any other
Person.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to repay and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
8. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
70
<PAGE> 76
(b) In the event the consent of the Institutional Trustee
as the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination on the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders of
the Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the holders of greater than a majority in
aggregate principal amount of the Debentures (a "Super Majority"), the
Institutional Trustee may only give such consent at the direction of the
Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding; provided, further, that the Institutional
Trustee shall not take any action in accordance with the directions of the
Holders of the Securities under this Section 8(b) unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
9. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default under the Declaration has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to each Holder of
the Preferred Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Common Securities outstanding.
10. Ranking.
The Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquida-
71
<PAGE> 77
tion, redemption and otherwise are subordinated to the rights to payment of the
Holders of the Preferred Securities.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights
to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.
72
<PAGE> 78
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. [ ]
Certificate Evidencing Preferred Securities
of
MCN FINANCING III
____ % Trust Originated Preferred SecuritiesSM ("TOPrS"SM)
(liquidation amount $50 per Preferred Security)
MCN FINANCING III, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of preferred securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the_____% Trust Originated Preferred Securities (SM)
(liquidation
A1-1
<PAGE> 79
amount $50 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of _______, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Preferred Securities Guarantee to
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this __ day of ________, 1997.
MCN FINANCING III
By:________________________________
Name:
Title: Regular Trustee
A1-2
<PAGE> 80
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be
fixed at a rate per annum of ______% (the "Coupon Rate") of the stated
liquidation amount of $50 per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears for more than one quarter will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 30-day month.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on ______ __, 1997, which
payment dates shall correspond to the interest payment dates on the Debentures.
The Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding beyond the date of maturity of the
Debentures (each an "Extension Period") and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first
record date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed
20 consecutive quarters.
The Preferred Securities shall be repayable as provided in the
Declaration.
A1-3
<PAGE> 81
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Trust to repay $ stated liquidation amount of the within Preferred Security,
pursuant to its terms, on the "Put Option Exercise Date" first occurring after
the date of receipt of the within Preferred Security as specified below,
together with distributions thereon accrued to the date or repayment, to the
undersigned at:
(Please print or type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Declaration, a
new Preferred Security or Preferred Securities representing the remaining
stated liquidation amount of this Preferred Security.
For this Option to Elect Repayment to be effective, this Preferred Security
with the Option to Elect Repayment duly completed must be received by the Trust
at the Corporate Trust Office of the Institutional Trustee at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Administration.
Dated: Signature:
_________________
Note: The signature to this Option to Elect Repayment must correspond with the
name as written upon the face of the within Preferred Security in every
particular without alternation or enlargement or any change whatsoever.
A1-4
<PAGE> 82
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
______________________________________________________________________________
______________________________________________________________________________
______________________________________________ agent to transfer this
Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-5
<PAGE> 83
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
MCN FINANCING III
______% Trust Originated Common Securities
(liquidation amount $50 per Common Security)
MCN FINANCING III, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
_________________ (the "Holder") is the registered owner of common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the ______% Trust Originated Common Securities (liquidation
amount $50 per Common Security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of _______, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder
is entitled to the benefits of the Common Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-1
<PAGE> 84
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of ____________, 1997.
MCN FINANCING III
By:________________________________
Name:
Title: Regular Trustee
A2-2
<PAGE> 85
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a
rate per annum of ______% (the "Coupon Rate") of the stated liquidation amount
of $__ per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing on _______ __, 1997, to Holders of
record fifteen (15) days prior to such payment dates, which payment dates shall
correspond to the interest payment dates on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding beyond the date of maturity of the Debentures (each an
"Extension Period") and, as a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such Extension Period.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarters.
The Common Securities shall be repayable as provided in the
Declaration.
A2-3
<PAGE> 86
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
_______________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to
act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-4
<PAGE> 87
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 88
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4-23
====================================
AMENDED AND RESTATED DECLARATION
OF TRUST
MCN FINANCING IV
Dated as of ________ __, 1997
====================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . 8
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . 9
SECTION 2.3 Reports by the Institutional Trustee . . . . . . . . . . 9
SECTION 2.4 Periodic Reports to Institutional Trustee . . . . . . . . 9
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . 9
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . 10
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . 12
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . 13
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . . . 14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . . 17
SECTION 3.8 Powers and Duties of the Institutional Trustee . . . . . 18
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.10 Certain Rights of Institutional Trustee . . . . . . . . . 22
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . . 25
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities . 25
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . . . 27
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . . . 27
SECTION 4.3 Right to Proceed . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
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Page
----
TRUSTEES
SECTION 5.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.3 Institutional Trustee; Eligibility . . . . . . . . . . . . 30
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.5 Regular Trustees . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.6 Appointment, Removal and Resignation of Trustees . . . . . 32
SECTION 5.7 Vacancies among Trustees . . . . . . . . . . . . . . . . . 34
SECTION 5.8 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.9 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.10 Delegation of Power . . . . . . . . . . . . . . . . . . . . 35
Section 5.11 Merger, Conversion, Consolidation or Succession to Business 35
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . . . 36
SECTION 7.2 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . . . 38
SECTION 9.2 Transfer of Certificates . . . . . . . . . . . . . . . . . 38
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . 39
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . . . . 39
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . 40
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . . . . 40
SECTION 9.7 Definitive Capital Security Certificates . . . . . . . . . 40
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . 41
ARTICLE X
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<PAGE> 4
Page
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LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.5 Outside Businesses . . . . . . . . . . . . . . . . . . . 47
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . . . 48
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee . 53
SECTION 13.2 Representations and Warranties of Delaware Trustee . . . 54
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . . . 56
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . . . 56
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . . . 56
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . 56
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . A2-1
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C FORM OF PURCHASE AGREEMENT . . . . . . . . . . . . . . . C-1
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
iv
<PAGE> 6
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MCN FINANCING IV
________ __, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of ________ __, 1997, by the Trustees (as defined
herein), the Sponsor (as defined herein) and by the holders, from time to time,
of undivided beneficial interests in the assets of the Trust to be issued
pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established MCN
Financing IV (the "Trust"), a trust under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of February 3, 1997 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on February 3, 1997, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE> 7
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above or elsewhere herein have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
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<PAGE> 8
"Capital Securities" means the __% Capital Securities of the
Trust.
"Capital Securities Guarantee" means the guarantee agreement
to be dated as of _______ __, 1997, of the Sponsor in respect of the Capital
Securities.
"Capital Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Capital Security Certificate" means a certificate
representing a Capital Security substantially in the form of Exhibit A-1.
"Certificate" means a Common Security Certificate or a
Security Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Capital
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the "Closing Time" under the Purchase
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement to
be dated as of _______ __, 1997 of the Sponsor in respect of the Common
Securities.
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
3
<PAGE> 9
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Capital Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means MCN Energy Group Inc., a Michigan
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means NBD Bank, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Institutional
Trustee, a specimen certificate for such series of Debentures being Exhibit B.
"Definitive Capital Security Certificates" has the meaning set
forth in Section 9.4.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one
or more Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
4
<PAGE> 10
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of September 1, 1994,
among the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in
Section 3.8(c).
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex
I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Capital Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Capital Securities
or Holders of
5
<PAGE> 11
outstanding Common Securities voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 7.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Purchase Agreement" means the Purchase Agreement for the
offering and sale of Capital Securities in the form of Exhibit C.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
6
<PAGE> 12
"Regular Trustee" has the meaning set forth in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Capital
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee
and the Capital Securities Guarantee.
"Sponsor" means MCN Corporation, a Michigan corporation, or
any successor entity in a merger, consolidation or amalgamation, in its
capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Capital Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as
the context may require, Holders of outstanding Capital Securities or Holders
of outstanding Common Securities voting separately as a class, who are the
record owners of 10% or more of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Dis-
7
<PAGE> 13
tributions to the date upon which the voting percentages are determined) of all
outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this Declaration and shall,
to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Section
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide the Institutional Trustee (i) within 14 days
after each record date for payment of Distribu-
8
<PAGE> 14
tions, a list, in such form as the Institutional Trustee may reasonably
require, of the names and addresses of the Holders of the Securities ("List of
Holders") as of such record date, provided that neither the Sponsor nor the
Regular Trustees, on behalf of the Trust, shall be obligated to provide such
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Institutional Trustee by the Sponsor and
the Regular Trustees on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Institutional Trustee. The Institutional Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity as Paying Agent
(if acting in such capacity) provided that the Institutional Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Institutional Trustee shall comply with its
obligations under Section Section 311(a), 311(b) and 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after _________ of each year, the Institutional
Trustee shall provide to the Holders of the Capital Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Declaration that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
9
<PAGE> 15
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Capital Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Capital Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not be
waivable; or
10
<PAGE> 16
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Capital Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely on
behalf of the Holders of the Capital Securities and only the Holders of the
Capital Securities will have the right to direct the Institutional Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Section Section 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Section Section 316(a)(1)(A)
and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such waiver,
any such default shall cease to exist and any Event of Default with respect to
the Common Securities arising therefrom shall be deemed to have been cured for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture
by the Institutional Trustee at the direction of the Holders of the Capital
Securities, constitutes a waiver of the corresponding Event of Default with
respect to the Capital Securities under this Declaration. Any waiver of an
Event of Default under the Indenture by the Institutional Trustee at the
direction of the Holders of the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of the
corresponding Event of Default under this Declaration with respect to the
Common Securities for all purposes of this Declaration without further act,
vote or consent of the Holders of the Common Securities. The foregoing
provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of
the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture
Act is hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act.
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SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities actually known to a Responsible Officer of the Institutional
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Event of Default as defined in the Indenture, not including
any periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures or in
the payment of any sinking fund installment established for the Debentures, the
Institutional Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Securities.
(b) The Institutional Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 501 and 503 of the
Indenture; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible Officer
of the Institutional Trustee charged with the administration of the
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "MCN Financing IV," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o MCN
Corporation, 500 Griswold Street, Detroit, Michigan 48226. On ten Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
SECTION 3.3 Purpose.
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The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
The Trust will be classified as a grantor trust for United
States federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Capital Securities and the Common
Securities will be the owners of the Trust for United States federal income tax
purposes, and such owners will include directly in their gross income the
income, gain, deduction or loss of the Trust as if the Trust did not exist. By
the acceptance of this Trust neither the Trustees, the Sponsor nor the owners
of the Capital Securities or Common Securities will take any position for
United States federal income tax purposes which is contrary to the
classification of the Trust as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Institutional Trustee, the Regular Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Institutional Trustee Account or as otherwise provided in
this Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
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The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Capital Securities and the
Common Securities in accordance with this Declaration; provided,
however, that the Trust may issue no more than one series of Capital
Securities and no more than one series of Common Securities, and,
provided further, that there shall be no interests in the Trust other
than the Securities, and the issuance of Securities shall be limited
to a simultaneous issuance of both Capital Securities and Common
Securities on each Closing Date;
(b) in connection with the issue and sale of the Capital
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto, pertaining to the Capital
Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register all or part of
the Capital Securities in any State in which the Sponsor has
determined to qualify or register such Capital Securities for
sale;
(iii) execute and file an application, prepared by
the Sponsor, to the New York Stock Exchange, Inc. or any other
national stock exchange or the Nasdaq Stock Market's National
Market for listing upon notice of issuance of any Capital
Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the registration
of the Capital Securities under Section 12(b) of the Exchange
Act; and
(v) execute and enter into the Purchase Agreement
and providing for the sale of the Capital Securities;
(vi) execute and deliver letters, documents or
instruments with DTC;
(c) to acquire the Debentures with the proceeds of the
sale of the Capital Securities and the Common Securities; provided,
however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional
Trustee for the benefit of the
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Holders of the Capital Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee
prompt written notice of the occurrence of a Tax Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes of
Section 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices to
the Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to
bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable compensation
for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by Section
314(a)(4) of the Trust Indenture Act to the Institutional Trustee,
which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary, appropriate,
convenient or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf
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of the Trust in all matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's
valid existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of each
other jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Capital Securities or to
enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying
out the activities of the Trust as set out in this Section 3.6,
including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor trust;
and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated as indebtedness of
the Debenture Issuer for United States federal income tax
purposes,
provided that such action does not adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be filed
with respect to the Trust to be duly prepared and filed by the Regular
Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust
set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Institutional Trustee set forth in
Section 3.8.
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Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall not, engage in any activity other than as required
or authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Institutional Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex I,
(A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is waivable under the Indenture, (C) exercise any right
to rescind or annul any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an insubstantial risk
that for United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by
and held of record in the name of the Institutional Trustee in
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trust for the benefit of the Holders of the Securities. The right, title and
interest of the Institutional Trustee to the Debentures shall vest
automatically in each Person who may hereafter be appointed as Institutional
Trustee in accordance with Section 5.6. Such vesting and cessation of title
shall be effective whether or not conveyancing documents with regard to the
Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its
right, title and interest in the Debentures to the Regular Trustees or to the
Delaware Trustee (if the Institutional Trustee does not also act as Delaware
Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Institutional Trustee Account") in the name of and
under the exclusive control of the Institutional Trustee on behalf of
the Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Institutional Trustee Account and
make payments to the Holders of the Capital Securities and Holders of
the Common Securities from the Institutional Trustee Account in
accordance with Section 6.1. Funds in the Institutional Trustee
Account shall be held uninvested until disbursed in accordance with
this Declaration. The Institutional Trustee Account shall be an
account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness is at least equal to the rating
assigned to the Capital Securities by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Capital
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain special events (as may be
defined in the terms of the Securities) arising from a change in law
or a change in legal interpretation or other specified circumstances
pursuant to the terms of the Securities.
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(d) The Institutional Trustee shall take all actions and
perform such duties as may be specifically required of the Institutional
Trustee pursuant to the terms of the Securities.
(e) The Institutional Trustee shall take any Legal Action
which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act; provided, however, that if the Institutional Trustee fails
to enforce its rights under the Debentures after a holder of Capital Securities
has made a written request, such holder of record of Capital Securities may
institute a legal proceeding against the Debenture Issuer without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or principal on the Debentures
on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then such holder of Capital Securities may
directly institute a proceeding for enforcement of payment to such holder of
the principal of or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Capital Securities of such holder (a
"Direct Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of the holders
of Common Securities will be subrogated to the rights of the holders of Capital
Securities. In connection with such Direct Action, the Debenture Issuer shall
be subrogated to the rights of such holder of Capital Securities with respect
to payments on the Capital Securities under this Declaration to the extent of
any payment made by the Debenture Issuer to such holder of Capital Securities
in such Direct Action. Except as provided in the preceding sentences, the
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
(f) The Institutional Trustee shall not resign as a
Trustee unless either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed
and has accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power
to exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of
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Default actually known to a Responsible Officer of the Institutional Trustee
occurs and is continuing, the Institutional Trustee shall, for the benefit of
Holders of the Securities, enforce its rights as holder of the Debentures
subject to the rights of the Holders pursuant to the terms of such Securities.
(h) Subject to this Section 3.8, the Institutional
Trustee shall have none of the duties, liabilities, powers or the authority of
the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth
in this Section 3.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Institutional Trustee
shall not take any action that is inconsistent with the purposes and functions
of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee.
(a) The Institutional Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed
to relieve the Institutional Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the
Institutional Trustee shall be determined solely by the
express provisions of this Declaration and the Institutional
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall be
read into this Declaration against the Institutional Trustee;
and
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(B) in the absence of bad faith on the part of
the Institutional Trustee, the Institutional Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional
Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Institutional
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Institutional Trustee Account shall be to deal with such property
in a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and
limitations on liability afforded to the Institutional Trustee under
this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or
liability for or with respect to the value, genuineness,
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existence or sufficiency of the Debentures or the payment of any taxes
or assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Sponsor. Money held by the Institutional Trustee need not be
segregated from other funds held by it except in relation to the
Institutional Trustee Account maintained by the Institutional Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall
be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see to
any recording, filing or registration of any instrument (including any
financing or continuation statement or
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any filing under tax or securities laws) or any rerecording, refiling
or registration thereof;
(v) the Institutional Trustee may consult with counsel or
other experts and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Institutional
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder, unless such
Holder shall have provided to the Institutional Trustee security and
indemnity, reasonably satisfactory to the Institutional Trustee,
against the costs, expenses (including attorneys' fees and expenses
and the expenses of the Institutional Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as
may be requested by the Institutional Trustee provided, that
, nothing contained in this Section 3.10(a)(vi) shall be taken to
relieve the Institutional Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or attorneys
and the Institutional Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its
agents hereunder shall bind the Trust and the Holders of
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the Securities, and the signature of the Institutional Trustee or its
agents alone shall be sufficient and effective to perform any such
action and no third party shall be required to inquire as to the
authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Institutional Trustee (i) may request
instructions from the Holders of the Securities which instructions may
only be given by the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on
or acting in or accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration; and
(xii) the Institutional Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Institutional Trustee to perform any act
or acts or exercise any right, power, duty or obligation conferred or imposed
on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts, or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Institutional Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or
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the Institutional Trustee described in this Declaration. Except as set forth
in Section 5.2, the Delaware Trustee shall be a Trustee for the sole and
limited purpose of fulfilling the requirements of Section 3807 of the Business
Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, a majority of or, if
there are only two, any Regular Trustee or, if there is only one, such Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for [forty-five (45)] years from the
Closing Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular
Trustees or, if there are more than two, a majority of the Regular Trustees and
without the consent of the Holders of the Securities, the Delaware Trustee or
the Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity") either:
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(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the Capital
Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Capital Securities
rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of
the Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification
of issuance, on any national securities exchange or with any other
organization on which the Capital Securities are then listed or
quoted;
(iv) such merger, consolidation, amalgamation or replacement
does not cause the Capital Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical
rating organization;
(v) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities) in
any material respect (other than with respect to any dilution of such
Holders' interests in the Capital Securities as a result of such
merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of
the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new
entity); and
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
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Successor Entity will be required to register as an Investment
Company;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Capital Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Capital Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be
executed and filed by the Trust, as the Sponsor deems necessary or
advisable in order to comply with the applicable laws of any such
States;
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(c) to prepare for filing by the Trust an application to
the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Capital Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the Capital Securities under Section 12(b) of the
Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement
providing for the sale of the Capital Securities.
SECTION 4.3 Right to Proceed.
The Sponsor acknowledges the rights of Holders to institute a
Direct Action as set forth in Section 3.8(e) hereto.
SECTION 4.4 Expenses.
In connection with the offering, sale and issuance of the
Debentures to the Institutional Trustee and in connection with the sale of the
Securities by the Trust, the Debenture Issuer, in its capacity as borrower with
respect to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale
and issuance of the Debentures, including commissions to the underwriter
payable pursuant to the Purchase Agreement and compensation of the Trustee
under the Indenture in accordance with the provisions of the Indenture;
(b) be responsible for and shall pay all debts and
obligations (other than with respect to the Securities) and all costs and
expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization, maintenance and dissolution of the Trust, the
offering, sale and issuance of the Securities (including commissions to the
underwriters in connection therewith), the fees and expenses (including
reasonable counsel fees and expenses) of the Institutional Trustee, the
Delaware Trustee and the Regular Trustees (including any amounts payable under
Article X of this Declaration), the costs and expenses relating to the
operation of the Trust, including, without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets and the enforcement
by the Institutional Trustee of the rights of the Holders of the Capital
Securities);
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(c) be primarily liable for any indemnification obligations
arising with respect to this Declaration; and
(d) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
The Debenture Issuer's obligations under this Section 4.4
shall be for the benefit of, and shall be enforceable by, any person to whom
such debts, obligations, costs, expenses and taxes are owed (a "Creditor")
whether or not such Creditor has received notice hereof. Any such Creditor may
enforce the Debenture Issuer's obligations under this Section 4.4 directly
against the Debenture Issuer and the Debenture Issuer irrevocably waives any
right of remedy to require that any such Creditor take any action against the
Trust or any other Person before proceeding against the Debenture Issuer. The
Debenture Issuer agrees to execute such additional agreements as may be
necessary or desirable in order to give full effect to the provisions of this
Section 4.4.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be three(3), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; provided,
however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the "Delaware
Trustee"); (2) there shall be at least one Trustee who is an employee
or officer of, or is affiliated with the Sponsor (a "Regular
Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture
under the Trust Indenture Act, and such Trustee may also serve as
Delaware Trustee if it meets the applicable requirements.
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SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law,
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable
law, then the Institutional Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
(c) The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall
act as Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 5.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
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(b) If at any time the Institutional Trustee shall cease
to be eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Institutional Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in Section 310(b) of the
Trust Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee shall be deemed to
be specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Regular Trustees.
The initial Regular Trustees shall be:
Daniel L. Schiffer
Sebastian Coppola
c/o MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
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(b) Unless otherwise determined by the Regular Trustees,
and except as otherwise required by the Business Trust Act or applicable law,
any Regular Trustee is authorized to execute on behalf of the Trust any
documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that, the registration
statement referred to in Section 3.6, including any amendments thereto, shall
be signed by a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed
or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall
not be removed in accordance with Section 5.6(a) until a Successor
Institutional Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with this Section 5.6(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
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(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Institutional Trustee and delivered
to the Trust, the Sponsor and the resigning Institutional
Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their
best efforts to promptly appoint a Successor Delaware Trustee or Successor
Institutional Trustee as the case may be if the Institutional Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Institutional Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation or removal, the Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Institutional Trustee Successor
Delaware Transfer. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Institutional
Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Institutional Trustee
or successor Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees shall be
conclusive evi-
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dence of the existence of such vacancy. The vacancy shall be filled
with a Trustee appointed in accordance with Section 5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of
the Regular Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Regular Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any regis-
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tration statement or amendment thereto filed with the Commission, or making
any other governmental filing; and
(b) the Regular Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Institutional Trustee or the Delaware Trustee, as
the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of interest (including
Compounded Interest (as defined in the Indenture) and Additional Interest (as
defined in the Indenture)), premium and/or principal on the Debentures held by
the Institutional Trustee (the amount of any such payment being a "Payment
Amount"), the Institutional Trustee shall and is directed, to the extent funds
are available for that purpose, to make a distribution (a "Distribution") of
the Payment Amount to Holders.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall, on behalf of the Trust,
issue one class of preferred securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Capital Securities") and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities.") The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Capital Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the
Trust by a Regular Trustee. Such signature shall be the manual signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the Regular Trustees of the
Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage.
(c) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or
a Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
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SECTION 7.2 Paying Agent.
In the event that the Capital Securities are not in book-entry
only form, the Trust shall maintain in the borough of Manhattan, City of New
York, State of New York, an office or agency where the Capital Securities may
be presented for payment ("Paying Agent"), and any such Paying Agent shall
comply with Section 317(b) of the Trust Indenture Act. The Trust may appoint
the Paying Agent and may appoint one or more additional paying agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent. The Trust may change any Paying Agent without prior
notice to any Holder. The Trust shall notify the Institutional Trustee of the
name and address of any Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Paying Agent, the Institutional
Trustee shall act as such. The Trust or any of its Affiliates may act as
Paying Agent. The Trust shall initially act as Paying Agent for the Capital
Securities and the Common Securities.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) on ________, 2042, the expiration of the term of the
Trust,
(ii) upon the bankruptcy of the Sponsor;
(iii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor; the filing of a certificate of
cancellation with respect to the Trust after having obtained the
consent of a majority in liquidation amount of the Securities voting
together as a single class to file such certificate of cancellation or
the revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iv) upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor or the Trust;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities; or
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(vi) before the issuance of any Securities, with the consent
of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 8.1(a) and upon completion of the winding-up of
the Trust and its termination, the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities shall
be freely transferable.
(c) The Sponsor may not transfer the Common Securities.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
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SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust shall
have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Capital
Securities, the Capital Securities Certificates, on original issuance, will be
issued in the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificate(s)
shall initially be registered on the books and records of the Trust in the name
of Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner
will receive a definitive Preferred Security Certificate representing such
Preferred Security Beneficial Owner's interests in such Global Certificate(s),
except as provided in Section 9.7. Unless and until definitive, fully
registered Preferred Security Certificates (the "Definitive Preferred Security
Certificates") have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Certificate(s)
and receiving approvals, votes or consents hereunder) as the Holder of
the Capital Securities and the sole holder of the Global
Certificate(s) and shall have no obligation to the Preferred Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions
of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial
Owners shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants and receive and transmit payments of
Distributions on the
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Global Certificates to such Clearing Agency Participants. DTC will
make book entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, unless and until
Definitive Preferred Security Certificates shall have been issued to the
Preferred Security Beneficial Owners pursuant to Section 9.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Preferred Security Holders to the Clearing Agency, and shall have
no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Capital Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services
as securities depositary with respect to the Capital Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with
the Sponsor to terminate the book entry system through the Clearing
Agency with respect to the Capital Securities,
then:
(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect
to such Capital Securities; and
(d) upon surrender of the Global Certificate(s) by the
Clearing Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in
relying on,
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said instructions of the Clearing Agency. The Definitive Preferred
Security Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may
have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees
may deem appropriate, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Capital Securities may be
listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to
the Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees such
security or indemnity as may be required by them to keep each of them
harmless.
then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration,
the Securities Guarantees and the terms of the Securities, the Sponsor shall
not be:
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(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust;
and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable
for all of the debts and obligations of the Trust (other than with respect to
the Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Capital Securities shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall
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not be liable to the Trust or to any other Covered Person for its good faith
reliance on the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person
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who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circum- stances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(includ-
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ing attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by
the Debenture Issuer in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section
10.4(a). Notwithstanding the foregoing, no advance shall be made by
the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
10.4(a) shall not be deemed exclusive of any
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other rights to which those seeking indemnification and advancement of
expenses may be entitled under any agreement, vote of stockholders or
disinterested directors of the Debenture Issuer or Preferred Security
Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 10.4(a)
shall be deemed to be provided by a contract between the Debenture
Issuer and each Company Indemnified Person who serves in such capacity
at any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Institutional Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Institutional Trustee and the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees, representatives,
custodians, nominees or agents of the Institutional Trustee and the Delaware
Trustee (each of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any loss, liability or expense incurred
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without gross negligence( or, in the case of the Institutional Trustee,
pursuant to Section 3.9, negligence) or bad faith on its part, arising out of
or in connection with the acceptance or administration or the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
10.4(b) shall survive the satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated
to present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Institutional Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect
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in reasonable detail, each transaction of the Trust. The books of account
shall be maintained on the accrual method of accounting, in accordance with
generally accepted accounting principles, consistently applied. The Trust
shall use the accrual method of accounting for United States federal income tax
purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm
of independent certified public accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be duly prepared
and delivered to each of the Holders of Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the
Code to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Regular Trustees shall cause to be duly prepared
and filed with the appropriate taxing authority, an annual United States
federal income tax return, on a Form 1041 or such other form required by United
States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Institutional Trustee shall be
made directly to the Institutional Trustee Account and no other funds of the
Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Institutional Trustee shall designate the
signatories for the Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions
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and, unless an exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to withhold and pay
over any amounts to any authority with respect to distributions or allocations
to any Holder, the amount withheld shall be deemed to be a distribution in the
amount of the withholding to the Holder. In the event of any claimed over
withholding, Holders shall be limited to an action against the applicable
jurisdiction. If the amount required to be withheld was not withheld from
actual Distributions made, the Trust may reduce subsequent Distributions by the
amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or
by any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two
Regular Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Institutional Trustee, the Institutional Trustee shall have first
received:
(A) an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted
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by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to
the Sponsor or the Trust) that such amendment is permitted by,
and conforms to, the terms of this Declaration (including the
terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Institutional Trustee in contravention of the
Trust Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) at such time after the Trust has issued any
Securities that remain outstanding, any amendment that would adversely affect
the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the
terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common Securities
and;
(f) the rights of the holders of the Common Securities
under Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration may
be amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
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(iii) add to the covenants, restrictions or obligations of
the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change
in interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the right, preferences or
privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the
Amended Declaration to such extent as may be necessary.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Regular Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration,
the terms of the Securities or the rules of any stock exchange on which the
Capital Securities are listed or admitted for trading. The Regular Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the Regular Trustees one or more
calls in a writing stating that the signing Holders of Securities wish to call
a meeting and indicating the general or specific purpose for which the meeting
is to be called. Any Holders of Securities calling a meeting shall specify in
writing the Security Certificates held by the Holders of Securities exercising
the right to call a meeting and only those Securities specified shall be
counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms
of the Securities, the following provisions shall apply to meetings of Holders
of Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7 days
and not more than 60 days before the date of such meeting. Whenever a
vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which the Capital Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders
of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities owning not less
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than the minimum amount of Securities in liquidation amount that would
be necessary to authorize or take such action at a meeting at which
all Holders of Securities having a right to vote thereon were present
and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who have
not consented in writing. The Regular Trustees may specify that any
written ballot submitted to the Security Holder for the purpose of
taking any action without a meeting shall be returned to the Trust
within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law
of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall
be conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing rules
of any stock exchange on which the Capital Securities are then listed
or trading, otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings
of Holders of Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
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ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Institutional Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Institutional
Trustee's acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the
Institutional Trustee of the Declaration has been duly authorized by
all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the
Institutional Trustee, and it constitutes a legal, valid and binding
obligation of the Institutional Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) the execution, delivery and performance of the
Declaration by the Institutional Trustee does not conflict with or
constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
(e) the Institutional Trustee, pursuant to this
Declaration, shall hold legal title and a valid ownership interest in
the Debentures.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
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The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform
its obligations under the Certificate of Trust and the Declaration.
The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders of the
Securities):
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MCN Financing IV
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may
give notice of to the Holders of the Securities):
(c) if given to the Institutional Trustee, at its
Corporate Trust Office to the attention of Corporate Trust
Administration (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice to the
Trust):
MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
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It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
______________________________
Daniel L. Schiffer, as Regular
Trustee
_____________________________
Sebastian Coppola, as Regular
Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By:__________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Institutional Trustee
By:__________________________
Name:
Title:
MCN Energy Group Inc., as
Sponsor
By:__________________________
Name: Sebastian Coppola
Title: Vice President
and Treasurer
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ANNEX I
TERMS OF
___% CAPITAL SECURITIES
___% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of ________ __, 1997 (as amended from time to
time, the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Capital Securities. ________ Capital Securities of
the Trust with an aggregate liquidation amount with respect to the assets of
the Trust of ________ ($________) and a liquidation amount with respect to the
assets of the Trust of $1,000 per capital security, are hereby designated for
the purposes of identification only as "___% Capital Securities(SM)" (the
"Capital Securities"). The Preferred Security Certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Capital Securities are listed.
(b) Common Securities. ______ Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of ______________ ($___________) and a liquidation amount with respect to
the assets of the Trust of $1,000 per common security, are hereby designated
for the purposes of identification only as "___% Trust Originated Common
Securities" (the "Common Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially in the form of Exhibit
A-2 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
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2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of ___% (the "Coupon Rate") of the stated liquidation
amount of $1,000 per Security, such rate being the rate of interest payable on
the Debentures to be held by the Institutional Trustee. Distributions in
arrears for more than one payment period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes such cash distributions and
any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full semi-annual Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full
semi-annual Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 30 day month.
(b) Distributions on the Securities will be cumulative,
will accrue from __________, and will be payable semi-annual in arrears, on
__________, and _____________ of each year, commencing on _____________, except
as otherwise described below.
(c) The Debenture Issuer has the right under the Indenture to
defer payments of interest by extending the interest payment period from time
to time on the Debentures for a period not exceeding 10 consecutive semi-annual
periods or extend beyond the maturity of the Debentures (each an "Extension
Period"), during which Extension Period no interest shall be due and payable on
the Debentures, provided that no Extension Period shall last beyond the date of
maturity of the Debentures. As a consequence of such deferral, Distributions
on the Securities will also be deferred. Despite such deferral, semi-annual
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded semi-annually during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further extend such Extension Period; provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed 10 consecutive semi-annual periods or extend
beyond the maturity dates of the Debentures. Payments of accrued Distributions
will be payable to Holders as they appear on the books and records of the Trust
on the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
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(d) In the event that the Debenture Issuer exercises the
right under the Indenture to defer payments of interest on the Debentures, then
(i) the Debenture Issuer shall not declare or pay any dividend on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock other than (a)
purchases or acquisitions of shares of its common stock in connection with the
satisfaction by the Debenture Issuer of its obligations under any employee
benefit plans or the satisfaction by MCN of its obligations pursuant to any
contract or security outstanding on the date of such exercise requiring MCN to
purchase shares of MCN's Common Stock, (b) as a result of a reclassification of
the Debenture Issuer's capital stock or the exchange or conversion of one class
or series of the Debenture Issuer's capital stock for another class or series
of the Debenture Issuer's capital stock or (c) the purchase of fractional
interests in shares of the Debenture Issuer's capital stock pursuant to the
conversion or exchange provisions of such Debenture Issuer's capital stock or
the security being converted or exchanged, (ii) the Debenture Issuer shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Debenture Issuer that
rank pari passu with or junior to such Debentures, or any other junior
subordinated debentures issued by MCN and (iii) the Debenture Issuer shall not
make any guarantee payments with respect to the foregoing.
(e) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
relevant record dates which shall be the ________ or ________ immediately
preceding the relevant Payment date. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Capital Securities will be made as described under the heading
"Description of the Capital Securities -- Book-Entry Only Issuance -- The
Depository Trust Company" in the Prospectus Supplement dated ________ __, 1997,
to the Prospectus dated _______ __, 1997 (together, the "Prospectus"), of the
Trust included in the Registration Statement on Form S-3 of the Sponsor, the
Trust and certain other business trusts. The relevant record dates for the
Common Securities shall be the same record date as for the Capital Securities.
If the Capital Securities shall not continue to remain in book-entry only form,
the relevant record dates for the Capital Securities, shall conform to the
rules of any securities exchange on which the securities are listed and, if
none, shall be selected by the Regular Trustees, which dates shall be at least
one Business Day but less than 60 Business Days before the relevant payment
dates, which payment dates correspond to the interest payment dates on the
Debentures. Distributions payable on any Securities that are not punctually
paid on any Distribution payment date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures, will cease to be payable
to the Person in whose name such Securi-
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<PAGE> 66
ties are registered on the relevant Payment date, and such defaulted
Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made
on such date.
(f) In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distributed Pro Rata (as defined herein) among the Holders of the
Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination, as the case may be, will be
entitled to receive Pro Rata out of the assets of the Trust available for
distribution to Holders after satisfaction of liabilities of creditors an
amount equal to the aggregate of the stated liquidation amount of $1,000 per
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such Securities.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in
part, whether at maturity or upon redemption (either at the option of the
Debenture Issuer or pursuant to a Tax Event as described below), the proceeds
from such repayment or payment shall be simultaneously applied to redeem
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at the redemption
price for the Debentures payable in cash (the "Redemption Price"). Holders
will be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to
be so redeemed, the Common Securities and the Capital Securi-
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ties will be redeemed Pro Rata and the Capital Securities to be redeemed will
be as described in Section 4(h)(ii) below.
(c) The Debentures are redeemable, in whole or in part, at the
option of the Debenture Issuer, on or after ________, at a redemption price
equal to the percentage of the principal amount of the Debentures specified
below, plus, in each case, accrued and unpaid interest thereon to the date of
such redemption (the "Optional Redemption Price") if redeemed during the
12-month period beginning _________, of the years indicated below:
YEAR PERCENTAGE
---- ----------
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__. . . . . . . . . . . . . . . . . . . . . . . . . ______
20__ and thereafter . . . . . . . . . . . . . . . . . ______
(d) If a Tax Event (as defined below) shall occur and be
continuing, the Debenture Issuer may at its option redeem the Debentures in
whole (but not in part) at any time prior to _________, and within 90 days of
the occurrence of such Tax Event, at a redemption price equal to the greater of
(i) 100% of the principal amount of such Debentures or (ii) the sum, as
determined by a Quotation Agent, of the present values of the principal amount
and premium payable as part of the redemption price with respect to an optional
redemption of such Debentures on _________, together with scheduled payments of
interest from the redemption date to _________, (the "Remaining Life"), in each
case discounted to the redemption date on a semi-annual basis (assuming a
360-day year consisting of 30-day months) at the Adjusted Treasury Rate, plus,
in each case, accrued interest thereon to the date of redemption.
(e) The following terms used herein shall be defined as
follows:
"Adjusted Treasury Rate" means, with respect to any redemption
date, the rate per annum equal to (i) the yield under the heading which
represents the average for the immediately prior week, appearing in the most
recently published statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Federal Reserve Board and which
establishes yields on actively traded United States Treasury
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<PAGE> 68
securities adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Remaining Life (if no
maturity is within three months before or after the Remaining Life, yields for
the two published maturities most closely corresponding to the Remaining Life
shall be determined and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight- line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date, in each case
calculated on the third Business Day preceding the redemption date, plus in
each case (a) ___% if such redemption date occurs on or prior to January 31,
1998 and (b) ___% in all other cases.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
Remaining Life of the Debentures to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity with the
Remaining Life of the Debentures. If no United States Treasury security has a
maturity which is within a period from three months before to three months
after __________, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Adjusted
Treasury Rate shall be interpolated or extrapolated on a straight line basis,
rounding to the nearest month using such securities.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principle amount)
on the third Business Day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such Business Day, (a) the
average of five Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (b) if the Debenture Trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Debenture Trustee after consultation with the Debenture
Issuer.
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"Reference Treasury Dealer" means: (i) Merrill Lynch
Government Securities, Inc. and its respective successors; provided, however,
that if the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Debenture Issuer
shall substitute therefor another Primary Treasury Dealer; and (ii) any other
Primary Treasury Dealer selected by the Debenture Trustee after consultation
with the Debenture Issuer.
"Reference Treasury Dealer Quotations" means, with respect to
each reference Treasury Dealer and any redemption date, the average, as
determined by the Debenture Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Debenture Trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day
Preceding such redemption date.
"Tax Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent tax counsel
experienced in such matters to the effect that as a result of (a) any amendment
to, clarification of or change (including any announced prospective change) in,
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein affecting taxation, or (b)
any amendment to or change in an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of
any judicial decision or regulatory determination on or after such date), there
is more than an insubstantial risk that interest payable to the Trust on the
Debentures would not be deductible by the Debenture Issuer for United States
federal income tax purposes.
(f) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all semi-annual Distribution periods terminating on or before
the date of redemption.
[(g) If a partial redemption of the Debentures would result in
the delisting of the Capital Securities issued by the Trust from any national
securities exchange or other organization on which the Capital Securities are
then listed, the Debenture Issuer shall not be permitted to effect such partial
redemption and may only redeem the Debentures in whole.]
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depository") or its nominee (or any successor Clearing Agency or its
nominee), as the record
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Holder of the Capital Securities, will receive a registered global certificate
or certificates representing the Debentures to be delivered upon such
distribution and any certificates representing Securities, except for
certificates representing Capital Securities held by the Depository or its
nominee (or any successor Clearing Agency or its nominee), will be deemed to
represent beneficial interests in the Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on such Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissue.
(h) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail
to each Holder of Securities to be redeemed or exchanged not fewer
than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Debentures. For purposes of the
calculation of the date of redemption or exchange and the dates on
which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in
the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Capital Securities, it being
understood that, in respect of Capital Securities registered in the
name of and held of record by the Depository or its nominee (or any
successor Clearing Agency or its nominee) or any nominee, the
distribution of the proceeds of such redemption will be made to each
Clearing Agency Participant (or Person on whose behalf such nominee
holds such securities) in accordance with the procedures applied by
such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice, which notice may only be issued if
the Debentures are redeemed as set out in this Section 4 (which notice
will be irrevocable), then
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(A) while the Capital Securities are in book-entry only form, with
respect to the Capital Securities, by 12:00 noon, New York City time,
on the redemption date, provided that the Debenture Issuer has paid
the Institutional Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, the
Institutional Trustee will deposit irrevocably with the Depository or
its nominee (or successor Clearing Agency or its nominee) funds
sufficient to pay the applicable Redemption Price with respect to the
Capital Securities and will give the Depository irrevocable
instructions and authority to pay the Redemption Price to the Holders
of the Capital Securities, and (B) with respect to Capital Securities
issued in definitive form and Common Securities, provided that the
Debenture Issuer has paid the Institutional Trustee a sufficient
amount of cash in connection with the related redemption or maturity
of the Debentures, the Institutional Trustee will pay the relevant
Redemption Price to the Holders of such Securities by check mailed to
the address of the relevant Holder appearing on the books and records
of the Trust on the redemption date. If a Redemption/Distribution
Notice shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable,
distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such
Securities to receive the Redemption Price, but without interest on
such Redemption Price. Neither the Regular Trustees nor the Trust
shall be required to register or cause to be registered the transfer
of any Securities that have been so called for redemption. If any
date fixed for redemption of Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that,
if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any
Securities is improperly withheld or refused and not paid either by
the Institutional Trustee or by the Sponsor as guarantor pursuant to
the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue from the original redemption date to the
actual date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating
the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in re-
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spect of the Capital Securities, the Depository or its nominee (or any
successor Clearing Agency or its nominee) if the Global Certificates
have been issued or, if Definitive Preferred Security Certificates
have been issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws), provided the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any of
its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Capital
Securities, voting separately as a class may direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with
respect to the Debentures, (ii) waive any past default and its consequences
that is waivable under the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and
payable, provided, however, that, where a consent under the Indenture would
require the consent or act of the Holders of greater than a majority of the
Holders in principal amount of Debentures affected thereby (a "Super
Majority"), the Institutional Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Capital Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
The Institutional Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Capital Securities. Other than with
respect to directing the time, method and place of conducting any remedy
available to the Institutional Trustee or the Debenture Trustee as set forth
above, the Institutional Trustee shall not take any action in accordance with
the directions of the Holders of the Capital Securities under this paragraph
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax
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the Trust will not be classified as other than a grantor trust on account of
such action. If the Institutional Trustee fails to enforce its rights under
the Declaration, any Holder of Capital Securities may institute a legal
proceeding directly against any person to enforce the Institutional Trustee's
rights under the Declaration without first instituting a legal proceeding
against the Institutional Trustee or any other Person. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Debenture Issuer to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Capital Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Capital Securities of such holder on or after the respective due date
specified in the Debentures. Except as provided in the preceding sentence, the
Holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may
be given at a separate meeting of Holders of Capital Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Capital Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities
will be required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Capital Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
68
<PAGE> 74
(a) Except as provided under Sections 6(b), (c) and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Capital Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under Section 513 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable, provided that,
where a consent or action under the Indenture would require the consent or act
of the Holders of greater than a majority in principal amount of Debentures
affected thereby (a "Super Majority"), the Institutional Trustee may only give
such consent or take such action at the written direction of the Holders of at
least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Pursuant to this Section 6(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a vote
of the Holders of the Capital Securities. Other than with respect to directing
the time, method and place of conducting any remedy available to the
Institutional Trustee or the Debenture Trustee as set forth above, the
Institutional Trustee shall not take any action in accordance with the
directions of the Holders of the Common Securities under this paragraph unless
the Institutional Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights under the Declaration, any
Holder of Common Securities may institute a legal proceeding directly against
any Person to enforce the Institutional Trustee's rights under the Declaration,
without first instituting a legal proceeding against the Institutional Trustee
or any other Person.
69
<PAGE> 75
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities
voting together as a single class, will be entitled to vote on such amendment
or proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the Holders of at
least a Majority in liquidation amount of the Securities, affected thereby;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Capital Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee
as the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination on the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders of
the Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation
70
<PAGE> 76
amount of the Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of the
holders of greater than a majority in aggregate principal amount of the
Debentures (a "Super Majority"), the Institutional Trustee may only give such
consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding;
provided, further, that the Institutional Trustee shall not take any action in
accordance with the directions of the Holders of the Securities under this
Section 7(b) unless the Institutional Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default under the Declaration has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to each Holder of
the Capital Securities pro rata according to the aggregate liquidation amount
of Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Capital Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Capital Securities
Guarantee and the Common Securities Guarantee,
71
<PAGE> 77
respectively, including the subordination provisions therein and to the
provisions of the Indenture.
11. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights
to subscribe for any additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.
72
<PAGE> 78
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Capital Securities registered in
the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
Certificate Number Number of Capital Securities
CUSIP NO. [ ]
Certificate Evidencing Capital Securities
of
MCN FINANCING IV
____% Capital Securities(SM)
(liquidation amount $1,000 per Preferred Security)
MCN FINANCING IV, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of preferred securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the _____% Capital Securities (liquidation amount $1,000 per
Pre-
A1-1
<PAGE> 79
ferred Security) (the "Capital Securities"). The Capital Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of _______, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Capital Securities Guarantee to
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Capital Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this __ day of ________, 1997.
MCN FINANCING IV
By:________________________________
Name:
Title: Regular Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
Dated _________, 1997
Wilmington Trust Company,
as Institutional Trustee
By ___________________________
Authorized Signatory
[FORM OF REVERSE OF SECURITY]
A1-2
<PAGE> 80
Distributions payable on each Preferred Security will be
fixed at a rate per annum of ______% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Preferred Security, such rate being the rate
of interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears for more than one semi-annual will bear interest
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions" as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full semi-annual
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full semi-annual Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 180 day semi-annual period.
Except as otherwise described below, distributions on the
Capital Securities will be cumulative, will accrue from the date of original
issuance and will be payable semi-annually in arrears, on _________ and
___________ of each year, commencing on ______ __, 1997, which payment dates
shall correspond to the interest payment dates on the Debentures. The
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding 10 consecutive semi-annual periods (each
an "Extension Period") provided that no Extension Period shall last beyond the
date of maturity of the Debentures and as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, semi-annual
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded semi-annually during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further extend such Extension Period; provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed 10 consecutive semi-annual periods or extend
beyond the maturity of the Debentures. Payments of accrued Distributions will
be payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
Capital Securities shall be redeemable as provided in the
Declaration.
------------------
A1-3
<PAGE> 81
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________agent to transfer
this Capital Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)
Signature Guarantee*: ___________________________________
- ---------------
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
A1-4
<PAGE> 82
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
MCN FINANCING IV
______% Trust Originated Common Securities
(liquidation amount $1000 per Common Security)
MCN FINANCING IV, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
_________________ (the "Holder") is the registered owner of common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the ______% Trust Originated Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of _______, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder
is entitled to the benefits of the Common Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-1
<PAGE> 83
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day of
____________, 1997.
MCN FINANCING IV
By:________________________________
Name:
Title: Regular Trustee
A2-2
<PAGE> 84
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a
rate per annum of ______% (the "Coupon Rate") of the stated liquidation amount
of $1,000 per Common Security, such rate being the rate of interest payable on
the Debentures to be held by the Institutional Trustee. Distributions in
arrears for more than one semi-annual period will bear interest thereon
compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions" as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full semi-annual
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 180-day semi-annual periods.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semi-annually in arrears, on ________ and _________ of each
year, commencing on _______ __, 1997, to Holders of record fifteen (15) days
prior to such payment dates, which payment dates shall correspond to the
interest payment dates on the Debentures. The Debenture Issuer has the right
under the Indenture to defer payments of interest by extending the interest
payment period from time to time on the Debentures for a period not exceeding
10 consecutive semi-annual periods (each an "Extension Period"), provided that
no Extension Period shall last beyond the date of maturity of the Debentures
and as a consequence of such deferral, Distributions will also be deferred.
Despite such deferral, semi-annual Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 10 consecutive
semi-annual periods or extend beyond the maturity date of the Debentures.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
A2-3
<PAGE> 85
The Common Securities shall be redeemable as provided in the
Declaration.
A2-4
<PAGE> 86
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Common Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
______________________________________________________________agent to transfer
this Common Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee*: ___________________________________
- ---------------
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
A2-5
<PAGE> 87
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 88
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4-24
====================================
________ SUPPLEMENTAL INDENTURE
Dated as of _______, 199_
between
MCN CORPORATION,
AS ISSUER
and
NBD BANK
AS TRUSTEE
=====================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. Designation and Principal Amount . . . . . . . . . . . . 3
SECTION 2.2. Maturity . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3. Form and Payment . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4. Global Debenture . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5. Interest . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1. Special Event Redemption . . . . . . . . . . . . . . . . 8
SECTION 3.2. Optional Redemption by Company . . . . . . . . . . . . . 9
SECTION 3.3. No Sinking Fund . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period . . . . . . . . . . 10
SECTION 4.2. Notice of Extension . . . . . . . . . . . . . . . . . . . 11
SECTION 4.3. Limitation of Transactions . . . . . . . . . . . . . . . 11
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses . . . . . . . . . . . . . . . . . . . 12
SECTION 5.2 Payment Upon Resignation or Removal . . . . . . . . . . . . 13
ARTICLE VI
NOTICE
SECTION 6.1 Notice by the Company . . . . . . . . . . . . . . . . . . 13
ARTICLE VII
COVENANT TO LIST ON EXCHANGE
SECTION 7.1. Listing on an Exchange . . . . . . . . . . . . . . . . . . 15
ARTICLE VIII
FORM OF DEBENTURE
SECTION 8.1. Form of Debenture . . . . . . . . . . . . . . . . . . . 15
i
<PAGE> 3
Page
----
ARTICLE IX
ORIGINAL ISSUE OF DEBENTURES
SECTION 9.1. Original Issue of Debentures . . . . . . . . . . . . . . 27
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Ratification of Indenture . . . . . . . . . . . . . . . . 27
SECTION 10.2. Trustee Not Responsible for Recitals . . . . . . . . . . 28
SECTION 10.3. Governing Law . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10.4. Separability . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . 28
ii
<PAGE> 4
________ SUPPLEMENTAL INDENTURE, dated as of ________, 1997 (the "______
Supplemental Indenture"), between MCN Corporation, a corporation duly organized
and existing under the laws of the State of Michigan doing business as MCN
Energy Group Inc., having its principal office at 500 Griswold Street, Detroit,
Michigan 48226, (the "Company"), and NBD Bank as trustee (the "Trustee").
WHEREAS, the Company executed and delivered the indenture dated as of
September 1, 1994 (the "Base Indenture") as supplemented by a first
supplemental indenture, dated April 17, 1996 (the "First Supplemental
Indenture") (the Base Indenture as so supplemented the "Indenture), to the
Trustee to provide for the future issuance of the Company's unsecured
debentures, notes or other evidence of indebtedness (the "Securities"), to be
issued from time to time in one or more series as might be determined by the
Company under the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Securities to be known as
its ___% Junior Subordinated Debentures due ____ (the "Debentures"), the form
and substance of such Debentures and the terms, provisions and conditions
thereof to be set forth as provided in the Indenture and this ______
Supplemental Indenture;
WHEREAS, MCN Financing II, a Delaware statutory business trust (the
"Trust"), has offered to the public $_______ million aggregate liquidation
amount of its ___% Trust Originated Preferred Securities (the "Preferred
Securities"), representing undivided beneficial interests in the assets of the
Trust and proposes to invest the proceeds from such offering, together with the
proceeds of the issuance and sale by the Trust to the Company of $______
million aggregate liquidation amount of its ___% Trust Originated Common
Securities (the "Common Securities" and together with the Preferred Securities,
the "Trust Securities"), in $________ million aggregate principal amount of the
Debentures; and
WHEREAS, the Company has requested that the Trustee execute and deliver this
_______ Supplemental Indenture and all requirements necessary to make this
_______ Supplemental Indenture a valid instrument in accordance with its terms,
and to make the Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed, and the execution and delivery of this _______ Supplemental
Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for
<PAGE> 5
the purpose of setting forth, as provided in the Indenture, the form and
substance of the Debentures and the terms, provisions and conditions thereof,
the Company covenants and agrees with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used in this
_______ Supplemental Indenture;
(b) a term defined anywhere in this _______ Supplemental Indenture has the
same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) headings are for convenience of reference only and do not affect
interpretation;
(e) the following terms have the meanings given to them in the
Declaration: (i) Business Day; (ii) Clearing Agency; (iii) Delaware Trustee;
(iv) Depositary; (v) Dissolution Tax Opinion; (vi) No Recognition Opinion;
(vii) Preferred Security Certificate; (viii) Pricing Agreement; (ix)
Institutional Trustee; (x) Regular Trustees; (xi) Special Event; (xii) Tax
Event; (xiii) Investment Company Event; and (xiv) Underwriting Agreement;
(f) the following terms have the meanings given to them in this Section
1.1(f):
"Additional Interest" shall have the meaning set forth in Section 2.5.
"Compounded Interest" shall have the meaning set forth in Section 4.1.
"Declaration" means the Amended and Restated Declaration of Trust of MCN
Financing II, a Delaware statutory business trust, dated as of ________, 1997.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is
2
<PAGE> 6
to be dissolved in accordance with the Declaration, and the Debentures held by
the Institutional Trustee are to be distributed to the holders of the Trust
Securities issued by the Trust pro rata in accordance with the Declaration.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.
"Global Debenture" shall have the meaning set forth in Section 2.4.
"Maturity Date" means the date on which the Debentures mature and on which
the principal shall be due and payable together with all accrued and unpaid
interest thereon including Compounded Interest and Additional Interest, if any.
"Non Book-Entry Preferred Securities" shall have the meaning set forth in
Section 2.4.
"Optional Redemption Price" shall have the meaning set forth in Section 3.2.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated the "___%
Junior Subordinated Debentures due ____", limited in aggregate principal
amount to $________ million, which amount shall be as set forth in any written
order of the Company for the authentication and delivery of Debentures pursuant
to Section 303 of the Indenture.
SECTION 2.2. Maturity. The Maturity Date will be _______.
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Debentures shall be issued in fully
registered certificated form without interest coupons. Principal and interest
on the Debentures issued in certificated form will be payable, the transfer of
such Debentures will be registrable and such Debentures will be exchangeable
for Debentures bearing identical terms and provisions at the office or agency
of the Institutional Trustee; provided, however, that payment of interest may
be made at the option of the Company by check mailed to the Holder at such
address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of any Debentures is the Institutional
Trustee, the payment of the
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principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Debentures held by the Institutional Trustee will be
made at such place and to such account as may be designated by the
Institutional Trustee.
SECTION 2.4. Global Debenture.
(a) In connection with a Dissolution Event,
(i) the Debentures in certificated form may be presented to the Trustee
by the Institutional Trustee in exchange for a global Debenture in an
aggregate principal amount equal to the aggregate principal amount of all
outstanding Debentures (a "Global Debenture"), to be registered in the name
of the Depositary, or its nominee, and delivered by the Institutional Trustee
to the Depositary for crediting to the accounts of its participants pursuant
to the instructions of the Regular Trustees. The Company upon any such
presentation shall execute a Global Debenture in such aggregate principal
amount and deliver the same to the Trustee for authentication and delivery in
accordance with the Indenture and this _______ Supplemental Indenture.
Payments on the Debentures issued as a Global Debenture will be made to the
Depositary; and
(ii) if any Preferred Securities are held in non book-entry certificated
form, the Debentures in certificated form may be presented to the Trustee by
the Institutional Trustee and any Preferred Security Certificate which
represents Preferred Securities other than Preferred Securities held by the
Clearing Agency or its nominee ("Non Book-Entry Preferred Securities") will
be deemed to represent beneficial interests in Debentures presented to the
Trustee by the Institutional Trustee having an aggregate principal amount
equal to the aggregate liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security Certificates are presented to the
Security Registrar for transfer or reissuance at which time such Preferred
Security Certificates will be cancelled and a Debenture, registered in the
name of the holder of the Preferred Security Certificate or the transferee of
the holder of such Preferred Security Certificate, as the case may be, with
an aggregate principal amount equal to the aggregate liquidation amount of
the Preferred Security Certificate cancelled, will be executed by the Company
and delivered to the Trustee for authentication and delivery in accordance
with the Indenture and this _______ Supplemental Indenture. On issue of such
Debentures, Debentures with an equivalent aggregate principal amount that
were pre-
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sented by the Institutional Trustee to the Trustee will be deemed to have
been cancelled.
(b) Unless and until it is exchanged for the Debentures in registered
form, a Global Debenture may be transferred, in whole but not in part, only to
another nominee of the Depositary, or to a successor Depositary selected or
approved by the Company or to a nominee of such successor Depositary.
(c) If at any time the Depositary notifies the Company that
it is unwilling or unable to continue as Depositary or if at any time the
Depositary for such series shall no longer be registered or in good standing
under the Securities Exchange Act of 1934, as amended, or other applicable
statute or regulation, and a successor Depositary for such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, the Company will
execute, and, subject to Article III of the Indenture, the Trustee, upon
written notice from the Company, will authenticate and deliver the Debentures
in definitive registered form without coupons, in authorized denominations, and
in an aggregate principal amount equal to the principal amount of the Global
Debenture in exchange for such Global Debenture. In addition, the Company may
at any time determine that the Debentures shall no longer be represented by
Global Debenture. In such event the Company will execute, and subject to
Section 301 of the Indenture, the Trustee, upon receipt of an Officers
Certificate evidencing such determination by the Company, will authenticate and
deliver the Debentures in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such Global Debenture.
Upon the exchange of the Global Debenture for such Debentures in definitive
registered form without coupons, in authorized denominations, the Global
Debenture shall be cancelled by the Trustee. Such Debentures in definitive
registered form issued in exchange for the Global Debenture shall be registered
in such names and in such authorized denominations as the Depositary, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Securities to the
Depositary for delivery to the Persons in whose names such Securities are so
registered.
SECTION 2.5. Interest.
(a) Each Debenture will bear interest at the rate of ___% per annum (the
"Coupon Rate") from the original date of issuance until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
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payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the Coupon Rate, compounded quarterly, payable
(subject to the provisions of Article IV) quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year (each, an "Interest Payment
Date," commencing on __________, 1997), to the Person in whose name such
Debenture or any predecessor Debenture is registered, at the close of business
on the regular record date for such interest installment, which, in respect of
(i) Debentures of which the Institutional Trustee is the Holder and the
Preferred Securities are in book-entry only form or (ii) a Global Debenture,
shall be the close of business on the Business Day next preceding that Interest
Payment Date. Notwithstanding the foregoing sentence, if (i) the Debentures
are held by the Institutional Trustee and the Preferred Securities are no
longer in book-entry only form or (ii) the Debentures are not represented by a
Global Debenture, the Company may select a regular record date for such
interest installment which shall be any date at least one Business Day before
an Interest Payment Date.
(b) The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than
a full quarterly period for which interest is computed, will be computed on the
basis of the actual number of days elapsed in such a 90-day period. In the
event that any date on which interest is payable on the Debentures is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
(c) If, at any time while the Institutional Trustee is the Holder of any
Debentures, the Trust or the Institutional Trustee is required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any case, the Company will pay as additional interest
("Additional Interest") on the Debentures held by the Institutional Trustee,
such additional amounts as shall be required so that the net amounts received
and retained by the Trust and the Institutional Trustee after paying such
taxes, duties, assessments or other governmental charges will be equal to the
amounts the Trust and the Institutional Trustee would have received had no such
taxes, duties, assessments or other government charges been imposed.
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ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1. Special Event Redemption.
If a Special Event, whether a Tax Event or an Investment Company Event, has
occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees shall
have been informed by tax counsel rendering the Dissolution Tax Opinion that
a No Recognition Opinion cannot be delivered to the Trust; or
(c) the Company has received an Investment Company Event Opinion, then,
notwithstanding Section 3.2(a) but subject to Section 3.2(b), the Company
shall have the right upon not less than 30 days nor more than 60 days notice
to the Holders of the Debentures to redeem the Debentures, in whole or in
part, for cash within 90 days following the occurrence of such Tax Event (the
"90 Day Period") at a redemption price equal to 100% of the principal amount
to be redeemed plus any accrued and unpaid interest thereon to the date of
such redemption (the "Redemption Price"), provided that if at the time there
is available to the Company the opportunity to eliminate, within the 90 Day
Period, the Tax Event by taking some ministerial action ("Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure which has no adverse effect on the Company, the
Trust or the Holders of the Trust Securities issued by the Trust, the Company
shall pursue such Ministerial Action in lieu of redemption, and, provided,
further, that the Company shall have no right to redeem the Debentures while
the Trust is pursuing any Ministerial Action pursuant to its obligations
under the Declaration. The Redemption Price shall be paid prior to 12:00
noon, New York time, on the date of such redemption or such earlier time as
the Company determines, provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m., New
York time, on the date such Redemption Price is to be paid.
SECTION 3.2. Optional Redemption by Company.
(a) Subject to the provisions of Section 3.2(b) and to the provisions of
Article XI of the Indenture, except as otherwise may be specified in this
_______ Supplemental Indenture, the Company shall have the right to redeem the
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Debentures, in whole or in part, from time to time, on or after July, 2001, at
a redemption price equal to 100% of the principal amount to be redeemed plus
any accrued and unpaid interest thereon to the date of such redemption (the
"Optional Redemption Price"). Any redemption pursuant to this paragraph will
be made upon not less than 30 days nor more than 60 days notice to the Holder
of the Debentures, at the Optional Redemption Price. If the Debentures are
only partially redeemed pursuant to this Section 3.2, the Debentures will be
redeemed pro rata or by lot or by any other method utilized by the Trustee;
provided, that if at the time of redemption the Debentures are registered as a
Global Debenture, the Depositary shall determine, in accordance with its
procedures, the principal amount of such Debentures held by each Holder of
Debenture to be redeemed. The Optional Redemption Price shall be paid prior to
12:00 noon, New York time, on the date of such redemption or at such earlier
time as the Company determines provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Optional Redemption Price by 10:00
a.m., New York time, on the date such Optional Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would result in the
delisting of the Preferred Securities issued by the Trust from any national
securities exchange or other organization on which the Preferred Securities are
then listed, the Company shall not be permitted to effect such partial
redemption and may only redeem the Debentures in whole.
SECTION 3.3. No Sinking Fund.
The Debentures are not entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
The Company shall have the right, at any time and from time to time during
the term of the Debentures, to defer payments of interest by extending the
interest payment period of such Debentures for a period not exceeding 20
consecutive quarters (the "Extended Interest Payment Period"), during which
Extended Interest Payment Period no interest shall be due and payable; provided
that no Extended Interest Payment Period may extend beyond the Maturity Date.
To the extent permitted by applicable law, interest, the payment of which has
been deferred because of the extension of the interest payment period pursuant
to this Section 4.1, will bear inter-
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est thereon at the Coupon Rate compounded quarterly for each quarter of the
Extended Interest Payment Period ("Compounded Interest"). At the end of the
Extended Interest Payment Period, the Company shall pay all interest accrued
and unpaid on the Debentures, including any Additional Interest and Compounded
Interest (together, "Deferred Interest") that shall be payable to the Holders
of the Debentures in whose names the Debentures are registered in the Security
Register on the first record date after the end of the Extended Interest
Payment Period. Before the termination of any Extended Interest Payment
Period, the Company may further extend such period, provided that such period
together with all such further extensions thereof shall not exceed 20
consecutive quarters, or extend beyond the maturity date of the Debentures.
Upon the termination of any Extended Interest Payment Period and upon the
payment of all Deferred Interest then due, the Company may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
SECTION 4.2. Notice of Extension.
(a) If the Institutional Trustee is the only registered Holder of the
Debentures at the time the Company selects an Extended Interest Payment Period,
the Company shall give written notice to the Regular Trustees, the
Institutional Trustee and the Trustee of its selection of such Extended
Interest Payment Period one Business Day before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities issued by the
Trust are payable, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions are payable, to the New York Stock
Exchange or other applicable self-regulatory organization or to holders of the
Preferred Securities issued by the Trust, but in any event at least one
Business Day before such record date.
(b) If the Institutional Trustee is not the only Holder of the Debentures
at the time the Company selects an Extended Interest Payment Period, the
Company shall give the Holders of the Debentures and the Trustee written notice
of its selection of such Extended Interest Payment Period at least 10 Business
Days before the earlier of (i) the next succeeding Interest Payment Date, or
(ii) the date the Company is required to give notice of the record or payment
date of such interest payment to the New York Stock Exchange or other
applicable self-regulatory organization or to Holders of the Debentures.
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(c) The quarter in which any notice is given pursuant to paragraphs (a) or
(b) of this Section 4.2 shall be counted as one of the 20 quarters permitted in
the maximum Extended Interest Payment Period permitted under Section 4.1.
SECTION 4.3. Limitation of Transactions.
If (i) the Company shall exercise its right to defer payment of interest as
provided in Section 4.1, or (ii) there shall have occurred any Event of
Default, as defined in the Indenture, then (a) the Company shall not declare or
pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of shares of its common
stock in connection with the satisfaction by the Company of its obligations
under any employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security requiring the Company to
purchase shares of its common stock, (ii) as a result of a reclassification of
its capital stock or the exchange or conversion of one class or series of its
capital stock for another class or series of its capital stock or, (iii) the
purchase of fractional interests in shares of its capital stock pursuant to the
conversion or exchange provisions of such capital stock or security being
converted or exchanged) or make any guarantee payment with respect thereto, (b)
the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the
Company which rank pari passu with or junior to the Debentures and the Company
shall not make any guarantee payments with respect to the foregoing (other than
pursuant to the Preferred Security Guaranty).
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Debentures to the
Institutional Trustee and in connection with the sale of the Trust Securities
by the Trust, the Company, in its capacity as borrower with respect to the
Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and issuance
of the Debentures, including commissions to the underwriters payable pursuant
to the Underwriting Agreement and the Pricing Agreement and compensation of the
Trustee under the Indenture in accordance with the provisions of Section 607 of
the Indenture;
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(b) pay all costs and expenses of the Trust (including, but not limited
to, costs and expenses relating to the organization of the Trust, the offering,
sale and issuance of the Trust Securities (including commissions to the
underwriters in connection therewith), the fees and expenses of the
Institutional Trustee and the Delaware Trustee, the costs and expenses relating
to the operation of the Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommu- nications expenses and costs and expenses incurred in connection
with the acquisition, financing, and disposition of Trust assets);
(c) be primarily liable for any indemnification obligations arising with
respect to the Declaration; and
(d) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
SECTION 5.2 Payment Upon Resignation or Removal
Upon termination of this _______ Supplemental Indenture or the Indenture or
the removal or resignation of the Trustee pursuant to this Section 5.2, the
Company shall pay to the Trustee all amounts accrued to the date of such
termination, removal or resignation. Upon termination of the Declaration or
the removal or resignation of the Delaware Trustee or the Institutional
Trustee, as the case may be, pursuant to Section 5.6 of the Declaration, the
Company shall pay to the Delaware Trustee or the Institutional Trustee, as the
case may be, all amounts accrued to the date of such termination, removal or
resignation.
ARTICLE VI
NOTICE
SECTION 6.1 Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Company that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Debentures pursuant to
the provisions of this Article VI. Notwithstanding the provisions of Article
Fourteen of the Indenture or any other provision of the Indenture and this
_______ Supplemental Indenture, the Trustee shall not be charged with knowledge
of the existence of any facts that would prohibit the making of any payment of
monies to or by the Trustee in respect of the
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Debentures pursuant to the provisions of Article Fourteen of the Indenture,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 601 of the
Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Article 6 at least two Business Days prior to the
date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (or
premium, if any) or interest on any Debenture), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purposes for which
they were received, and shall not be affected by any notice to the contrary
that may be received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 601 of the Indenture,
shall be entitled to conclusively rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior Indebtedness
of the Company, as the case may be (or a trustee on behalf of such holder), to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article VI, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article VI, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
ARTICLE VII
COVENANT TO LIST ON EXCHANGE
SECTION 7.1. Listing on an Exchange.
If the Debentures are to be issued as a Global Debenture in connection with
the distribution of the Debentures to the holders of the Preferred Securities
issued by the Trust upon a Dissolution Event, the Company will use its best
efforts to list such Debentures on the New York Stock Ex-
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change, Inc. or on such other exchange as the Preferred Securities are then
listed.
ARTICLE VIII
FORM OF DEBENTURE
SECTION 8.1. Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This Debenture is a
Global Debenture within the meaning of the Indenture hereinafter referred to
and is registered in the name of a Depositary or a nominee of a Depositary.
This Debenture is exchangeable for Debentures registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Debenture
(other than a transfer of this Debenture as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary) may be registered except in limited
circumstances.
Unless this Debenture is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.]
No. __________________
$_____________________
CUSIP No. ____________
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MCN CORPORATION
___% JUNIOR SUBORDINATED DEBENTURE
DUE ____
MCN CORPORATION, a Michigan corporation (the "Company", which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to, ______________ or registered
assigns, the principal sum of _____________ Dollars ($___________) on July 30,
____, and to pay interest on said principal sum from __________, 1997, or from
the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly (subject
to deferral as set forth herein) in arrears on March 31, June 30, September 30
and December 31 of each year commencing ___________, 1997, at the rate of ___%
per annum until the principal hereof shall have become due and payable, and on
any overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum compounded
quarterly. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on this Debenture is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the person in whose name this Debenture (or one or
more Predecessor Securities, as defined in said Indenture) is registered at the
close of business on the regular record date for such interest installment,
which shall be the close of business on the business day next preceding such
Interest Payment Date. [IF PURSUANT TO THE PROVISIONS OF THE INDENTURE THE
DEBENTURES ARE NO LONGER REPRESENTED BY A GLOBAL Debenture -- which shall be
the close of business on the ____ business day next preceding such Interest
Payment Date.] Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holders on
such regular record date and may be paid to the Person in whose name this
Debenture (or one or more Predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered
Holders of this series of Debentures not less than 10 days prior to
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such special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Trustee maintained for that purpose in any coin or
currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of this Debenture is the
Institutional Trustee, the payment of the principal of (and premium, if any)
and interest on this Debenture will be made at such place and to such account
as may be designated by the Institutional Trustee.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until
the Certificate of Authentication hereon shall have been signed by or on behalf
of the Trustee.
The provisions of this Debenture are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
Dated __________________________
MCN CORPORATION
By: ____________________________
Name:
Title
Attest:
By: _____________________________
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.
Dated _________________________
NBD BANK
as Trustee
By______________________________
Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Securities of the
Company (herein sometimes referred to as the "Securities"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of September 1, 1994, duly executed and delivered
between the Company and NBD Bank, as Trustee (the "Trustee") (as supplemented
by a First Supplemental Indenture, dated April 17, 1996, as so supplemented,
the "Base Indenture"), as supplemented by a _______ Supplemental Indenture
dated as of July 24, 1996, between the Company and the Trustee
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(the Base Indenture as so supplemented, the "Indenture"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Securities. By the terms of the Indenture, the Securities are issuable in
series that may vary as to amount, date of maturity, rate of interest and in
other respects as provided in the Indenture. This series of Securities is
limited in aggregate principal amount as specified in said _______ Supplemental
Indenture.
Except as provided in the next paragraph, the Debentures may not be redeemed
by the Company prior to _________, ____. The Company shall have the right to
redeem this Debenture at the option of the Company, without premium or penalty,
in whole or in part at any time and from time to time on or after ______, ____
(an "Optional Redemption"), at a redemption price equal to 100% of the
principal amount plus any accrued but unpaid interest, including any Compounded
Interest, if any, to the date of such redemption (the "Optional Redemption
Price"). Any redemption pursuant to this paragraph will be made upon not less
than 30 nor more than 60 days' notice, at the Optional Redemption Price.
If, at any time, a Special Event (as defined below) shall occur or be
continuing after receipt of a Dissolution Tax Opinion (as defined below) and
either (a) (i) the Regular Trustees and the Company shall have received an
opinion (a "Redemption Tax Opinion") of a nationally recognized independent tax
counsel experienced in such matters that, as a result of a Tax Event (as
defined herein), there is more than a insubstantial risk that the Company would
be precluded from deducting the interest on the Debentures for United States
federal income tax purposes even after the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
holder's interest in the Trust as set forth in the Declaration of Trust or (ii)
the Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion (as defined below) cannot be delivered or (b) the Regular
Trustee and the Company shall have received an opinion of an independent
counsel experienced in such matter that, as a result of a Investment Company
Event (as defined below), there is more than an insubstantial risk that MCN
Financing II would be considered an "investment company" and would be required
to be registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), the Company shall have the right at any time, upon not less than
30 nor more than 60 days' notice, to redeem the Debentures in whole or in part
for cash at the Optional Redemption Price within 90 days following the
occurrence of such Special Event; provided, however, that, if at that time
there is available to the Company or the Trust the opportunity to
17
<PAGE> 21
eliminate, within such 90 day period, the Special Event by taking some
ministerial action ("Ministerial Action"), such as filing a form or making an
election, or pursuing some other similar reasonable measure, which has no
adverse effect on the Trust, the Company or the Holders of the Preferred
Securities, the Company or the Trust will pursue such measure in lieu of
redemption and provided further that the Company shall have no right to redeem
the Debentures while the Trust is pursuing any such Ministerial Action.
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision
or regulatory determination on or after such date), there is more than an
insubstantial risk that (i) the Trust would be subject to United States federal
income tax with respect to income accrued or received on the Debentures, (ii)
interest payable to the Trust on the Debentures would not be deductible by MCN
for United States federal income tax purposes or (iii) the Trust would be
subject to more than a de minimis amount of other taxes, duties or other
governmental charges, which change or amendment becomes effective on or after
_______, 199_.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
1940 Act to the effect that, as a result of the occurrence of a change in law
or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an insubstantial
risk that the Trust is or will be considered an "investment company" which is
required to be registered under the 1940 Act, as amended (the "1940 Act"),
which Change in 1940 Act Law becomes effective on or after ________, 199_.
Any redemption pursuant to the occurrence of a Tax Event or an Investment
Company Event (each as defined above a "Special Event") will be made upon not
less than 30 days nor more than 60 days notice, at the Optional Redemption
Price. If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption, the Debentures will be redeemed pro rata or by lot
or by any other method utilized by
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<PAGE> 22
the Trustee; provided that if, at the time of redemption, the Debentures are
registered as a Global Debenture, the Depositary shall determine the principal
amount of such Debentures held by each Debentureholder to be redeemed in
accordance with its procedures.
In the event of redemption of this Debenture in part only, a new Debenture
or Debentures of this series for the unredeemed portion hereof will be issued
in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in ggregate
principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Debentures; provided, however, that no such supplemental indenture shall (i)
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any premium payable upon the redemption
thereof, without the consent of the Holder of each Debenture so affected, or
(ii) reduce the aforesaid percentage of Debentures, the Holders of which are
required to consent to any such supplemental indenture, without the consent of
the Holders of each Debenture then outstanding and affected thereby. The
Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the Securities of any series at the time
outstanding affected thereby, on behalf of all of the Holders of the Debentures
of such series, to waive Default or Event of Default with respect to such
series, and its consequences, except a Default or Event of Default in the
payment of the principal of or premium, if any, or interest on any of the
Securities of such series. Any such consent or waiver by the registered Holder
of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Debenture and of any Debenture issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.
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<PAGE> 23
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
So long as the Company is not default in the payment of interest on the
Debentures, the Company shall have the right at any time during the term of the
Debentures from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarters (an "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with the interest thereon at the rate specified
for the Debentures to the extent that payment of such interest is enforceable
under applicable law). In the event that the Company exercises this right,
then (a) the Company shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock (other than (i) purchases or
acquisitions of shares of its Common Stock in connection with the satisfaction
by the Company of its obligations under any employee benefit plans or the
satisfaction by the Company of its obligations pursuant to any contract or
security requiring the Company to purchase shares of the Company's Common
Stock, (ii) as a result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock or (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged) or make any guarantee payments with
respect to the foregoing), (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by the Company that rank pari
passu with or junior to such Debentures and (c) the Company shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Preferred Securities Guarantee). Prior to the termination of any such Extended
Interest Payment Period, the Company may further extend the interest payment
period; provided, that such Extended Interest Payment Period, together with all
such previous and further extensions thereof, may not exceed 20 consecutive
quarters or extend beyond the maturity date of the Debenture. At the
termination of any such Extended Interest Payment Period and upon the payment
of all accrued and unpaid interest and any additional amount then due, the
Company may commence a new Extended Interest Payment Period, subject to the
above requirements.
20
<PAGE> 24
As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Trustee in the City of
Detroit and State of Michigan accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the registered Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Debenture, the
Company, the Trustee, any paying agent and the Security Registrar may deem and
treat the registered holder hereof as the absolute owner hereof (whether or not
this Debenture shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the interest
on this Debenture, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of the
Company or of any predecessor or successor corporation, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Indenture imposes certain limitations on the ability of the Company to,
among other things, merge or consolidate with any other Person or sell, assign,
transfer or lease all or substantially all of its properties or assets. All
such covenants and limitations are subject to a number of important
qualifications and exceptions. The Company must report periodically to the
Trustee on compliance with the covenants in the Indenture.
The Debentures of this series are issuable only in registered form without
coupons in denominations of $25 and
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<PAGE> 25
any integral multiple thereof. This Global Debenture is exchangeable for
Debentures in definitive form only under certain limited circumstances set
forth in the Indenture. Debentures of this series so issued are issuable only
in registered form without coupons in denominations of $25 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Debentures of this series so issued are
exchangeable for a like aggregate principal amount of Debentures of this series
of a different authorized denomination, as requested by the Holder surrendering
the same.
All terms used in this Debenture that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
ARTICLE IX
ORIGINAL ISSUE OF DEBENTURES
SECTION 9.1. Original Issue of Debentures.
Debentures in the aggregate principal amount of $82,474,250 may, upon
execution of this _______ Supplemental Indenture, be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Debentures to or upon the written order
of the Company, signed by its Chairman, its Vice Chairman, its President, or
any Vice President and its Treasurer or an Assistant Treasurer, without any
further action by the Company.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Ratification of Indenture.
The Indenture, as supplemented by this _______ Supplemental Indenture, is in
all respects ratified and confirmed, and this First Supplemental Indenture
shall be deemed part of the Indenture in the manner and to the extent herein
and therein provided.
SECTION 10.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
_______ Supplemental Indenture.
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<PAGE> 26
SECTION 10.3. Governing Law.
This _______ Supplemental Indenture and each Debenture shall be deemed to be
a contract made under the internal laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State.
SECTION 10.4. Separability.
In case any one or more of the provisions contained in this _______
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this _______
Supplemental Indenture or of the Debentures, but this _______ Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal
or unenforceable provision had never been contained herein or therein.
SECTION 10.5. Counterparts.
This _______ Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
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<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this _______ Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgements and as of the day and year first above written.
MCN CORPORATION
By______________________
________________________
Name:
Title:
Attest:
By:______________________
NBD BANK
as Trustee
By___________________________
_____________________________
Name:
Title:
Attest:
By:___________________
<PAGE> 1
EXHIBIT 4.25
====================================
THIRD SUPPLEMENTAL INDENTURE
Dated as of March __, 1997
between
MCN CORPORATION,
AS ISSUER
and
NBD BANK
AS TRUSTEE
=====================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. Designation and Principal Amount . . . . . . . . . . . . . . 4
SECTION 2.2. Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3. Form and Payment . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4. Global Debenture . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.6. Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.1. Extension of Interest Payment Period . . . . . . . . . . . . 8
SECTION 3.2. Notice of Extension . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3. Limitation of Transactions . . . . . . . . . . . . . . . . . 10
SECTION 3.4. Optional Repayment of Debentures . . . . . . . . . . . . . . 11
SECTION 3.5. Repayment Procedure for Debentures . . . . . . . . . . . . . 11
ARTICLE IV
EXPENSES
SECTION 4.1. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.2. Payment Upon Resignation or Removal . . . . . . . . . . . . . 13
ARTICLE V
NOTICE
SECTION 5.1. Notice by the Company . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI
FORM OF DEBENTURE
SECTION 6.1. Form of Debenture . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII
ORIGINAL ISSUE OF DEBENTURES
SECTION 7.1. Original Issue of Debentures . . . . . . . . . . . . . . . . 26
ARTICLE VIII
MISCELLANEOUS
i
<PAGE> 3
Page
SECTION 8.1. Ratification of Indenture . . . . . . . . . . . . . . . . . 26
SECTION 8.2. Trustee Not Responsible for Recitals . . . . . . . . . . . 26
SECTION 8.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.4. Separability . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 27
ii
<PAGE> 4
THIRD SUPPLEMENTAL INDENTURE, dated as of March __, 1997 (the "Third
Supplemental Indenture"), between MCN Corporation, a corporation duly organized
and existing under the laws of the State of Michigan, having its principal
office at 500 Griswold Street, Detroit, Michigan 48226 and doing business as
MCN Energy Group Inc., (the "Company"), and NBD Bank, a Michigan banking
corporation, as trustee (the "Trustee").
WHEREAS, the Company executed and delivered the indenture dated as
of September 1, 1994 (the "Base Indenture") as supplemented by a first
supplemental indenture, dated April 17, 1996 (the "First Supplemental
Indenture") and the second supplemental indenture (the "Second Supplemental
Indenture"), dated July 24, 1996, (the Base Indenture as so supplemented the
"Indenture"), to the Trustee to provide for the future issuance of the
Company's unsecured debentures, notes or other evidence of indebtedness (the
"Securities"), to be issued from time to time in one or more series as might be
determined by the Company under the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its ___% Junior Subordinated Debentures due 2002 (the "Debentures"), the
form and substance of such Debentures and the terms, provisions and conditions
thereof to be set forth as provided in the Indenture and this Third
Supplemental Indenture;
WHEREAS, MCN Financing III, a Delaware statutory business trust (the
"Trust"), has offered to the public $________ million aggregate liquidation
amount of its ___% Trust Originated Preferred Securities (the "Preferred
Securities"), representing preferred undivided beneficial interests in the
assets of the Trust and proposes to invest the proceeds from such offering,
together with the proceeds of the issuance and sale by the Trust to the Company
of $__________ million aggregate liquidation amount of its ___% Trust
Originated Common Securities, representing common undivided beneficial
interests in the assets of the Trust (the "Common Securities" and together with
the Preferred Securities, the "Trust Securities"), in $__________ million
aggregate principal amount of the Debentures; and
WHEREAS, the Company has requested that the Trustee execute and
deliver this Third Supplemental Indenture, and all requirements necessary to
make this Third Supplemental Indenture a valid instrument in accordance with
its terms, and to make the Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company, have been performed, and the execution and delivery of this Third
Supplemental Indenture has been duly authorized in all respects:
<PAGE> 5
NOW THEREFORE, in consideration of the purchase and acceptance of
the Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used
in this Third Supplemental Indenture;
(b) a term defined anywhere in this Third Supplemental Indenture
has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) headings are for convenience of reference only and do not
affect interpretation;
(e) the following terms have the meanings given to them in the
Declaration: (i) Business Day; (ii) Clearing Agency; (iii) Delaware Trustee;
(iv) Depositary; (v) Dissolution Tax Opinion; (vi) Preferred Security
Certificate; (vii) Preferred Security Guaranty; (viii) Pricing Agreement; (ix)
Institutional Trustee; (x) Regular Trustees; (xi) Special Event; (xii) Tax
Event; (xiii) Investment Company Event; and (xiv) Underwriting Agreement;
(f) the following terms have the meanings given to them in this
Section 1.1(f):
"Additional Interest" shall have the meaning set forth in Section
2.5.
"Compounded Interest" shall have the meaning set forth in Section
3.1.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Debentures Repayment Price" shall have the meaning set forth in
Section 3.5.
2
<PAGE> 6
"Declaration" means the Amended and Restated Declaration of Trust of
MCN Financing III, a Delaware statutory business trust, dated as of March __,
1997.
"Deferred Interest" shall have the meaning set forth in Section 3.1.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance
with the Declaration, and the Debentures held by the Institutional Trustee are
to be distributed to the holders of the Trust Securities issued by the Trust
pro rata in accordance with the Declaration.
"Extended Interest Payment Period" shall have the meaning set forth
in Section 3.1.
"Global Debenture" shall have the meaning set forth in Section 2.4.
"Maturity Date" means the date on which the Debentures mature and on
which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest and Additional Interest,
if any.
"Non Book-Entry Preferred Securities" shall have the meaning set
forth in Section 2.4.
"Put Option Exercise Date" shall have the meaning set forth in
Section 3.4.
"Purchase Contract Agreement" means the Purchase Contract Agreement,
dated as of March __, 1997 among the Company and The First National Bank of
Chicago, as purchase contract agent (the "Purchase Contract Agent").
(g) the following terms have the meaning given to them in the
Purchase Contract Agreement: (i) Cash Settlement; (ii) Collateral Agent; (iii)
Collateral Settlement; (iv) Early Settlement Date; (v) Purchase Contract; and
(vi) Purchase Contract Settlement Date.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated the
"___% Junior Subordinated Debentures due 2002", limited in aggregate principal
amount to $__________ million,
3
<PAGE> 7
which amount shall be as set forth in any written order of the Company for the
authentication and delivery of Debentures pursuant to Section 303 of the
Indenture.
SECTION 2.2. Maturity. The Maturity Date will be May , 2002.
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Debentures shall be issued in
fully registered certificated form without interest coupons. Principal and
interest on the Debentures will be payable, the transfer of such Debentures
will be registrable and such Debentures will be exchangeable for Debentures
bearing identical terms and provisions at the office or agency of the
Institutional Trustee; provided, however, that payment of interest may be made
at the option of the Company by check mailed to the Holder at such address as
shall appear in the Security Register. Notwithstanding the foregoing, so long
as the Holder of any Debentures is the Institutional Trustee or the Collateral
Agent, the payment of the principal of and interest (including Compounded
Interest and Additional Interest, if any) on such Debentures held by the
Institutional Trustee or the Collateral Agent will be made at such place and to
such account as may be designated in writing by the Institutional Trustee or
the Collateral Agent, as the case may be, prior to such payment.
SECTION 2.4. Global Debenture.
(a) In connection with a Dissolution Event,
(i) the Debentures in certificated form may be presented to
the Trustee by the Institutional Trustee in exchange for a global
Debenture in an aggregate principal amount equal to the aggregate
principal amount of all outstanding Debentures (a "Global Debenture"), to
be registered in the name of the Depositary, or its nominee, and delivered
by the Institutional Trustee to the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the Regular
Trustees. The Company upon any such presentation shall execute a Global
Debenture in such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery in accordance with the Indenture
and this Third Supplemental Indenture. Payments on the Debentures issued
as a Global Debenture will be made to the Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Debentures in certificated form may be presented to
the Trustee by the
4
<PAGE> 8
Institutional Trustee and any Preferred Security Certificate which
represents Preferred Securities other than Preferred Securities held by the
Clearing Agency or its nominee ("Non Book-Entry Preferred Securities") will
be deemed to represent beneficial interests in Debentures presented to the
Trustee by the Institutional Trustee having an aggregate principal amount
equal to the aggregate liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security Certificates are presented to the
Security Registrar for transfer or reissuance at which time such Preferred
Security Certificates will be cancelled and a Debenture, registered in the
name of the holder of the Preferred Security Certificate or the transferee
of the holder of such Preferred Security Certificate, as the case may be,
with an aggregate principal amount equal to the aggregate liquidation
amount of the Preferred Security Certificate cancelled, will be executed by
the Company and delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this Third Supplemental Indenture. On
issue of such Debentures, Debentures with an equivalent aggregate principal
amount that were presented by the Institutional Trustee to the Trustee will
be deemed to have been cancelled.
(b) Unless and until it is exchanged for the Debentures in
registered form, a Global Debenture may be transferred, in whole but not in
part, only to another nominee of the Depositary, or to a successor Depositary
selected or approved by the Company or to a nominee of such successor
Depositary.
(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the Depositary
for such series shall no longer be registered or in good standing under the
Securities Exchange Act of 1934, as amended, or other applicable statute or
regulation, and a successor Depositary for such series is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such condition, as the case may be, the Company will execute, and, subject
to Article III of the Indenture, the Trustee, upon written notice from the
Company, will authenticate and
5
<PAGE> 9
deliver the Debentures in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such Global Debenture.
In addition, the Company may at any time determine that the Debentures shall no
longer be represented by Global Debenture. In such event the Company will
execute, and subject to Section 301 of the Indenture, the Trustee, upon receipt
of an Officers Certificate evidencing such determination by the Company, will
authenticate and deliver the Debentures in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount
equal to the principal amount of the Global Debenture in exchange for such
Global Debenture. Upon the exchange of the Global Debenture for such
Debentures in definitive registered form without coupons, in authorized
denominations, the Global Debenture shall be cancelled by the Trustee. Such
Debentures in definitive registered form issued in exchange for the Global
Debenture shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to the Depositary for delivery to the Persons in
whose names such Securities are so registered.
SECTION 2.5. Interest.
(a) Each Debenture will bear interest at the rate of ___% per
annum (the "Coupon Rate") from the original date of issuance until the
principal thereof becomes due and payable, and on any overdue principal and (to
the extent that payment of such interest is enforceable under applicable law)
on any overdue installment of interest at the Coupon Rate, compounded
quarterly, payable (subject to the provisions of Article IV) quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year (each,
an "Interest Payment Date," commencing on June 30, 1997), to the Person in
whose name such Debenture or any predecessor Debenture is registered, at the
close of business on the regular record date for such interest installment,
which, in respect of (i) Debentures of which the Institutional Trustee is the
Holder and the Preferred Securities are in book-entry only form or (ii) a
Global Debenture, shall be the close of business on the Business Day next
preceding that Interest Payment Date. Notwithstanding the foregoing sentence,
if (i) the Debentures are held by the Institutional Trustee and the Preferred
Securities are no longer in book-entry only form or (ii) the Debentures are not
represented by a Global Debenture, the Company may select a regular record date
for such interest installment which shall be any date at least one Business Day
before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest is computed, will be computed
on the basis of the actual number of days elapsed per 30-day month. In the
event that any date on which interest is payable on the Debentures is not a
Business Day, then payment of interest payable on such date will be made on the
next
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<PAGE> 10
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
(c) If, at any time while the Institutional Trustee or the
Collateral Agent is the Holder of any Debentures, the Trust or the
Institutional Trustee or the Collateral Agent is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Company will pay as additional interest ("Additional
Interest") on the Debentures held by the Institutional Trustee or the
Collateral Agent, such additional amounts as shall be required so that the net
amounts received and retained by the Trust and the Institutional Trustee or the
Collateral Agent after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust and the
Institutional Trustee or the Collateral Agent would have received had no such
taxes, duties, assessments or other government charges been imposed.
SECTION 2.6. Sinking Fund.
The Debentures are not entitled to the benefit of any sinking fund.
ARTICLE III
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.1. Extension of Interest Payment Period.
The Company shall have the right, at any time and from time to time
during the term of the Debentures, to defer payments of interest by extending
the interest payment period of such Debentures for a period not extending
beyond the date of maturity of the Debentures (the "Extended Interest Payment
Period"), during which Extended Interest Payment Period no interest shall be
due and payable. To the extent permitted by applicable law, interest, the
payment of which has been deferred because of the extension of the interest
payment period pursuant to this Section 3.1, will bear interest thereon at the
Coupon Rate compounded quarterly for each quarter of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and unpaid on the
Debentures, including any Additional Interest and Compounded Interest
(together, "Deferred Interest") that shall be payable to the
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<PAGE> 11
Holders of the Debentures in whose names the Debentures are registered in the
Security Register on the first record date after the end of the Extended
Interest Payment Period. Before the termination of any Extended Interest
Payment Period, the Company may further extend such period, provided that such
period together with all such further extensions thereof shall not exceed 20
consecutive quarters or extend beyond the maturity date of the Debentures.
Upon the termination of any Extended Interest Payment Period and upon the
payment of all Deferred Interest then due, the Company may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
SECTION 3.2. Notice of Extension.
(a) If the Institutional Trustee or the Collateral Agent is the
only registered Holder of the Debentures at the time the Company selects an
Extended Interest Payment Period, the Company shall give written notice to the
Regular Trustees, the Institutional Trustee, the Collateral Agent, and the
Trustee of its selection of such Extended Interest Payment Period one Business
Day before the earlier of (i) the next succeeding date on which Distributions
on the Trust Securities issued by the Trust are payable, or (ii) the date the
Trust is required to give notice of the record date, or the date such
Distributions are payable, to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred Securities issued
by the Trust, but in any event at least one Business Day before such record
date.
(b) If the Institutional Trustee or the Collateral Agent is not
the only Holder of the Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give the Holders of the Debentures
and the Trustee written notice of its selection of such Extended Interest
Payment Period at least 10 Business Days before the next succeeding Interest
Payment Date.
(c) The quarter in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 3.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period permitted
under Section 3.1.
SECTION 3.3. Limitation of Transactions.
If (i) the Company shall exercise its right to defer payment of
interest as provided in Section 4.1, then (a) the Company shall not declare or
pay any dividend on, make any
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distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of its common stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase shares of its common stock, (ii) as a result of a reclassification of
its capital stock or the exchange or conversion of one class or series of its
capital stock for another class or series of its capital stock or, (iii) the
purchase of fractional interests in shares of its capital stock pursuant to the
conversion or exchange provisions of such capital stock or security being
converted or exchanged) or make any guarantee payment with respect thereto, (b)
the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the
Company which rank pari passu with or junior to the Debentures and (c) the
Company shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Preferred Security Guaranty).
SECTION 3.4. Optional Repayment of Debentures.
Each Holder of Debentures, including the Institutional Trustee and
the Collateral Agent, shall have the right to require the Company to repay all
or a portion (which portion must be $50 or any integral multiple thereof) of
the Debentures held by such Holder, on or before [May __], 2000, which shall be
the Business Day immediately preceding the Purchase Contract Settlement Date
(the "Put Option Exercise Date"), at a repayment price equal to 100% of the
principal amount thereof plus any accrued and unpaid interest thereon,
including Additional Interest, if any, to the date of such repayment (the
"Debentures Repayment Price").
SECTION 3.5. Repayment Procedure for Debentures.
(a) In order for the Debentures to be repaid on the Put Option
Exercise Date, the Company must receive at the Corporate Trust Office in the
City of Detroit, Michigan, not less than [10] nor more than [30] days prior to
the Put Option Exercise Date, the Debentures to be repaid with the form
entitled "Option to Elect Repayment" on the reverse of or otherwise
accompanying such Debentures duly completed. Any such notice received by the
Company shall be irrevocable. All questions as to the validity, eligibility
(including time of receipt) and acceptance of the Debentures for repayment
shall be determined by the Company, whose determination shall be final and
binding. Notwithstanding the foregoing, so long as the Holder is the
Institutional Trustee or the Collateral
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<PAGE> 13
Agent, and assuming prior notice to the Trustee, such Debentures may be
received at the Corporate Trust Office at any time prior to 11:00 a.m., New
York City time, on the Put Option Exercise Date in the form and manner as may
be designated by the Institutional Trustee or the Collateral Agent and
acceptable to the Trustee.
(b) Payment of the Debentures Repayment Price to Holders of
Debentures shall be made through the Trustee, subject to the Trustee's receipt
of payment from the Company in accordance with the terms of the Indenture.
Notwithstanding the foregoing, so long as the Holder of any Debentures
presented for repayment is the Institutional Trustee or the Collateral Agent,
the payment of the Debentures Repayment Price in respect of such Debentures
shall be made, either through the Trustee or the Company acting as Paying
Agent, no later than 12:00 noon, New York City time, on the Put Option Exercise
Date, by check or wire transfer, in immediately available funds, at such place
and to such account as may be designated by the Institutional Trustee or the
Collateral Agent, as the case may be. If the Trustee holds immediately
available funds sufficient to pay the Debentures Repayment Price of the
Debentures presented for repayment (or, if the Company is acting as Paying
Agent or the Institutional Trustee has received the Debentures Repayment
Price), then, immediately prior to the close of business on the Put Option
Exercise Date, such Debentures will cease to be outstanding and interest
thereon will cease to accrue, whether or not such Debentures have been received
by the Company, and all other rights of the Holder in respect of the
Debentures, including the Holder's right to require the Company to repay such
Debentures, shall terminate and lapse (other than the right to receive the
Debentures Repayment Price upon delivery of such Debentures but without
interest on such Debentures Repayment Price). Neither the Institutional
Trustee nor the Company will be required to register or cause to be registered
the transfer of any Debentures for which repayment has been elected.
ARTICLE IV
EXPENSES
SECTION 4.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Debentures
to the Institutional Trustee and in connection with the sale of the Trust
Securities by the Trust, the Company, in its capacity as borrower with respect
to the Debentures, shall:
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<PAGE> 14
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions to the underwriters payable
pursuant to the Underwriting Agreement and the Pricing Agreement and
compensation of the Trustee under the Indenture in accordance with the
provisions of Section 607 of the Indenture;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust, the
offering, sale and issuance of the Trust Securities (including commissions to
the underwriters in connection therewith), the fees and expenses of the
Institutional Trustee and the Delaware Trustee, the costs and expenses relating
to the operation of the Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets);
(c) be primarily liable for any indemnification obligations
arising with respect to the Declaration; and
(d) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
SECTION 4.2. Payment Upon Resignation or Removal.
Upon termination of this Third Supplemental Indenture or the
Indenture or the removal or resignation of the Trustee pursuant to this Section
4.2, the Company shall pay to the Trustee all amounts accrued to the date of
such termination, removal or resignation. Upon termination of the Declaration
or the removal or resignation of the Delaware Trustee or the Institutional
Trustee, as the case may be, pursuant to Section 5.6 of the Declaration, the
Company shall pay to the Delaware Trustee or the Institutional Trustee, as the
case may be, all amounts accrued to the date of such termination, removal or
resignation.
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ARTICLE V
NOTICE
SECTION 5.1. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article VI. Notwithstanding the
provisions of Article Fourteen of the Indenture or any other provision of the
Indenture and this Third Supplemental Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of Article Fourteen of the Indenture,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 601 of the
Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Article 6 at least two Business Days prior to the
date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (or
premium, if any) or interest on any Debenture), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purposes for which
they were received, and shall not be affected by any notice to the contrary
that may be received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 601 of the
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company, as the case may be (or a trustee on behalf of such
holder), to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee on behalf of any such holder or holders. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article VI, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Arti-
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cle VI, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
ARTICLE VI
FORM OF DEBENTURE
SECTION 6.1. Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This
Debenture is a Global Debenture within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depositary or a nominee of a
Depositary. This Debenture is exchangeable for Debentures registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Debenture
(other than a transfer of this Debenture as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary) may be registered except in limited
circumstances.
Unless this Debenture is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
Debenture issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.]
No. __________________
$_____________________
CUSIP No. ____________
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<PAGE> 17
MCN CORPORATION
___% JUNIOR SUBORDINATED DEBENTURE
DUE 2002
MCN CORPORATION, a Michigan corporation (the "Company", doing
business as MCN Energy Group Inc., which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to, ______________ or registered assigns, the principal
sum of _____________ Dollars ($___________) on ________, 2002, and to pay
interest on said principal sum from March __, 1997, or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly (subject to deferral as
set forth herein) in arrears on March 31, June 30, September 30 and December 31
of each year commencing June 30, 1997, at the rate of ___% per annum until the
principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded quarterly. The
amount of interest payable on any Interest Payment Date shall be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than
a full quarterly period for which interest is computed, will be computed on the
basis of the actual number of days elapsed per 30-day month. In the event that
any date on which interest is payable on this Debenture is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the person in whose name this Debenture (or one or
more Predecessor Securities, as defined in said Indenture) is registered at the
close of business on the regular record date for such interest installment,
which shall be the close of business on the business day next preceding such
Interest Payment Date. [IF PURSUANT TO THE PROVISIONS OF THE INDENTURE THE
DEBENTURES ARE NO LONGER REPRESENTED BY A GLOBAL DEBENTURE -- which shall be
the close of business on the ____ business day next preceding such Interest
Payment Date.] Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holders on
such regular record date and may be paid to the Person in whose name this
Debenture (or one or more
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<PAGE> 18
Predecessor Securities) is registered at the close of business on a special
record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered Holders of this
series of Debentures not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of (and premium, if any) and the
interest on this Debenture shall be payable at the office or agency of the
Trustee maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered Holder at
such address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of this Debenture is the Institutional Trustee
or the Collateral Agent, the payment of the principal of (and premium, if any)
and interest on this Debenture will be made at such place and to such account
as may be designated in writing by the Institutional Trustee or the Collateral
Agent.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness and pari passu in right of
payment with the Company's other junior subordinated debentures, and this
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Trustee
on his or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each Holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall
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<PAGE> 19
for all purposes have the same effect as though fully set forth at this place.
16
<PAGE> 20
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated _______________________
MCN CORPORATION
By:
___________________________________
Name:
Title
Attest:
By: _________________________
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series of Securities described
in the within-mentioned Indenture.
Dated ___________________
NBD BANK
as Trustee
By________________________
Authorized Signatory
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<PAGE> 21
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Securities of
the Company (herein sometimes referred to as the "Securities"), specified in
the Indenture, all issued or to be issued in one or more series under and
pursuant to an Indenture dated as of September 1, 1994, duly executed and
delivered between the Company and NBD Bank, as Trustee (the "Trustee") (as
supplemented by a First Supplemental Indenture, dated April 17, 1996, and a
Third Supplemental Indenture, dated July 24, 1996, as so supplemented, the
"Base Indenture"), as supplemented by a Third Supplemental Indenture dated as
of March __, 1997, between the Company and the Trustee (the Base Indenture as
so supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Securities. By the terms of the
Indenture, the Securities are issuable in series that may vary as to amount,
date of maturity, rate of interest and in other respects as provided in the
Indenture. This series of Securities is limited in aggregate principal amount
as specified in said Third Supplemental Indenture.
The Debentures are not entitled to the benefit of any sinking fund.
The Holder of this Debenture, including the Institutional Trustee
and the Collateral Agent, shall have the right to require the Company to repay
all or a portion (which portion must be $50 or any integral multiple thereof)
of this Debenture on or before May __, 2000, which shall be the Business Day
immediately preceding the Purchase Contract Settlement Date (the "Put Option
Exercise Date") at a repayment price equal to 100% of the principal amount
thereof plus any accrued but unpaid interest, including Additional Interest, if
any, to the date of such repayment (the "Debentures Repayment Price"). In
order for the Debentures to be repaid on the Put Option Exercise Date, the
Company must receive at the Corporate Trust Office, either (i) not less than
[10] nor more than [30] days prior to the Put Option Exercise Date, the
Debentures to be repaid with the form entitled "Option to Elect repayment"
hereon duly completed. Any such notice received by the Company shall be
irrevocable. All questions as to the validity, eligibility (including time of
receipt) and acceptance of the Debentures for repayment shall be determined by
the Company, whose determination shall be final and binding. Notwithstanding
the foregoing, so long as the Holder is the Institutional Trustee or the
Collateral Agent, and assuming prior notice to the Trustee, this Debenture may
be received at the Corporate Trust Office at any time prior to 11:00 a.m., New
York City time, on the Put Option Exercise
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<PAGE> 22
Date in the form and manner as may be designated by the Institutional Trustee
or the Collateral Agent and acceptable to the Trustee.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the
time outstanding, as defined in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Debentures; provided, however, that no such supplemental indenture shall
(i) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Debentures of any series or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the Holder of each Debenture so affected, or (ii) reduce
the aforesaid percentage of Debentures, the Holders of which are required to
consent to any such supplemental indenture, without the consent of the Holders
of each Debenture then outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Securities of any series at the time outstanding affected
thereby, on behalf of all of the Holders of the Debentures of such series, to
waive any Default or Event of Default with respect to such series, and its
consequences, except a Default or Event of Default in the payment of the
principal of or premium, if any, or interest on any of the Securities of such
series. Any such consent or waiver by the registered Holder of this Debenture
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Debenture and
of any Debenture issued in exchange therefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any,
19
<PAGE> 23
and interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
So long as the Company is not in default in the payment of interest
on the Debentures, the Company shall have the right at any time during the term
of the Debentures and from time to time to extend the interest payment period
of such Debentures for up to a maximum of 20 consecutive quarters (an "Extended
Interest Payment Period"), at the end of which period the Company shall pay all
interest then accrued and unpaid (together with the interest thereon at the
rate specified for the Debentures to the extent that payment of such interest
is enforceable under applicable law). In the event that the Company exercises
this right, then (a) the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of its Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such election requiring the Company to
purchase shares of the Company's Common Stock, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion
of one class or series of the Company's capital stock for another class or
series of the Company's capital stock or (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged) or make any guarantee payments with respect to the foregoing), (b)
the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Company that rank pari passu with or junior to such
Debentures and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Preferred Securities
Guarantee). Prior to the termination of any such Extended Interest Payment
Period, the Company may further extend the interest payment period; provided,
that such Extended Interest Payment Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarters or extend
beyond the maturity date of the Debentures.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered Holder
hereof on the Security Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Trustee
in the City of Detroit and State of Michigan accompanied by a written
instrument or instruments of transfer in form satisfactory to
20
<PAGE> 24
the Company or the Trustee duly executed by the registered Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Debentures
of authorized denominations and for the same aggregate principal amount and
series will be issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and the Security
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Security
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any paying agent nor any
Security Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
The Indenture imposes certain limitations on the ability of the
Company to, among other things, merge or consolidate with any other Person or
sell, assign, transfer or lease all or substantially all of its properties or
assets. All such covenants and limitations are subject to a number of
important qualifications and exceptions. The Company must report periodically
to the Trustee on compliance with the covenants in the Indenture.
The Debentures of this series are issuable only in registered form
without coupons in denominations of $50 and any integral multiple thereof.
This Global Debenture is exchangeable for Debentures in definitive form only
under certain limited circumstances set forth in the Indenture. Debentures of
this series so issued are issuable only in registered form without coupons in
denominations of $50 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Deben-
21
<PAGE> 25
tures of this series so issued are exchangeable for a like aggregate principal
amount of Debentures of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ARTICLE VII
ORIGINAL ISSUE OF DEBENTURES
SECTION 7.1. Original Issue of Debentures.
Debentures in the aggregate principal amount of $__________ may,
upon execution of this Third Supplemental Indenture, be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Debentures to or upon the written order
of the Company, signed by its Chairman, its Vice Chairman, its President, or
any Vice President and its Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary, without any further action by the Company.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Ratification of Indenture.
The Indenture, as supplemented by this Third Supplemental Indenture,
is in all respects ratified and confirmed, and this Third Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent
herein and therein provided.
SECTION 8.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
Third Supplemental Indenture.
SECTION 8.3. Governing Law.
This Third Supplemental Indenture and each Debenture shall be deemed
to be a contract made under the internal laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State.
22
<PAGE> 26
SECTION 8.4. Separability.
In case any one or more of the provisions contained in this Third
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Third
Supplemental Indenture or of the Debentures, but this Third Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal
or unenforceable provision had never been contained herein or therein.
SECTION 8.5. Counterparts.
This Third Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
23
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, on the date or dates indicated in
the acknowledgements and as of the day and year first above written.
MCN CORPORATION
By______________________________
Name:
Title:
Attest:
By:______________________
NBD BANK
as Trustee
By______________________________
Name:
Title:
Attest:
By:___________________
<PAGE> 1
EXHIBIT 4-26
=====================================
__________ SUPPLEMENTAL INDENTURE
Dated as of ______ __, 1997
between
MCN ENERGY GROUP INC.,
AS ISSUER
and
NBD BANK
AS TRUSTEE
=====================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms . . . . . . . . . . . . . . . . . . 2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. Designation and Principal Amount . . . . . . . . . . . 6
SECTION 2.2. Maturity . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.3. Form and Payment . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4. Global Debenture . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5. Interest . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1. Tax Event Redemption . . . . . . . . . . . . . . . . . 10
SECTION 3.2. Optional Redemption by Company . . . . . . . . . . . . 10
SECTION 3.3. No Sinking Fund . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period . . . . . . . . . 12
SECTION 4.2. Notice of Extension . . . . . . . . . . . . . . . . . . 13
SECTION 4.3. Limitation of Transactions . . . . . . . . . . . . . . 13
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Payment Upon Resignation or Removal . . . . . . . . . . 15
ARTICLE VI
COVENANT TO LIST ON EXCHANGE
SECTION 6.1. Listing on an Exchange . . . . . . . . . . . . . . . . 15
ARTICLE VII
FORM OF DEBENTURE
SECTION 7.1. Form of Debenture . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES
SECTION 8.1. Original Issue of Debentures . . . . . . . . . . . . . 27
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Ratification of Indenture . . . . . . . . . . . . . . . 27
i
<PAGE> 3
Page
----
SECTION 9.2. Trustee Not Responsible for Recitals . . . . . . . . . 27
SECTION 9.3. Governing Law . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.4. Separability . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.5. Counterparts . . . . . . . . . . . . . . . . . . . . . 28
ii
<PAGE> 4
_______ SUPPLEMENTAL INDENTURE, dated as of ________ __, 1997
(the "______ Supplemental Indenture"), between MCN Energy Group Inc., a
corporation duly organized and existing under the laws of the State of
Michigan, having its principal office at 500 Griswold Street, Detroit, Michigan
48226, (the "Company"), and NBD Bank as trustee (the "Trustee").
WHEREAS, the Company executed and delivered the indenture
dated as of September 1, 1994 (the "Base Indenture") as supplemented by a first
supplemental indenture, dated April 17, 1996 (the "First Supplemental
Indenture"), a second supplemental indenture, dated July 24, 1996 (the "Second
Supplemental Indenture") and a third supplemental indenture dated March __,
1997 (the "Third Supplemental Indenture") (the Base Indenture as so
supplemented the "Indenture), to the Trustee to provide for the future issuance
of the Company's unsecured debentures, notes or other evidence of indebtedness
(the "Securities"), to be issued from time to time in one or more series as
might be determined by the Company under the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company
desires to provide for the establishment of a new series of its Securities to
be known as its ____% Junior Subordinated Debentures due 20__ (the
"Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Indenture
and this Second Supplemental Indenture;
WHEREAS, MCN Financing IV, a Delaware statutory business trust
(the "Trust"), has offered to the public $__________ million aggregate
liquidation amount of its ____% Capital Securities (the "Capital Securities"),
representing preferred undivided beneficial interests in the assets of the
Trust and proposes to invest the proceeds from such offering, together with the
proceeds of the issuance and sale by the Trust to the Company of $__________
million aggregate liquidation amount of the Trust's ___% Common Securities
(representing common undivided beneficial interests in the assets of the Trust)
(the "Common Securities," together with the Capital Securities, the "Trust
Securities"), in $__________ million aggregate principal amount of the
Debentures; and
WHEREAS, the Company has requested that the Trustee execute
and deliver this ______ Supplemental Indenture and all requirements necessary
to make this ______ Supplemental Indenture a valid instrument in accordance
with its terms, and to make the Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company, have been performed, and the execution and delivery of this ______
Supplemental Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance
of the Debentures by the Holders thereof, and for the purpose of setting forth,
as provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and
<PAGE> 5
conditions thereof, the Company covenants and agrees with the Trustee as
follows:
ARTICLE I.
DEFINITIONS
SECTION A. Definition of Terms.
Unless the context otherwise requires:
1. a term defined in the Indenture has the same meaning
when used in this ______ Supplemental Indenture;
2. a term defined anywhere in this ______ Supplemental
Indenture has the same meaning throughout;
3. the singular includes the plural and vice versa;
4. a reference to a Section or Article is to a Section or
Article of this _____ Supplemental Indenture;
5. headings are for convenience of reference only and do
not affect interpretation;
6. the following terms have the meanings given to them in the
Declaration: (i) Business Day; (v) Security Certificate; (iii) Capital
Securities Guarantee; (iv) Clearing Agency; (v) Delaware Trustee; (vi)
Depositary; (vii) Institutional Trustee; (viii) Regular Trustees; (ix)
Investment Company Event; and (x) Underwriting Agreement;
7. the following terms have the meanings given to them
in this Section 1.1(g):
"Additional Interest" shall have the meaning set forth in
Section 2.5.
"Adjusted Treasury Rate" means, with respect to any redemption
date, the rate per annum equal to (i) the yield under the heading which
represents the average for the immediately prior week, appearing in the most
recently published statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Federal Reserve Board and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant Maturities,"
for the maturity corresponding to the Remaining Life (if no maturity is within
three months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Adjusted Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month); or (ii) if
such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields,
2
<PAGE> 6
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date, in each case calculated on
the third Business Day preceding the redemption date, plus in each case (a)
___% if such redemption date occurs on or prior to ________ __, 20__, and (b)
___% in all other cases.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
Remaining Life of the Debentures to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity with the
Remaining Life of the Debentures. If no United States Treasury security has a
maturity which is within a period from three months before to three months
after _______ __, 20__, the two most closely corresponding United States
Treasury securities shall be used as the Comparable Treasury Issue, and the
Adjusted Treasury Rate shall be interpolated or extrapolated on a straight line
basis, rounding to the nearest month using such securities.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principle amount)
on the third Business Day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities"; or (ii) if such release (or any successor release)
is not published or does not contain such prices on such Business Day, (a) the
average of five Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (b) if the Debt Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Compounded Interest" shall have the meaning set forth in
Section 4.1.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Declaration" means the Amended and Restated Declaration of
Trust of MCN Financing IV, a Delaware statutory business trust, dated as of
_______ __, 1997.
"Deferred Interest" shall have the meaning set forth in
Section 4.1.
" Debentures" means the ____% Junior Subordinated
Debentures due 20__ of the Company.
3
<PAGE> 7
"Extended Interest Payment Period" shall have the meaning set
forth in Section 4.1.
"Global Debenture" shall have the meaning set forth in Section
2.4.
"Guarantee" means the guarantee by the Company of the payment
of distributions of money held by the Trust and payments on liquidation of the
Trust.
"Maturity Date" means the date on which the Debentures mature
and on which the principal shall be due and payable together with all accrued
and unpaid interest thereon including Compounded Interest and Additional
Interest, if any.
"Non Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.4.
"Optional Redemption Price" shall have the meaning set forth in
Section 3.2.
"Quotation Agent" means the Reference Treasury Dealer appointed
by the Trustee after consultation with the Company. "Reference Treasury
Dealer" means: (i) Merrill Lynch Government Securities, Inc. and its
respective successors; provided, however, that if the foregoing shall cease to
be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the
Trustee after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to
each reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
"Tax Event" means that the Regular Trustees of the Trust shall
have received an opinion of a nationally recognized independent tax counsel
experienced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision
or regulatory determination on or after such date), there is more than an
insubstantial risk that interest payable to the Trust on the Debentures would
not be deductible by the Company for United States federal income tax purposes.
4
<PAGE> 8
ARTICLE II.
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION A. Designation and Principal Amount.
There is hereby authorized a series of Securities designated
the "____% Junior Subordinated Debentures due 20__", limited in aggregate
principal amount to $_________ million, which amount shall be as set forth in
any written order of the Company for the authentication and delivery of
Debentures pursuant to Section 303 of the Indenture.
SECTION B. Maturity. The Maturity Date will be ________ __, 20__.
SECTION C. Form and Payment.
Except as provided in Section 2.4, the Debentures shall be
issued in fully registered certificated form without interest coupons.
Principal and interest on the Debentures issued in certificated form will be
payable, the transfer of such Debentures will be registrable and such
Debentures will be exchangeable for Debentures bearing identical terms and
provisions at the office or agency of the Institutional Trustee; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the Holder at such address as shall appear in the Security
Register. Notwithstanding the foregoing, so long as the Holder of any
Debentures is the Institutional Trustee, the payment of the principal of and
interest (including Compounded Interest and Additional Interest, if any) on
such Debentures held by the Institutional Trustee will be made at such place
and to such account as may be designated by the Institutional Trustee.
SECTION D. Global Debenture.
1. In connection with a distribution of the Debentures to the
holders of the Trust Securities,
a. the Debentures in certificated form may be presented
to the Trustee by the Institutional Trustee in exchange for a global
Debenture in an aggregate principal amount equal to the aggregate
principal amount of all outstanding Debentures (a "Global
Debenture"), to be registered in the name of the Depositary, or its
nominee, and delivered by the Institutional Trustee to the Depositary
for crediting to the accounts of its participants pursuant to the
instructions of the Regular Trustees. The Company, upon any such
presentation shall execute a Global Debenture in such aggregate
principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with the Indenture and this
______ Supplemental Indenture. Payments on the Debentures issued as a
Global Debenture will be made to the Depositary; and
5
<PAGE> 9
b. if any Capital Securities are held in non
book-entry certificated form, the Debentures in certificated form may
be presented to the Trustee by the Institutional Trustee and any
Capital Security Certificate which represents Capital Securities other
than Capital Securities held by the Clearing Agency or its nominee
("Non Book-Entry Capital Securities") will be deemed to represent
beneficial interests in Debentures presented to the Trustee by the
Institutional Trustee having an aggregate principal amount equal to
the aggregate liquidation amount of the Non Book-Entry Capital
Securities until such Capital Security Certificates are presented to
the Security Registrar for transfer or reissuance at which time such
Preferred Security Certificates will be cancelled and a Debenture,
registered in the name of the holder of the Capital Security
Certificate or the transferee of the holder of such Capital Security
Certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Security
Certificate cancelled, will be executed by the Company and delivered
to the Trustee for authentication and delivery in accordance with the
Indenture and this ______ Supplemental Indenture. On issue of such
Debentures, Debentures with an equivalent aggregate principal amount
that were presented by the Institutional Trustee to the Trustee will
be deemed to have been cancelled.
2. A Global Debenture may be transferred, in whole but not in
part, only to another nominee of the Depositary, or to a successor Depositary
selected or approved by the Company or to a nominee of such successor
Depositary.
3. If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary or if at any time the
Depositary for such series shall no longer be registered or in good standing
under the Securities Exchange Act of 1934, as amended, or other applicable
statute or regulation, and a successor Depositary for such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, the Company will
execute, and, subject to Article III of the Indenture, the Trustee, upon
written notice from the Company, will authenticate and deliver the Debentures
in definitive registered form without coupons, in authorized denominations, and
in an aggregate principal amount equal to the principal amount of the Global
Debenture in exchange for such Global Debenture. In addition, the Company may
at any time determine that the Debentures shall no longer be represented by a
Global Debenture. In such event the Company will execute, and subject to
Section 301 of the Indenture, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will authenticate and
deliver the Debentures in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such Global Debenture.
Upon the exchange of the Global Debenture for
6
<PAGE> 10
such Debentures in definitive registered form without coupons, in authorized
denominations, the Global Debenture shall be cancelled by the Trustee. Such
Debentures in definitive registered form issued in exchange for the Global
Debenture shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to the Depositary for delivery to the Persons in
whose names such Securities are so registered.
SECTION E. Interest.
1. Each Debenture will bear interest at the rate of
____% per annum (the "Coupon Rate") from the original date of issuance until
the principal thereof becomes due and payable, and on any overdue principal and
(to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the Coupon Rate, compounded
quarterly, payable (subject to the provisions of Article IV) semi-annually in
arrears on ________ and _________ of each year (each, an "Interest Payment
Date," commencing on __________ __, 199_), to the Person in whose name such
Debenture or any predecessor Debenture is registered, at the close of business
on the regular record date for such interest installment, which shall be any
date at least one Business Day before an Interest Payment Date.
2. The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable for any
period shorter than a full semi-annual period for which interest is computed,
will be computed on the basis of the actual number of days elapsed in such
180-day semi-annual period. In the event that any date on which interest is
payable on the Debentures is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
3. If, at any time while the Institutional Trustee is the
Holder of any Debentures, the Trust or the Institutional Trustee is required
to pay any taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States, or any other
taxing authority, then, in any case, the Company will pay as additional interest
("Additional Interest") on the Debentures held by the Institutional Trustee,
such additional amounts as shall be required so that the net amounts received
and retained by the Trust and the Institutional Trustee after paying such taxes,
duties, assessments or other governmental charges will be equal to the amounts
the Trust and the Institutional Trustee would
7
<PAGE> 11
have received had no such taxes, duties, assessments or other government
charges been imposed.
ARTICLE III.
REDEMPTION OF THE DEBENTURES
SECTION A. Tax Event Redemption.
If a Tax Event, has occurred and is continuing, then,
notwithstanding Section 3.2(a) but subject to Section 3.2(b), the Company shall
have the right, upon not less than 30 days nor more than 60 days notice to the
Holders of the Debentures to redeem the Debentures, in whole (but not in part),
for cash, at any time prior to ______, 20__, and within 90 days following the
occurrence of such Tax Event (the "90 Day Period") at a redemption price (the
"Redemption Price")equal to the greater of (i) 100% of the principal amount of
such Debentures or (ii) the sum, as determined by a Quotation Agent, of the
present values of the principal amount and premium payable as part of the
redemption price with respect to an optional redemption of such Debentures on
________ __, 20__, together with scheduled payments of inter- ests from the
redemption date to ______ __, 20__ (the "Remaining Life"), in each case,
discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of 30-day months) at the Adjusted Treasury Rate, plus, in each
case, accrued interest thereon to the date of redemption. The Redemption Price
shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or such earlier time as the Company determines, provided that the
Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., New York time, on the date such Redemption
Price is to be paid.
SECTION B. Optional Redemption by Company.
1. Subject to the provisions of Section 3.2(b) and to
the provisions of Article XI of the Indenture, except as otherwise may be
specified in this ______ Supplemental Indenture, the Company shall have the
right to redeem the Debentures, in whole or in part, from time to time, on or
after ________ , 20__, at a redemption price equal to the percentage of the
principal amount of the Debentures specified below, plus, in each case accrued
and unpaid interest thereon to the date of such redemption (the "Optional
Redemption Price"), if redeemed during the 12-month period beginning ______, of
the years indicated below:
YEARS PERCENTAGES
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
<PAGE> 12
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Any redemption pursuant to this paragraph will be made upon
not less than 30 days nor more than 60 days notice before the redemption date
to each Holder of the Debentures, at the Optional Redemption Price. If the
Debentures are only partially redeemed pursuant to this Section 3.2, the
Debentures will be redeemed pro rata or by lot or by any other method utilized
by the Trustee; provided, that if at the time of redemption the Debentures are
registered as a Global Debenture, the Depositary shall determine, in accordance
with its procedures, the principal amount of such Debentures held by each
Holder of Debenture to be redeemed. The Optional Redemption Price shall be
paid prior to 12:00 noon, New York time, on the date of such redemption or at
such earlier time as the Company determines provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Optional Redemption
Price by 10:00 a.m., New York time, on the date such Optional Redemption Price
is to be paid.
2. If a partial redemption of the Debentures would
result in the delisting of the Capital Securities issued by the Trust from any
national securities exchange or other organization on which the Capital
Securities are then listed, the Company shall not be permitted to effect such
partial redemption and may only redeem the Debentures in whole.
SECTION C. Maturity.
The entire principal amount of the Debenture will mature and
become due and payable with any accrued and unpaid interest thereon, including
Compounded Interest and Additional Interest, if any, on ________, 20__.
SECTION D. No Sinking Fund.
The Debentures are not entitled to the benefit of any sinking
fund.
ARTICLE IV.
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION A. Extension of Interest Payment Period.
The Company shall have the right, at any time and from time to
time during the term of the Debentures, to defer payments of interest by
extending the interest payment period of such Debentures for a period not
exceeding 10 semi-annual periods (the "Extended Interest Payment Period"),
during which Extended Interest Payment Period no interest shall be due and
payable; provided that no Extended Interest Payment Period may extend beyond
the Maturity Date. To the extent permitted by applicable law, interest, the
payment of which has been deferred because of the extension of the interest
payment period pursuant to this Section 4.1, will bear interest thereon at the
Coupon
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<PAGE> 13
Rate compounded semi-annually for each semi-annual period of the Extended
Interest Payment Period ("Compounded Interest"). At the end of the Extended
Interest Payment Period, the Company shall pay all interest accrued and unpaid
on the Debentures, including any Additional Interest and Compounded Interest
(together, "Deferred Interest") that shall be payable to the Holders of the
Debentures in whose names the Debentures are registered in the Security
Register on the first record date after the end of the Extended Interest
Payment Period. Before the termination of any Extended Interest Payment
Period, the Company may further extend such period, provided that such period
together with all such previous and further extensions thereof shall not exceed
10 consecutive semi-annual periods, or extend beyond the maturity date of the
Debentures. Upon the termination of any Extended Interest Payment Period and
upon the payment of all Deferred Interest then due, the Company may commence a
new Extended Interest Payment Period, subject to the foregoing requirements.
No interest shall be due and payable during an Extended Interest Payment
Period, except at the end thereof, but the Company may prepay at any time all
or any portion of the interest accrued during an Extended Interest Payment
Period.
SECTION B. Notice of Extension.
1. If the Institutional Trustee is the only registered
Holder of the Debentures at the time the Company selects an Extended Interest
Payment Period, the Company shall give written notice to the Regular Trustees,
the Institutional Trustee and the Trustee of its selection of such Extended
Interest Payment Period on the earlier of (i) 10 Business Days prior to the
next succeeding date on which Distributions on the Capital Securities issued by
the Trust are payable, or (ii) the date the Regular Trustee is required to give
notice of the record date, or the date such Distributions are payable, to the
New York Stock Exchange or other applicable self-regulatory organization or to
holders of the Capital Securities issued by the Trust, but in any event at
least one Business Day before such record date.
2. If the Institutional Trustee is not the only Holder
of the Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give the Holders of the Debentures and the Trustee
written notice of its selection of such Extended Interest Payment Period at
least 10 Business Days before the earlier of (i) the next succeeding Interest
Payment Date, or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to the New York Stock Exchange
or other applicable self-regulatory organization or to Holders of the
Debentures.
3. The period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the 10
semi-annual periods permitted in the maximum Extended Interest Payment Period
permitted under Section 4.1.
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<PAGE> 14
SECTION C. Limitation of Transactions.
If (i) the Company shall exercise its right to defer payment
of interest as provided in Section 4.1, or (ii) there shall have occurred any
Event of Default, as defined in the Indenture, then (a) the Company shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock (other than (i) purchases or acquisitions of shares of its
common stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans or the satisfaction by the Company
of its obligations pursuant to any contract or security outstanding on the date
of such event, (ii) as a result of a reclassification of its capital stock or
the exchange or conversion of one class or series of its capital stock for
another class or series of its capital stock or, (iii) the purchase of
fractional interests in shares of its capital stock pursuant to the conversion
or exchange provisions of such capital stock or security being converted or
exchanged), or make any guarantee payments with respect to the foregoing (b)
the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the
Company which rank pari passu with or junior to the Debentures, including any
other junior subordinated debentures issued by the Company and (c) the Company
shall not make any guarantee payments with respect to the foregoing (other than
ARTICLE V.
EXPENSES
SECTION A. Payment of Expenses.
In connection with the offering, sale and issuance of the
Debentures to the Institutional Trustee and in connection with the sale of the
Trust Securities by the Trust, the Company, in its capacity as borrower with
respect to the Debentures, shall:
1. pay all costs and expenses relating to the offering,
sale and issuance of the Debentures, including commissions to the underwriters
payable pursuant to the Underwriting Agreement and compensation of the Trustee
under the Indenture in accordance with the provisions of Section 607 of the
Indenture;
2. pay all costs and expenses of the Trust (including,
but not limited to, costs and expenses relating to the organization of the
Trust, the offering, sale and issuance of the Trust Securities (including
commissions to the underwriters in connection therewith), the fees and expenses
of the Institutional Trustee and the Delaware Trustee, the costs and expenses
relating to the operation of the Trust, including without limitation, costs and
expenses of accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating, travel
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<PAGE> 15
and telephone and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing, and disposition of
Trust assets);
3. be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration; and
4. pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
SECTION 5.2 Payment Upon Resignation or Removal
Upon termination of this ______ Supplemental Indenture or, the
Indenture or the removal or resignation of the Trustee pursuant to this Section
5.2, the Company shall pay to the Trustee all amounts accrued to the date of
such termination, removal or resignation. Upon termination of the Declaration
or the removal or resignation of the Delaware Trustee or the Institutional
Trustee, as the case may be, pursuant to Section 5.6 of the Declaration, the
Company shall pay to the Delaware Trustee or the Institutional Trustee, as the
case may be, all amounts accrued to the date of such termination, removal or
resignation.
ARTICLE VI.
COVENANT TO LIST ON EXCHANGE
SECTION A. Listing on an Exchange.
If the Debentures are to be issued as a Global Debenture in
connection with the distribution of the Debentures to the holders of the
Capital Securities issued by the Trust upon a Dissolution Event, the Company
will use its best efforts to list such Debentures on the New York Stock
Exchange, Inc. or on such other exchange as the Capital Securities are then
listed.
ARTICLE VII.
FORM OF DEBENTURE
SECTION A. Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication
to be endorsed thereon are to be substantially in the following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This
Debenture is a Global Debenture within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depositary or a nominee of a
Depositary. This Debenture is exchangeable for Debentures registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of
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<PAGE> 16
this Debenture (other than a transfer of this Debenture as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except
in limited circumstances.
Unless this Debenture is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any Debenture issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment hereon is made to Cede & Co., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.]
No. __________________
$_____________________
CUSIP No. ____________
13
<PAGE> 17
MCN ENERGY GROUP INC.
___% JUNIOR SUBORDINATED DEBENTURE
DUE 20__
MCN ENERGY GROUP INC., a Michigan corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to, ______________ or
registered assigns, the principal sum of _____________ Dollars ($___________)
on ______ __, 20__, and to pay interest on said principal sum from ______ __,
20__, or from the most recent interest payment date to which interest has been
paid or duly provided for, semi-annually (subject to deferral as set forth
herein) in arrears on _________ and __________ of each year (each such date, an
"Interest Payment Date") commencing ___________, 199_, at the rate of ___% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum compounded
semi-annually. The amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve 30-day months.
Except as provided in the following sentence, the amount of interest payable
for any period shorter than a full semi-annual period for which interest is
computed, will be computed on the basis of the actual number of day elapsed in
such a 180-day semi-annual period. In the event that any date on which
interest is payable on this Debenture is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture (or one or more Predecessor Securities, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment, which shall be the close of business on the
business day next preceding such Interest Payment Date. [IF PURSUANT TO THE
PROVISIONS OF THE INDENTURE THE DEBENTURES ARE NO LONGER REPRESENTED BY A
GLOBAL Debenture -- which shall be the close of business on the ____ business
day next preceding such Interest Payment Date.] Any such interest installment
not punctually paid or duly provided for shall forthwith cease to be payable to
the registered Holders on such regular record date and may be paid to the
Person in whose name this Debenture (or one or more Predecessor Securities) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered Holders of this series of Debentures not less than 10
days prior to such special record date, or may be
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<PAGE> 18
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of (and premium, if any) and the
interest on this Debenture shall be payable at the office or agency of the
Trustee maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered Holder at
such address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of this Debenture is the Institutional
Trustee, the payment of the principal of (and premium, if any) and interest on
this Debenture will be made at such place and to such account as may be
designated by the Institutional Trustee.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness and ___________ and this
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Trustee
on his or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each Holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
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<PAGE> 19
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed.
Dated
MCN ENERGY GROUP INC.
By:
Name:
Title
Attest:
By:
Name:
Title:
16
<PAGE> 20
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series of Securities
described in the within-mentioned Indenture.
Dated ___________________
NBD BANK
as Trustee
By________________________
Authorized Signatory
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<PAGE> 21
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the "Securities"),
specified in the Indenture, all issued or to be issued in one or more series
under and pursuant to an Indenture dated as of September 1, 1994, duly executed
and delivered between the Company and NBD Bank, as Trustee (the "Trustee") (as
supplemented by a First Supplemental Indenture, dated April 17, 1996, a
Second Supplemental Indenture, dated July 24, 1996, as so supplemented, the
"Base Indenture"), and a ______ Supplemental Indenture dated as of ______ __,
1997, between the Company and the Trustee (the Base Indenture as so
supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Debentures. By the terms of the
Indenture, the Debentures are issuable in series that may vary as to amount,
date of maturity, rate of interest and in other respects as provided in the
Indenture. This series of Debentures is limited in aggregate principal amount
as specified in said ______ Supplemental Indenture.
Because of the occurrence and continuation of a Tax Event (as
defined below), in certain circumstances, this Debenture may become due and
payable, in whole (but not in part) at any time prior to ________ __, 20__ and
within 90 days of the occurrence of such Tax Event, at a redemption price (the
"Redemption Price") equal to the greater of (i) 100% of the principal amount of
this Debenture or (ii) the sum, as determined by a Quotation Agent, of the
present values of the principal amount and premium payable as part of the
redemption price with respect to an optional redemption of this Debenture on
_______ __, 20__, together with scheduled payments of interest from the
redemption date to ________ __, 20__ (the "Remaining Life"), in each case
discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of 30-day months) at the Adjusted Treasury Rate, plus, in each
case, accrued interest thereon to the date of redemption. The Redemption Price
shall be paid prior to 12:00 noon, New York time, on the date of such earlier
time as the Company determines provided, that the Company shall deposit
redemption or at such with the Trustee an amount sufficient to pay the
applicable Redemption Price by 10:00 a.m., New York City time, on the date such
Redemption Price is to be paid.
"Tax Event" means that the Regular Trustees of the Trust shall
have received an opinion of a nationally recognized independent tax counsel
experienced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court,
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<PAGE> 22
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination on or after such date), there is more than an insubstantial risk
that interest payable to the Trust on the Debentures would not be deductible by
the Company for United States federal income tax purposes.
The Company shall have the right to redeem this Debenture at
the option of the Company, without premium or penalty, in whole or in part, on
or after ______ __, 20__ (an "Optional Redemption"), at a redemption price
equal to the percentage of the principal amount of this Debenture specified
below, plus, in each case, accrued and unpaid interest thereon to the date of
such redemption (the "Optional Redemption Price") if redeemed during the
12-month period beginning ___________, of the years indicated below:
YEAR PERCENTAGE
---- ----------
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20__ and thereafter . . . . . . . . . . . . . . . . . . . .
Any such redemption will be made upon not less than 30 days nor more
than 60 days notice before the redemption date, at the Optional Redemption
Price. If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption, the Debentures will be redeemed pro rata or by lot
or by any other method utilized by the Trustee; provided that if, at the time
of redemption, the Debentures are registered as a Global Debenture, the
Depositary shall determine the principal amount of such Debentures held by each
Debentureholder to be redeemed in accordance with its procedures.
In the event of redemption of this Debenture in part only, a
new Debenture or Debentures of this series for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Debentures
may be declared, and upon such declaration shall become, due and payable, in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the
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<PAGE> 23
Company and the Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Debentures of each series
affected at the time outstanding, as defined in the Indenture, to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Debentures; provided, however, that no such supplemental indenture shall
(i) change the stated maturity of the principal of, or any installment of
principal of or interest on, any Debentures of any Series, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the Holder of each Debenture so affected, or (ii) reduce
the aforesaid percentage of Debentures, the Holders of which are required to
consent to any such supplemental indenture, without the consent of the Holders
of each Debenture then outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Debentures of any series at the time outstanding affected
thereby, on behalf of all of the Holders of the Debentures of such series, to
waive any Default or Event of Default with respect to such series, and its
consequences, except a Default or Event of Default in the payment of the
principal of or premium, if any, or interest on any of the Debentures of such
series. Any such consent or waiver by the registered Holder of this Debenture
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Debenture and
of any Debenture issued in exchange therefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debenture at the time and place and at
the rate and in the money herein prescribed.
So long as the Company is not in default in the payment of
interest on the Debentures, the Company shall have the right at any time during
the term of the Debentures and from time to time to extend the interest payment
period of such Debentures for up to 10 consecutive semi-annual periods (an
"Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate specified for the Debentures to the extent that payment of such
interest is enforceable under applicable law); provided that no Extended
Interest Payment Period may last beyond the maturity date of the Debentures.
Before the termination of any such Extended Interest Payment Period, the
Company may further extend such Extended Interest Payment Period, provided that
such Extended Interest Payment Period together with all such previous
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<PAGE> 24
and further extensions thereof shall not exceed 10 consecutive semi-annual
periods or extend the maturity date of the Debentures. At the termination of
any such Extended Interest Payment Period and upon the payment of all accrued
and unpaid interest and any additional amounts then due, the Company may
commence a new Extended Interest Payment Period.
In the event that the Company exercises this right, then (a)
the Company shall not declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Company's capital stock (other than (i) purchases or acquisitions of
shares of its Common Stock in connection with the satisfaction of its
obligations under any employee benefit plans or the satisfaction by the Company
of its obligations pursuant to any contract or security outstanding on the date
of such exercise requiring the Company to purchase shares of its Common Stock,
(ii) as a result of a reclassification of its capital stock or the exchange or
conversion of one class or series of its capital stock for another class or
series of its capital stock or (iii) the purchase of fractional interests in
shares of its capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged) or make any
guarantee payments with respect to the foregoing (b) the Company shall not make
any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities issued by the Company that rank pari
passu with or junior the Debentures and other junior subordinated debentures
issued by the Company or (c) the Company shall not (other than pursuant to the
Capital Securities Guarantee) make any guarantee payments with respect to the
foregoing.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered Holder
hereof on the Security Register of the Company, upon surrender of this Debenture
for registration of transfer at the office or agency of the Trustee in the City
of Detroit and State of Michigan accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the registered Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and the Security
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Security
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any paying agent nor any
Security
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<PAGE> 25
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of
or the interest on this Debenture, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
The Indenture imposes certain limitations on the ability of
the Company to, among other things, merge or consolidate with any other Person
or sell, assign, transfer or lease all or substantially all of its properties
or assets. All such covenants and limitations are subject to a number of
important qualifications and exceptions. The Company must report periodically
to the Trustee on compliance with the covenants in the Indenture.
The Debentures of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. This Global Debenture is exchangeable for Debentures in definitive
form only under certain limited circumstances set forth in the Indenture.
Debentures of this series so issued are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Debentures of this series so issued are exchangeable for a like
aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
All terms used in this Debenture that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
ARTICLE VIII.
ORIGINAL ISSUE OF DEBENTURES
SECTION A. Original Issue of Debentures.
Debentures in the aggregate principal amount of $_________
may, upon execution of this Second Supplemental Indenture, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Debentures to or upon the written order
of the Company, signed by its Chairman, its Vice Chairman, its President, or
any Vice President and its Treasurer or an Assistant Treasurer, without any
further action by the Company.
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<PAGE> 26
ARTICLE IX.
MISCELLANEOUS
SECTION A. Ratification of Indenture.
The Indenture, as supplemented by this ______ Supplemental
Indenture, is in all respects ratified and confirmed, and this ______
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
SECTION B. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not
by the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this ______ Supplemental Indenture.
SECTION C. Governing Law.
This ______ Supplemental Indenture and each Debenture shall be
deemed to be a contract made under the internal laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of said
State.
SECTION D. Separability.
In case any one or more of the provisions contained in this
______ Supplemental Indenture or in the Debentures shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
______ Supplemental Indenture or of the Debentures, but this Second
Supplemental Indenture and the Debentures shall be construed as if such invalid
or illegal or unenforceable provision had never been contained herein or
therein.
SECTION E. Counterparts.
This ______ Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
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<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this ______
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, on the date or dates indicated in
the acknowledgements and as of the day and year first above written.
MCN ENERGY GROUP INC.
By
Name:
Title:
Attest:
By:______________________
NBD BANK
as Trustee
By
Name:
Title:
Attest:
By:___________________
<PAGE> 1
EXHIBIT 5.1
[SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP LETTERHEAD]
March 7, 1997
MCN Corporation
MCN Financing II
MCN Financing III
MCN Financing IV
c/o MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Re: MCN Corporation;
MCN Financing II;
MCN Financing III;
MCN Financing IV;
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to (1) MCN Corporation (the
"Company"), a corporation organized under the laws of the State of Michigan and
(2) MCN Financing II, MCN Financing III and MCN Financing IV (each an "MCN
Trust" and, together, the "MCN Trusts"), statutory business trusts formed under
the Business Trust Act of the State of Delaware, in connection with the
preparation of a Registration Statement on Form S-3 (File No. 333-21175), filed
by the Company and the MCN Trusts with the Securities and Exchange Commission
(the "Commission") on February 5, 1997 under the Securities Act of 1933, as
amended (the "Act") (such Registration Statement being hereinafter referred to
as the "Registration Statement") relating to the registration under the Act of
the preferred securities (the "Preferred Securities") of each of the MCN Trusts
and certain other securities.
The Preferred Securities of each MCN Trust are to be issued
pursuant to the Amended and Restated Decla-
<PAGE> 2
MCN Corporation
March 7, 1997
Page 2
ration of Trust of such MCN Trust (each a "Declaration" and, collectively, the
"Declarations"), each such Declaration being among the Company, as sponsor,
Wilmington Trust Company, as the institutional trustee and as Delaware trustee
(the "Institutional Trustee") and Daniel L. Schiffer and Sebastian Coppola, as
regular trustees (together, the "Regular Trustees").
This opinion is being delivered in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
certificate of trust of each of the MCN trusts (the "Certificates of Trust")
filed with the Secretary of State of the State of Delaware on March 6, 1996
with respect to MCN Financing II and February 3, 1997, in the case of MCN
Financing III and MCN Financing IV; (ii) the form of the Declaration of each of
the MCN Trusts (including the designation of the terms of the Preferred
Securities annexed thereto); and (iii) the form of the Preferred Securities of
each of the MCN Trusts. We have also examined originals or copies, certified
or otherwise identified to our satisfaction, of such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us a certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the MCN Trusts, we have assumed that
such parties had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of
<PAGE> 3
MCN Corporation
March 7, 1997
Page 3
such parties. In addition, we have assumed that the Declaration of each MCN
Trust, and the Preferred Securities of each MCN Trust, when executed, will
be in substantially the form reviewed by us. As to any facts material to the
opinions expressed herein which were not independently established or verified,
we have relied upon oral or written statements and representations of officers,
trustee and other representatives of the Company, the MCN Trusts and others.
Members of our firm are admitted to the bar in the State of
New York, and we express no opinion as to the laws of any jurisdiction other
than the Business Trust Act of the State of Delaware.
Based on and subject to the foregoing and to the other
qualifications and limitations set forth herein, we are of the opinion that the
Preferred Securities of each MCN Trust, when the Declaration of such MCN Trust
is duly executed and delivered and the terms of the Preferred Securities are
established in accordance with the terms of the Declaration of such MCN Trust,
will be duly authorized for issuance and, when issued and executed in
accordance with the Declaration of such MCN Trust and delivered and paid for as
set forth in the form of prospectus supplement for the Preferred Securities
included in the Registration Statement, will be validly issued, fully paid and
nonassessable, representing undivided beneficial interests in the assets of
such MCN Trust. We bring to your attention, however, that the Preferred
Securities holders may be obligated, pursuant to the Declaration of such MCN
Trust, to (i) provide indemnity and/or security in connection with and pay
taxes or governmental charges arising from transfers of Preferred Securities
and (ii) provide security and indemnity in connection with the requests of or
directions to the Institutional Trustee of such MCN Trust to exercise its
rights and powers under the Declaration of such MCN Trust.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to the
use of our name under
<PAGE> 4
MCN Corporation
March 7, 1997
Page 4
the headings "Validity of Securities" in the base prospectus and "Legal
Matters" in the prospectus supplements included in the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act or the rules
and regulations of the Commission promulgated thereunder. This opinion is
expressed as of the date hereof unless otherwise expressly stated and we
disclaim any undertaking to advise you of any subsequent changes of the facts
stated or assumed herein or of any subsequent changes in applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher
& Flom LLP
<PAGE> 1
[MCN ENERGY GROUP INC. LETTERHEAD]
DANIEL L. SCHIFFER
Senior Vice President
General Counsel And Secretary
EXHIBIT 5-2
March 7, 1997
MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
Ladies and Gentlemen:
I an acting as counsel for MCN Corporation a Michigan corporation,
doing business as MCN Energy Group Inc., ("MCN") and MCN Financing II, MCN
Financing III and MCN Financing IV, each a Delaware business trust
(collectively, the "MCN Trusts"), in connection with its filing with the
Securities and Exchange Commission (the "Commission") of a Registration
Statement (File No. 333-21175) on Form S-3 (the "Registration Statement") with
respect to the Company's (i) unsecured senior debt securities (the "Senior Debt
Securities"), (ii) unsecured subordinated debt securities (the "Subordinated
Debt Securities") (item (i) or (ii) above being referred to herein as the
"Debt Securities"), (iii) shares of common stock, $.01 par value per share,
including the preferred stock purchase rights associated therewith
(collectively, "Common Stock"), (iv) stock purchase contracts to purchase
Common Stock ("Stock Purchase Contracts") and (v) stock purchase units, each
representing ownership of a Stock Purchase Contract and Debt Securities,
Preferred Securities (as defined below) or debt obligations of third parties,
including U.S. Treasury Securities, securing the holder's obligation to
purchase the Common Stock under the Stock Purchase Contract ("Stock Purchase
Units"). The Registration Statement also relates to the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of preferred
securities of the MCN Trusts (the "Preferred Securities") and guarantees of the
Preferred Securities by MCN (the "Preferred Securities Guarantees" and,
together with the Debt Securities, the Common Stock, the Stock Purchase
Contracts, the Stock Purchase Units and the Preferred Securities, the "Offered
Securities"). The Offered Securities will be issued from time to time pursuant
to the provisions of Rule 415
<PAGE> 2
MCN Corporation
March 7, 1997
Page 2
under the Securities Act. Capitalized terms used but not defined herein are
used as defined in the Registration Statement.
In preparation for rendering my opinion hereafter expressed, I have
examined the originals or copies certified to my satisfaction of corporate
records and other documents and certificates as I have deemed necessary.
Based on the above, I am of the opinion that:
1. MCN is a corporation duly organized and validly existing
pursuant to the laws of the State of Michigan;
2. The Debt Securities, the Common Stock, the Stock Purchase
Contracts and the Stock Purchase Units, which are covered by the
Registration Statement, when sold will be legally issued by MCN,
duly authorized, fully paid and non-assessable and, in the case
of the Debt Securities, will constitute valid and binding
obligations of MCN, enforceable against MCN in accordance with
their terms, except as such enforcement is subject to any
applicable bankruptcy insolvency, reorganization or other law
relating to or affecting creditors' rights generally and general
principles of equity; and
3. Upon issuance, the Preferred Securities Guarantees will
constitute the legal, valid and binding obligation of MCN,
enforceable against MCN in accordance with their terms, except
as such enforcement is subject to any applicable bankruptcy,
insolvency, reorganization or other law relating to or affecting
creditors' rights generally and general principles of equity.
<PAGE> 3
MCN Corporation
March 7, 1997
Page 3
I hereby consent to the use of this opinion as Exhibit 5-2 to the
Registration Statement and to the use of my name under the caption
"Validity of Securities" in the Prospectus and "Legal Matters" in the
Prospectus Supplements included therein.
Very truly yours,
/s/ Daniel L. Schiffer
<PAGE> 1
EXHIBIT 8.1
[SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP LETTERHEAD]
DIRECT DIAL
(212) 735-3000
DIRECT FAX
(212) 735-2000
March 7,1997
MCN Corporation
MCN Financing II
MCN Financing III
MCN Financing IV
c/o MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Re: MCN Corporation;
MCN Financing II;
MCN Financing III;
MCN Financing IV;
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as special United States tax counsel to (1) MCN
Corporation, a corporation organized under the laws of the State of Michigan,
doing business as MCN Energy Group Inc. (the "Company"), and (2) MCN Financing
II , MCN Financing III and MCN Financing IV (each an "MCN Trust" and, together,
the "MCN Trusts"), statutory business trusts formed under the laws of the State
of Delaware, in connection with the preparation of a Registration Statement
(No. 333-21175) on Form S-3, which was filed by the Company and the MCN Trusts
with the Securities and Exchange Commission (the "Commission") on February 5,
1997, under the Securities Act of 1933, as amended (the "Act") (such
Registration Statement, as amended, being hereinafter referred to as the
"Registration Statement") relating to the registration under the Act of the
Stock Purchase Units, consisting of Income PRIDES and Growth PRIDES (together,
the "FELINE PRIDES") and the preferred securities to be issued by MCN Financing
II, MCN Financing III (as a component of the Income PRIDES), and MCN Financing
IV (in the form of "Capital Securities") (collectively, the "Preferred
Securities"), and certain other securities of the Company.
<PAGE> 2
MCN Corporation
MCN Financing II
MCN Financing III
MCN Financing IV
March 7, 1997
Page 2
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, such documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinion set forth herein.
Based upon the foregoing, we are of the opinion that the
descriptions set forth under the captions "Certain Federal Income Tax
Consequences" and "United States Federal Income Taxation" in the prospectus
supplements included as part of the Registration Statement correctly describe
the material aspects of the United States federal income tax treatment, as of
the date hereof, of an investment in the FELINE PRIDES and the Preferred
Securities.
We hereby consent to the filing of this opinion with the
Commission as part of Exhibit 8-1 to the Registration Statement. We also
consent to the use of our name under the headings "Validity of Securities" in
the base prospectus and "Legal Matters" in the prospectus supplements for the
FELINE PRIDES and the Preferred Securities included within the Registration
Statement. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder. This
opinion is expressed as of the date hereof unless otherwise expressly stated
and we disclaim any undertaking to advise you of any subsequent changes of the
facts stated or assumed herein or any subsequent changes in applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher
& Flom LLP
<PAGE> 1
EXHIBIT 23.1
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-21175 on Form S-3 of MCN Corporation, doing
business as MCN Energy Group Inc. (the "Corporation"), of our reports dated
February 7, 1997 (which expresses an unqualified opinion and includes an
explanatory paragraph relating to the Corporation's adoption of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"), appearing in and incorporated by reference in the Annual Report
on Form 10-K of the Corporation for the year ended December 31, 1996, and to
the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
Deloitte & Touche LLP
March 7, 1997
<PAGE> 1
EXHIBIT 23-2
[S. A. HOLDITCH & ASSOCIATES, INC., LETTERHEAD]
February 28, 1997
MCN Corporation
500 Griswold
Detroit, Michigan 48226
RE: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of S. A. Holditch & Associates, Inc., consents to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
December 30, 1996, appearing in the Annual Report on Form 10-K of MCN
Corporation for the year ended December 31, 1996, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration statement
of MCN Corporation relating to the securities included in this Registration
Statement on Form S-3 filed after the date hereof pursuant to Rule 462(b) under
the Securities Act of 1933, as amended.
Very truly yours,
/s/ W. Denton Copeland
W. Denton Copeland, P.E.
Vice President, S. A. Holditch & Associates, Inc.
<PAGE> 1
EXHIBIT 23-3
[LEE KEELING AND ASSOCIATES, INC. LETTERHEAD]
February 28, 1997
MCN Corporation
500 Griswold
Detroit, Michigan 48226
Re: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Lee Keeling and Associates Inc., Petroleum Consultants, consents to
the incorporation by reference in this Registration Statement on Form S-3 of
our report dated January 7, 1997, appearing in the Annual Report on Form 10-K
of MCN Corporation for the year ended December 31, 1996, and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration statement
of MCN Corporation relating to the securities in this Registration Statement on
Form S-3 filed after the date hereof pursuant to Rule 462(b) under the
Securities Act of 1933, as amended.
Very truly yours,
/s/ Lee Keeling and Associates, Inc.
LEE KEELING AND ASSOCIATES, INC.
PETROLEUM CONSULTANTS
<PAGE> 1
EXHIBIT 23-4
[RYDER SCOTT COMPANY PETROLEUM ENGINEERS LETTERHEAD]
February 28, 1997
MCN Corporation
500 Griswold
Detroit, Michigan 48226
Re: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Ryder Scott Company Petroleum Engineers consents to the
incorporation by reference in this Registration Statement on Form S-3 of our
report dated February 10, 1997, appearing in the Annual Report on Form 10-K of
MCN Corporation for the year ended December 31, 1996, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Corporation relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
Very truly yours,
/s/ Ryder Scott Company
Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
<PAGE> 1
EXHIBIT 23-5
[MILLER AND LENTS, LTD. OIL AND GAS CONSULTANTS LETTERHEAD]
February 28, 1997
MCN Corporation
500 Griswold
Detroit, MI 48226
Re: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Miller and Lents, Ltd. consents to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated
January 15, 1997, appearing in the Annual Report on Form 10-K of MCN
Corporation for the year ended December 31, 1996, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Corporation relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
Miller and Lents, Ltd. has no interest in MCN Corporation or in any
affiliated companies or subsidiaries and is not to receive such interest as
payment for such reports and has no director, officer, or employee otherwise
connected with MCN Corporation. We are not employed by MCN Corporation on a
contingent basis.
Yours very truly,
MILLER AND LENTS, LTD.
By /s/ P. G. Von Tungeln
-----------------------------
P. G. Von Tungeln
Chairman
PGVT/mk
<PAGE> 1
EXHIBIT 23-8
[QUESTA ENGINEERING CORPORATION LETTERHEAD]
February 28, 1997
MCN Corporation
500 Griswold
Detroit, Michigan 48226
Re: MCN CORPORATION
FORM S-3 REGISTRATION STATEMENT
Ladies and Gentlemen,
The firm of Questa Engineering Corporation consents to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated
January 6, 1997, appearing in the Annual Report on Form 10-K of MCN Corporation
for the year ended December 31, 1996, and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
This consent may be incorporated by reference into any registration statement
of MCN Corporation relating to the securities included in this Registration
Statement on Form S-3 filed after the date hereof pursuant to Rule 462(b) under
the Securities Act of 1933, as amended.
Very truly yours,
QUESTA ENGINEERING CORPORATION
/s/ John D. Wright
John D. Wright
President
<PAGE> 1
EXHIBIT 23-9
[ADVANCED RESOURCES INTERNATIONAL LETTERHEAD]
March 3, 1997
MCN Corporation
500 Griswold
Detroit, Michigan 48226
RE: MCN CORPORATION
FORM S-3 REGISTRATION STATEMENT
Ladies and Gentlemen:
The firm of Advanced Resources International, Inc. consents to
incorporation by reference in this Registration Statement on Form S-3 of our
report dated January 21, 1997, appearing in the Annual Report on Form 10-K of
MCN Corporation for the year ended December 31, 1996, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Corporation relating to the securities included in the
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1993, as amended.
Very truly yours,
/s/ Vello A. Kuuskraa
Vello A. Kuuskraa
President
<PAGE> 1
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Corporation pursuant to Rule 46, (b) of the Securities Act of 1933, as amended
(the "1933 Act"), or other filings in connection therewith, under the 1933 Act,
as amended, with respect to the issuance of up to $500,000,000 maximum aggregate
offering price of securities of MCN Corporation, including MCN Debt Securities,
MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common Stock or the
securities of any special purpose financing entity; granting to such attorneys
and agents, and each of them, full power of substitution and revocation in the
premises; and ratifying and confirming all that such attorneys and agents, or
either of them, may do or cause to be done by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 27th
day of January, 1997.
/s/ Alfred R. Glancy III
--------------------
Alfred R. Glancy III
<PAGE> 2
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $500,000,000
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and, ratifying and confirming all
that such attorneys and agents, or either of them may do or cause to be done by
virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 27th
day of January, 1997.
/s/ Bill M. Thompson
------------------
Bill M. Thompson
<PAGE> 1
EXHIBIT 25-1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ___
____________________________________________
NBD BANK
(Exact name of Trustee as specified in its charter)
<TABLE>
<S> <C> <C>
611 WOODWARD AVENUE
DETROIT, MICHIGAN 48226 38-0864715
(Address of principal executive offices) (Zip Code) (I.R.S. Employer Identification No.)
</TABLE>
NBD BANK
611 Woodward Avenue
Detroit, Michigan 48226
Corporate Trust Services
Attn: James D. Khami (313) 225-3189
(Name, address and telephone number of agent for service)
MCN CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
MICHIGAN 38-2820658
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
500 GRISWOLD STREET
DETROIT, MICHIGAN 48103
(Address of principal executive offices) (Zip Code)
% SENIOR DEBT SECURITIES
(Title of Indenture Securities)
==============================================================================
<PAGE> 2
1. GENERAL INFORMATION
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
- State of Michigan Financial Institutions Bureau
- Federal Reserve Bank of Chicago, Chicago, Illinois
- Federal Deposit Insurance Corporation, Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR.
The obligor is not an affiliate of the Trustee.
3. VOTING SECURITIES OF THE TRUSTEE.
The following information is furnished as to each class of voting
securities of the Trustee:
AS OF MARCH 5, 1997
Column A Column B
Title of Class Amount Outstanding
Common Stock, par value $12.50 per share 8,948,648 shares
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
The Trustee also serves as Trustee under an indenture dated as of
September 1, 1994, as supplemented by the First Supplemental Indenture
dated April 17, 1996 under which the Company issued $101,100,000 Series A
Subordinated Deferrable Interest Debt Securities due 2024, and as
supplemented by the Second Supplemental Indenture dated July 24, 1996
under which the Company issued $82,474,250 8-5/8% Junior Subordinated
Debentures due 2036. As of March 5, 1997, the Trustee is submitting T-1
filings for both a Senior Debt Securities Indenture and a Subordinated
Debt Securities Indenture.
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR
OR UNDERWRITERS.
Neither the Trustee nor any of the directors or executive officers of the
Trustee is a director, officer, partner, employee, appointee or
representative of the obligor or of any underwriter for the obligor,
except Alfred R. Glancy III, Chairman, President and CEO of MCN
Corporation, who is a member of the Board of Directors of the Trustee, and
Thomas H. Jeffs II, President and Chief Operating Officer of the Trustee,
who serves as a member of the Board of Directors of the obligor.
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Voting securities of the Trustee owned by the obligor and its directors,
partners and executive officers, taken as a group, do not exceed one
percent of the outstanding voting securities of the Trustee.
<PAGE> 3
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Voting securities of the Trustee owned by any underwriter and its
directors, partners and executive officers, taken as a group, do not
exceed one percent of the outstanding voting securities of the Trustee.
8. SECURITIES OF OBLIGOR OWNED OR HELD BY THE TRUSTEE.
The amount of securities of the obligor which the Trustee owns
beneficially or holds as collateral security for obligations in default
does not exceed one percent of the outstanding securities of the obligor.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
The Trustee does not own beneficially, nor hold as collateral security
for obligations in default, any securities of an underwriter for the
obligor.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
The Trustee does not own beneficially, nor hold as collateral security for
obligations in default, voting securities of a person who, to the
knowledge of the Trustee: (1) owns 10% or more of the voting securities of
the obligor, or (2) is an affiliate, other than a subsidiary, of the
obligor.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PER CENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
The Trustee does not own beneficially, nor hold as collateral security
for obligations in default, any securities of a person who, to the
knowledge of the Trustee, owns 50 percent or more of the voting securities
of the obligor.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
NBD Bank provides a letter of credit facility to MCN Corporation in the
amount of $500,000.00, and maintains a 40% settlement limit in a
$2,000,000.00 foreign exhange line of credit to the obligor. In addition,
the Trustee has a $25,000,000.00 participation in a $100,000,000.00
non-amortizing term loan to MCNIC Oil and Gas Company, a subsidiary of the
obligor, which is agented by NBD and matures in December, 2000. The
Trustee also provides a letter of credit facility to Michigan Consolidated
Gas Company, another subsidiary of the obligor, in the amount of
$1,000,000.00 maturing September, 1997. As of March 5, 1997, the
outstanding amount of this facility is -0-.
13. DEFAULTS BY THE OBLIGOR.
Not applicable.
14. AFFILIATIONS WITH THE UNDERWRITERS.
No underwriter is an affiliate of the Trustee.
15. FOREIGN TRUSTEE.
Not applicable.
<PAGE> 4
16. LIST OF EXHIBITS.
(1) Articles of Incorporation of the Trustee.
(2) Certificate of Authority of the Trustee to commence business.
Incorporated by reference to Exhibit (2) filed with Amendment
No. 1 to Form T-1 Statement, Registration No. 22-4501.
(3) Authorization of the Trustee to exercise corporate trust powers.
Incorporated by reference to Exhibit (3) filed with Amendment
No. 1 to Form T-1 Statement, Registration No. 22-4501.
(4) By-laws of the Trustee.
(5) Not Applicable.
(6) Consent by the Trustee required by Section 321 (b) of the
Trust Indenture Act of 1939. Incorporated by reference to
Exhibit (6) filed with Amendment No. 1 to Form T-1 Statement,
Registration No. 22-4501.
(7) Report of condition of Trustee.
(8) Not applicable.
(9) Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the Trustee, NBD Bank, a Michigan banking corporation organized and existing
under the laws of the State of Michigan, has duly caused this Statement of
Eligibility and Qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Detroit, State of Michigan on the
5th day of March, 1997.
NBD BANK, Trustee
By: /s/ James D. Khami
--------------------------
James D. Khami
Trust Officer
<PAGE> 5
EXHIBIT #1
[NBD LOGO]
ARTICLES OF
INCORPORATION
AND
BYLAWS
NBD BANK
DETROIT, MICHIGAN
CHARTER NO. 970
<PAGE> 6
ARTICLES OF INCORPORATION
EFFECTIVE JANUARY 1, 1995
FIRST.
THE NAME OF THIS BANK SHALL BE NBD BANK.
SECOND.
THE PLACE WHERE THE PRINCIPAL OFFICE OF THIS BANK IS LOCATED IS IN THE CITY OF
DETROIT, WAYNE COUNTY, STATE OF MICHIGAN.
THE BOARD OF DIRECTORS SHALL HAVE THE POWER TO CHANGE THE LOCATION OF THE MAIN
OFFICE ANYWHERE WITHIN THE CITY OF DETROIT WITHOUT THE APPROVAL OF THE
SHAREHOLDERS AND SHALL HAVE THE POWER TO ESTABLISH OR CHANGE THE LOCATION OF
ANY BRANCH OR BRANCHES OF THIS BANK TO ANY OTHER LOCATION WITHOUT THE APPROVAL
OF THE SHAREHOLDERS.
THIRD.
THE PURPOSE OF THIS BANK IS TO CARRY ON THE BUSINESS OF BANKING PURSUANT TO THE
MICHIGAN BANKING CODE OF 1969, AS AMENDED.
FOURTH.
THE AUTHORIZED AMOUNT OF THE CAPITAL STOCK OF THIS BANK SHALL BE 10,000,000
SHARES OF COMMON STOCK OF THE PAR VALUE OF $12.50 EACH. THE AUTHORIZED AMOUNT
OF THE CAPITAL STOCK OF THIS BANK MAY BE INCREASED OR DECREASED FROM TIME TO
TIME IN ACCORDANCE WITH PROVISIONS OF THE LAWS OF THE STATE OF MICHIGAN.
FIFTH.
THE PERIOD FOR WHICH THIS BANK IS ORGANIZED IS PERPETUAL.
SIXTH.
A DIRECTOR OF THE BANK SHALL NOT BE PERSONALLY LIABLE TO THE BANK OR ITS
SHAREHOLDERS FOR MONETARY DAMAGES FOR A BREACH OF FIDUCIARY DUTY AS A DIRECTOR,
EXCEPT FOR LIABILITY: (A) FOR ANY BREACH OF THE DIRECTOR'S DUTY OF LOYALTY TO
THE BANK OR ITS SHAREHOLDERS; (B) FOR ACTS OR OMISSIONS NOT IN GOOD FAITH OR
WHICH INVOLVE INTENTIONAL MISCONDUCT OR A KNOWING VIOLATION OF LAW; (C)
RESULTING FROM A VIOLATION OF SECTION 43 OF THE MICHIGAN BANKING CODE, AS
AMENDED; (D) FOR ANY TRANSACTION FROM WHICH THE DIRECTOR DERIVED AN IMPROPER
PERSONAL BENEFIT; OR (E) FOR ANY ACT OR OMISSION OCCURRING PRIOR TO THE DATE
UPON WHICH THIS ARTICLE IS DULY ADOPTED AND FILED AS REQUIRED BY LAW. IF,
FOLLOWING APPROVAL OF THIS ARTICLE BY THE SHAREHOLDERS, THE MICHIGAN BANKING
CODE IS AMENDED TO AUTHORIZE CORPORATE ACTION FURTHER ELIMINATING OR LIMITING
THE PERSONAL LIABILITY OF
DIRECTORS, THEN THE LIABILITY OF A DIRECTOR OF THE BANK SHALL BE ELIMINATED OR
LIMITED TO THE FULLEST EXTENT PERMITTED BY THE MICHIGAN BANKING CODE, AS
AMENDED. ANY REPEAL, MODIFICATION OR ADOPTION OF ANY PROVISIONS IN THESE
ARTICLES OF INCORPORATION INCONSISTENT WITH THIS ARTICLE SHALL NOT ADVERSELY
AFFECT ANY RIGHT OR PROTECTION OF A DIRECTOR OF THE BANK EXISTING AT THE TIME
OF SUCH REPEAL, MODIFICATION OR ADOPTION.
SEVENTH.
THESE ARTICLES OF INCORPORATION MAY BE CHANGED OR AMENDED AT ANY TIME BY A VOTE
OF THE SHAREHOLDERS OWNING A MAJORITY OF THE STOCK OF THIS BANK IN ANY MANNER
NOT INCONSISTENT WITH THE PROVISIONS OF LAW.
<PAGE> 7
EXHIBIT #4
NBD BANK
DETROIT, MICHIGAN
BYLAWS
EFFECTIVE JANUARY 1, 1995
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. Annual Meetings. The regular Annual Meeting of the stockholders of
this Bank for the election of directors and for the transaction of any other
business as may properly come before the meeting shall be held on the third
Monday in May of each year or at such other date as from time to time may be
designated by the Board of Directors. If the election of directors shall not
be held on the day designated for an annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a
meeting of the stockholders as soon thereafter as convenient. Nominations for
election to the Board of Directors may be made by the Board of Directors or by
any stockholders entitled to vote for the election of directors.
Section 2. Special Meetings. Except as otherwise specifically provided by
statute, special meetings of the stockholders may be called for any purpose at
any time by the Board of Directors or by the holders of at least ten per cent
(10%) of the then outstanding shares of stock.
Section 3. Place of Meetings. Annual meetings or special meetings of the
stockholders shall be held at the main office of the Bank or at such other
place within or without the State of Michigan as is established by the Board of
Directors.
Section 4. Proxies. All proxies secured for any annual or special meeting of
stockholders shall be dated and filed by the Secretary with the records of the
meeting.
Section 5. Notice of Meetings. Written notice stating the place, day and hour
of the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten days, before
the date of the meeting either personally or by mail, by or at the direction of
the President, or the Secretary, or the officer or persons calling the meeting
to each stockholder of record entitled to vote at such meeting. If mailed,
such notices shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
records of the Bank with postage thereon prepaid. Such notice may be waived in
writing.
<PAGE> 8
Section 6. Fixing the Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders,
annual or special, or entitled to receive payment of any dividend, or in order
to make a determination of stockholders for any other proper purpose, the Board
of Directors shall fix in advance a record date and hour for any such
determination of stockholders, such date in any case to be not more than fifty
(50) days and, in case of a meeting of stockholders, not less than ten (10)
days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. When a determination of
stockholders entitled to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
Section 7. Stockholders' Action Without A Meeting. Unless otherwise
restricted in the Articles of Incorporation or these Bylaws, any action which
may be taken at the annual or any special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by all stockholders
entitled to vote with respect to the subject matter thereof.
ARTICLE II
DIRECTORS
Section 1. Size and Vacancies. The Board of Directors shall consist of such
number of persons, not less than five nor more than twenty-five, as from time
to time shall be determined by a majority of the votes to which all
stockholders are at the time entitled or by resolution adopted by the
affirmative vote of a majority of the Board of Directors. Any vacancies in the
Board of Directors may be filled by action of a majority of the remaining
Directors between meetings of stockholders. Subject to the limitation as to
the number of Directors, the stockholders may elect not to exceed two less than
the full Board, and the unfilled directorships shall be considered as vacancies
and may be filled thereafter by the Board of Directors.
Section 2. Powers. The Board of Directors, a majority of whom shall be a
quorum to transact business, shall have power to manage and administer the
business and affairs of the Bank and to prescribe Bylaws for the regulation of
the business of the Bank and the conduct of its affairs not inconsistent with
law, the Articles of Incorporation and these Bylaws. Except as expressly
limited by law, all corporate powers of the Bank shall be vested in and may be
exercised by the Board of Directors.
Section 3. Officers and Employees. The Board of Directors shall have power to
elect or appoint such officers and employees as may be required to transact the
business of the Bank, to define their duties, to require bonds from them and to
fix the penalty thereof, and to continue them in office or dismiss them.
Section 4. Meetings. The regular meetings of the Board of Directors shall be
held on such date and at such time each month, within or without the State of
Michigan as shall from time to time be determined by the Board of Directors by
resolution, except that in the month in which the regular annual meeting of the
stockholders is held, the regular meeting of the Board of Directors shall
<PAGE> 9
be held following and on the same day as the regular meeting of the
stockholders. When any regular meeting of the Board of Directors falls upon a
holiday, the meeting shall be held on such other day as the Board of Directors
may previously designate. Special meetings of the Board of Directors may be
called at any time by the Secretary or by any officer of higher rank than Vice
President, or any three Directors. Notice of each special meeting shall be
given personally or by duly mailing, telephoning, or telegraphing the same, at
least twenty-four hours before the meeting. Any or all Directors may waive
notice of any meeting either before or after the meeting.
Section 5. Participation In Meetings By Telephone. Unless otherwise
restricted by the Articles of Incorporation or these Bylaws, members of the
Board of Directors or any committee designated by the Board may participate in
a meeting of the Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Section 6. Directors' Action Without A Meeting. Unless otherwise restricted
by the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent thereto
is signed by all members of the Board or of such committee as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
or committee.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. There shall be a committee composed of not
less than four (4) members to be known as the Executive Committee which shall
consist of all the officer-directors of the Bank and two (2) other directors
appointed as shall be provided by the Board of Directors. Provision shall be
made by the Board of Directors for the appointment of alternates to act for
members in the event of their absence or disability.
1.1 Presiding Officer. The Chairman of the Board shall act as presiding
officer at any meeting of the Executive Committee. In the event of the absence
or disability of the Chairman of the Board, the President shall act as
presiding officer. In the event of the absence or disability of the Chairman
of the Board and President, another officer-director, if present, shall act as
presiding officer. If no officer-director member is present, an Executive Vice
President of the Bank may serve as the presiding officer or the other members
present at the meeting shall elect one of their members as presiding officer.
1.2 Quorum. Any two (2) persons, each of whom is a member or alternate member
of the Executive Committee, of whom not less than one (1) shall be non-officer
directors, shall constitute a quorum for the transaction of business at any
meeting of the Executive Committee.
1.3 Duties. The Executive Committee shall function from day to day or such
other short intervals as shall be found requisite and expedient in the
<PAGE> 10
carrying on of the business and affairs of the Bank, and between meetings of
the Board of Directors, said Committee, within the scope of the jurisdiction
and functions assigned by the Board of Directors to such Committee, shall have
and may exercise, so far as may be permitted by law, all power and authority of
the Board of Directors (including the right to authorize the seal of the Bank
to be affixed to all instruments on which the same may be required or
appropriate) and shall have power, but not by way of limitation of its general
powers, to discount and purchase bills, notes, and other evidences of debt, and
to buy and sell bills of exchange. A record of the meetings of the Committee
shall be kept, which shall be accessible to inspection by the Directors at all
times, and the Committee shall, at each regular meeting of the Board of
Directors and at such other times as the Board of Directors may request, submit
in writing a full report of its actions. The Board of Directors shall approve
or disapprove the report of the Executive Committee, such action to be recorded
in the minutes of the meeting; provided, however, that no rights of third
parties shall be affected by any action of the Board of Directors, if such
rights have attached by virtue of action of the Executive Committee within the
scope of the jurisdiction and functions assigned by the Board of Directors to
said Committee.
Section 2. Audit Committee. There shall be appointed annually by the Board of
Directors an Audit Committee composed of not less than three (3) Directors none
of whom shall be officers of the Bank.
2.1 Duties. The Audit Committee shall:
(i) Cause to be made by the Auditing Department of the Bank a suitable
examination of the financial records and operations of the Bank through a
program of continuous internal audits. The Committee may employ independent
certified public accounting firms of recognized standing to make such
additional examinations and audits as it may deem advisable. The examinations
caused to be made by the Committee shall meet any examination requirements
prescribed from time to time by the Michigan Financial Institutions Bureau or
other regulatory authorities having jurisdiction and may be made in conjunction
with examinations of the Michigan Financial Institutions Bureau.
(ii) Report to the Board of Directors at least once in each calendar year
the results of the examinations made and such conclusions and recommendations
as the Committee deems appropriate.
Section 3. Other Committees. The Board of Directors may create and appoint
such other committees as it may, at any time or from time to time, find
necessary or desirable to facilitate and expedite the management and
administration of the affairs of the Bank. The Board of Directors shall have
power to specify the number of members of any such other committee, to
designate the powers and duties of any such other committee, and to provide for
the tenure in office of its members, its method of organization, and its
procedure for the transaction of business.
ARTICLE IV
OFFICERS
Section 1. Appointment and Titles. The officers of this Bank shall include a
Chairman of the Board and a President and may include one or more Vice
<PAGE> 11
Chairman of the Board, each of whom shall be a member of the Board of
Directors, and shall further include one or more Vice Presidents, a Secretary,
one or more Assistant Secretaries, and such other officers as may be from time
to time required for the prompt and orderly transaction of its business, to be
elected by the Board of Directors. The same person may hold any two or more
offices, and in any such case, these Bylaws shall be construed and understood
accordingly; provided that the same person may not hold the offices of Chairman
of the Board and Secretary or President and Secretary. The duties and
authorities of the officers of the Bank, other than those mentioned in these
Bylaws, shall be those usually pertaining to their respective offices, or as
may be designated by the Chairman of the Board, subject to the supervision and
direction of the Board of Directors.
Section 2. Term of Office of Officer-Directors. The Chairman of the Board,
the President and any Vice Chairman of the Board shall hold office for the
current year for which the Board of Directors of which they shall be members
was elected, unless they shall resign, become disqualified, or be removed; and
any vacancy occurring in any of such offices may be filled by the remaining
members of the Board of Directors.
Section 3. Chairman of the Board and President. The Chairman of the Board
shall be the chief executive officer of the Bank, shall preside at meetings of
stockholders and directors, shall have general supervision and direction of the
business of the Bank, and perform such other duties as may be designated by the
Board of Directors. The President shall perform such duties as may be
designated by the Board of Directors and, in the event of the absence or
disability of the Chairman of the Board, shall have his powers and duties. The
Vice Chairman of the Board shall perform such duties as may be designated by
the Board of Directors.
Section 4. Officers. All other officers shall be elected to hold their
respective offices at the pleasure of the Board of Directors of the Bank, and
shall have such duties, other than those mentioned herein, as shall be
prescribed by the Board of Directors.
Section 5. Secretary. The Secretary or Assistant Secretary or other officers
designated by the Board of Directors shall be responsible for stock books and
records, and other valuables of the Bank, and shall keep accurate minutes of
all meetings. The Secretary shall attend to the giving of all notices required
by these Bylaws to be given. He shall be custodian of the corporate seal,
records, documents and papers of the Bank. He shall provide for the keeping of
proper records of all transactions of the Bank. The Secretary, or Assistant
Secretary in his absence, shall have the power to sign indemnity agreements and
appoint agents by executing powers of attorney or such other similar documents
deemed necessary in the ordinary course of transacting the Bank's business. He
shall serve as Cashier, and he or his Deputy Cashiers shall have and may
exercise any and all other powers and duties pertaining by law, regulation or
practice, to the office of the Cashier, or imposed by these Bylaws. He shall
also perform such other duties as may be assigned to him, from time to time, by
the Board of Directors.
Section 6. Officers, Employees and Agents. All other officers, employees and
agents of this Bank shall be responsible for all such sums of money and
property of every kind as may be entrusted to their care or placed in their
hands by the Board of Directors, or otherwise come into their hands as
<PAGE> 12
officers, employees or agents; and shall qualify under the bankers blanket bond
covering the bank officers and employees, approved as to type and amount from
year to year by the Board of Directors, conditioned for the honest and faithful
discharge of their duties as such officers, employees or agents, and that they
will faithfully and honestly apply and account for all sums of money and other
property of this Bank that may come into their hands as such officers,
employees or agents and pay over and deliver the same to the order of the Board
of Directors, or to any other person or persons authorized by the Board of
Directors to receive the same.
ARTICLE V
SEAL
The Board may adopt a seal of the Bank in any form including a raised
impression or a stamp bearing the name of the Bank and the city and state of
its principal place of business. The Secretary shall be the official custodian
of the seal and shall be responsible for the safekeeping and proper use
thereof. The seal shall not be used or affixed to any paper or document
whatsoever except by the Secretary or any Assistant Secretary, or such other
officers or employees of the Bank as may be authorized by the Secretary or any
Assistant Secretary to affix the seal.
ARTICLE VI
EXECUTION OF INSTRUMENTS
Section 1. Conveyance of Real Estate. All transfers and conveyances of real
estate shall be made by the Bank, under seal, and shall be signed by the
President or any Vice President or any other officer, employee or agent of the
Bank as may be designated by the Secretary, and shall be attested by the
Secretary or any Assistant Secretary, or such other officer or employee of this
Bank as may be authorized by the Secretary to affix the seal.
Section 2. Contracts. All contracts, checks, drafts, etc., shall be signed by
the Secretary, or any officer of the rank of Vice President or higher rank, or
any other officer or employee designated by the Secretary.
Section 3. Absence of Resolution. No resolution of the Board of Directors
shall be necessary in order to authorize the execution, acknowledgment or
verification of any document by any officer who is authorized under these
Bylaws to do so, and he or she shall have full authority to act as if he or she
were duly authorized by resolution of the Board of Directors in each particular
case.
ARTICLE VII
BANKING HOURS
The Bank shall be open for business upon such hours of each day of the
year as the Chief Executive Officer or his delegate shall from time to time
direct and the Chief Executive Officer or his delegate may, in his discretion,
prescribe different banking hours for different classes of business and
different banking hours for one or more branch offices, than prescribed for the
principal banking office.
<PAGE> 13
ARTICLE VIII
MINUTE BOOK
The organization papers of this Bank, the returns of the judges of the
elections, the proceedings of all regular and special meetings of the Board of
Directors and of the stockholders, the Bylaws and any amendments thereto, and
reports of the committees of the Board of Directors shall be recorded in the
minute book and the minutes of each meeting shall be signed by the person
presiding at such meeting and attested by the Secretary.
ARTICLE IX
TRANSFERS OF STOCK
Section 1. Transfers. The stock of this Bank shall be assignable and
transferable only on the books of this Bank, subject to the restrictions and
provisions of the law; and a transfer book shall be provided in which all
assignments and transfers of stock shall be made.
Section 2. Record Date. The stock transfer books of the Bank shall not be
closed for the determination of stockholders entitled to dividends, but any
dividend can be made payable to stockholders of record on the date such
dividend is declared, or any subsequent date. The Bank shall be fully
protected in giving notices of meetings, paying dividends and doing such other
things as require a knowledge of the names of the stockholders of the Bank, in
relying upon the names of the stockholders as they appear upon the stock books
of the Bank.
Section 3. Form and Issuance. Certificates of stock, bearing the manual or
facsimile signature of the Chairman of the Board, President or any Vice
President, and the Secretary, or the manual or facsimile signature of any two
of such other employees of the Bank as may be designated for such purpose from
time to time by resolution of the Board of Directors, and bearing the impressed
or facsimile seal of the Bank, may be issued to stockholders. The death,
resignation, discharge or incapacity of any person whose manual or facsimile
signature appears on any certificate, shall not affect the validity of such
certificate of stock, whether such certificate has theretofore or is thereafter
issued. All certificates of stock shall state upon the face thereof that the
stock is transferable only upon the books of the Bank; and when stock is
transferred, the certificates therefore shall be returned to the Bank,
canceled, preserved and new certificates issued.
ARTICLE X
PROXIES AND CONSENTS
Proxies to vote and written consent with respect to shares of stock of
other corporations owned by or standing in the name of the Bank may be executed
and delivered from time to time on behalf of the Bank by two officers, one of
whom shall be the Chairman, President, Executive Vice President, Senior Vice
President or a Vice President and the other of whom shall be the Secretary or
an Assistant Secretary of the Bank; or by any other person or persons duly
authorized by the Board of Directors.
<PAGE> 14
ARTICLE XI
TRUST DIVISION
Section 1. Exercise of Fiduciary Powers. All fiduciary powers of the Bank
shall be exercised through the Trust Division under the supervision of the
Trust Committee, subject to the Michigan Banking Code and subject to such
regulations as the Michigan Financial Institutions Bureau shall from time to
time establish. All books and records relating to fiduciary activities shall
be kept separate and distinct from the other books and records of the Bank.
Section 2. Officer in Charge. The Trust Division shall be placed under the
management and immediate supervision of an officer in charge appointed by the
Board of Directors. The duties of such officer shall be to cause the policies
and instructions of the Board of Directors, the chief executive officer and the
Trust Committee, with respect to the fiduciary accounts entrusted to the Bank,
to be carried out, and to supervise the due performance of such accounts in
accordance with law and their terms.
Section 3. Other Officers. Any other officer specifically appointed for the
performance of fiduciary activities shall exercise such powers and perform such
duties as are prescribed by these Bylaws, or as may be assigned to them by the
Board of Directors, the chief executive officer or the officer in charge of
fiduciary activities.
Section 4. Signature and Authentication of Instruments. All instruments in
which the Bank is named as Trustee or in any other fiduciary capacity and all
authentications or certificates by the Bank as Trustee under any mortgage, deed
of trust or other instrument securing bonds, debentures, notes or other
obligations of any individual, association or corporation, and all certificates
as Registrar or Transfer Agent and all certificates of deposit for stocks and
bonds, interim certificates, trust certificates and any other certificates,
document or instrument requiring execution may be signed or countersigned in
behalf of the Bank by any Trust Officer or officer of equal or higher rank
specifically elected or appointed for the performance of fiduciary duties or
the Secretary or any officer of the rank of Vice President or higher rank or by
any other person appointed for that purpose by the Board of Directors.
Section 5. Custody of Investments. The investments of each fiduciary account
shall be kept separate from the assets of the Bank, and shall be placed in the
joint custody or control of not less than two of the officers or employees of
the Bank designated for that purpose by the Board of Directors. All such
officers and employees shall be adequately bonded. The investments of each
such fiduciary account shall be either: kept separate from those of all other
accounts, except as provided under the regulations of the Michigan Financial
Institutions Bureau for collective investment, or adequately identified as the
property of the relevant account.
Section 6. Trust Committee. There shall be a Trust Committee which shall be
composed of not less than five (5) members of the Board of Directors, at least
three (3) of whom shall be non-officer directors, and may include one or more
officers of the Bank who are not directors, appointed by the Board of Directors
to serve during its pleasure. The Trust Committee shall have
<PAGE> 15
general supervision of and shall determine the policies relating to the
administration of fiduciary relationships. It shall have general supervision
of the Trust Division, the other committees to which the exercise of fiduciary
powers of the Bank are assigned, and the investment of funds and disposition of
investments held by the Bank in a fiduciary capacity. It shall have such other
powers and duties relating to the administration of fiduciary accounts
entrusted to the Bank as may be conferred upon it from time to time by the
Board of Directors. The Trust Committee shall meet at least once a month and
shall keep minutes of its meetings showing the disposition of all matters
considered and passed upon, and shall make monthly reports to the Board of
Directors. Any three (3) persons, each of whom is a member of the Trust
Committee, of whom not less than two (2) shall be nonofficer directors, shall
constitute a quorum for the transaction of business at any meeting of the Trust
Committee.
ARTICLE XII
QUORUM
Except as otherwise provided by statute or in the Articles of
Incorporation or these Bylaws, a majority of all the stockholders or Directors,
as the case may be, shall be required to constitute a quorum to do business.
Should there be no quorum at any regular or special meeting of stockholders or
Directors, the stockholders or Directors present may adjourn from day to day
until a quorum is in attendance.
ARTICLE XIII
INDEMNIFICATION AND INSURANCE
The Bank shall indemnify and reimburse any director, officer, employee,
or agent to the fullest extent permitted by the laws of the State of Michigan,
as amended from time to time.
ARTICLE XIV
AMENDMENTS TO BYLAWS
These Bylaws may be repealed, altered, or amended, in whole or in part, by
the vote of a majority of the Directors, at any regular or special meeting of
the Board of Directors.
<PAGE> 16
EXHIBIT #7
Charter No. 13671 Comptroller of the Currency District
REPORT OF CONDITION CONSOLIDATING
DOMESTIC AND FOREIGN SUBSIDIARIES OF THE
NBD BANK
in the State of Michigan, at the close of business on Dec. 31, 1996 pub-
lished in response to call made by Comptroller of the Currency, under
title 12, United States Code, Section 161.
ASSETS
<TABLE>
<CAPTION>
Thousands
of dollars
<S> <C>
Cash and balances due from depository institutions
Noninterest-bearing balances and currency
and coin.............................................................. 1,803,709
Interest-bearing balances............................................. 0
Securities:
Held-to-maturity securities........................................... 0
Available-for-sale securities......................................... 1,986,590
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds sold.................................................. 60,900
Securities purchased under agreements to resell..................... 0
Loans and lease financing receivables:
Loans and leases, net of unearned income.................. 17,800,147
LESS: Allowance for loan and lease losses................. 277,304
Loans and leases, net of unearned income and
allowance............................................................. 17,522,843
Assets held in trading accounts......................................... 55,513
Premises and fixed assets (including
capitalized leases)................................................... 341,544
Other real estate owned................................................. 11,729
Investments in unconsolidated subsidiaries and
associated companies.................................................. -
Customers' liability to this bank on acceptances
outstanding........................................................... 59,348
Intangible assets....................................................... 30,286
Other assets............................................................ 601,383
----------
Total assets............................................................ 22,473,845
==========
</TABLE>
<PAGE> 17
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices..................................................... 16,307,056
Noninterest-bearing..................................... 4,825,339
Interest-bearing........................................ 11,481,717
In foreign offices, Edge and Agreement
subsidiaries, and IBFs.................................................. 178,079
Noninterest-bearing...................................... 0
Interest-bearing......................................... 178,079
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................................. 912,684
Securities sold under agreements to repurchase....................... 5,520
Demand notes issued to the U.S. Treasury.................................. 247,100
Trading liabilities....................................................... 44,258
Other borrowed money:
With remaining maturity of one year or less.......................... 1,073,626
With remaining maturity of more than one year........................ 252,636
Mortgage indebtedness and obligations
under capitalized leases................................................ 12,163
Bank's liability on acceptances executed and
outstanding............................................................. 59,348
Notes and debentures subordinated to
deposits................................................................ 700,000
Other liabilities......................................................... 482,846
----------
Total liabilities......................................................... 20,275,316
----------
EQUITY CAPITAL
Common stock.............................................................. 111,858
Surplus................................................................... 642,824
Undivided profits and capital reserves.................................... 1,432,796
Net unrealized holding gains (losses) on available-for-sale securities.... 11,051
Cumulative foreign currency translation
adjustments............................................................. 0
----------
Total equity capital...................................................... 2,198,529
----------
Total liabilities and equity capital...................................... 22,473,845
==========
</TABLE>
I, Jason N. Hansen, Vice President of the above-named bank do hereby
|declare that this Report of Condition is true and correct to the best of my
knowledge and belief.
JASON N. HANSEN
January 30, 1997
We, the undersigned directors, attest to the correctness of this state-
ment of resources and liabilities. We declare that it has been examined by us,
and to the best of our knowledge and belief has been prepared in conformance
with the instructions and is true and correct.
PETER W. STROH
THOMAS H. JEFFS II
ALFRED R. GLANCY III
Directors
<PAGE> 1
EXHIBIT 25-2
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
_____________________________
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
____________________________________________
NBD BANK
(Exact name of Trustee as specified in its charter)
<TABLE>
<S> <C> <C>
611 WOODWARD AVENUE
DETROIT, MICHIGAN 48226 38-0864715
(Address of principal executive offices) (Zip Code) (I.R.S. Employer Identification No.)
</TABLE>
NBD BANK
611 Woodward Avenue
Detroit, Michigan 48226
Corporate Trust Services
Attn: James D. Khami (313) 225-3189
(Name, address and telephone number of agent for service)
MCN CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
MICHIGAN 38-2820658
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
500 GRISWOLD STREET
DETROIT, MICHIGAN 48103
(Address of principal executive offices) (Zip Code)
</TABLE>
% SUBORDINATED DEBT SECURITIES
(Title of Indenture Securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
-State of Michigan Financial Institutions Bureau
-Federal Reserve Bank of Chicago, Chicago, Illinois
-Federal Deposit Insurance Corporation, Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR.
The obligor is not an affiliate of the Trustee.
3. VOTING SECURITIES OF THE TRUSTEE.
The following information is furnished as to each class of voting
securities of the Trustee:
<TABLE>
<CAPTION>
AS OF MARCH 5, 1997
Column A Column B
Title of Class Amount Outstanding
-------------- ------------------
<S> <C>
Common Stock, par value $12.50 per share 8,948,648 shares
</TABLE>
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
The Trustee also serves as Trustee under an indenture dated as of
September 1, 1994, as supplemented by the First Supplemental Indenture
dated April 17, 1996 under which the Company issued $101,100,000 Series A
Subordinated Deferrable Interest Debt Securities due 2024, and as
supplemented by the Second Supplemental Indenture dated July 24, 1996
under which the Company issued $82,474,250 8-5/8% Junior Subordinated
Debentures due 2036. As of March 5, 1997, the Trustee is submitting T-1
filings for both a Senior Debt Securities Indenture and a Subordinated
Debt Securities Indenture.
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
Neither the Trustee nor any of the directors or executive officers of the
Trustee is a director, officer, partner, employee, appointee or
representative of the obligor or of any underwriter for the obligor,
except Alfred R. Glancy III, Chairman, President and CEO of MCN
Corporation, who is a member of the Board of Directors of the Trustee,
and Thomas H. Jeffs II, President and Chief Operating Officer of the
Trustee, who serves as a member of the Board of Directors of the obligor.
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Voting securities of the Trustee owned by the obligor and its directors,
partners and executive officers, taken as a group, do not exceed one
percent of the outstanding voting securities of the Trustee.
<PAGE> 3
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Voting securities of the Trustee owned by any underwriter and its
directors, partners and executive officers, taken as a group, do not
exceed one percent of the outstanding voting securities of the Trustee.
8. SECURITIES OF OBLIGOR OWNED OR HELD BY THE TRUSTEE.
The amount of securities of the obligor which the Trustee owns
beneficially or holds as collateral security for obligations in default
does not exceed one percent of the outstanding securities of the obligor.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
The Trustee does not own beneficially, nor hold as collateral security
for obligations in default, any securities of an underwriter for the
obligor.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
The Trustee does not own beneficially, nor hold as collateral security
for obligations in default, voting securities of a person who, to the
knowledge of the Trustee: (1) owns 10% or more of the voting securities
of the obligor, or (2) is an affiliate, other than a subsidiary, of the
obligor.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING
50 PER CENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
The Trustee does not own beneficially, nor hold as collateral security
for obligations in default, any securities of a person who, to the
knowledge of the Trustee, owns 50 percent or more of the voting
securities of the obligor.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
NBD Bank provides a letter of credit facility to MCN Corporation in the
amount of $500,000.00, and maintains a 40% settlement limit in a
$2,000,000.00 foreign exhange line of credit to the obligor. In
addition, the Trustee has a $25,000,000.00 participation in a
$100,000,000.00 non-amortizing term loan to MCNIC Oil and Gas Company, a
subsidiary of the obligor, which is agented by NBD and matures in
December, 2000. The Trustee also provides a letter of credit facility to
Michigan Consolidated Gas Company, another subsidiary of the obligor, in
the amount of $1,000,000.00 maturing September, 1997. As of March 5,
1997, the outstanding amount of this facility is -0-.
13. DEFAULTS BY THE OBLIGOR.
Not applicable.
14. AFFILIATIONS WITH THE UNDERWRITERS.
No underwriter is an affiliate of the Trustee.
15. FOREIGN TRUSTEE.
Not applicable.
<PAGE> 4
16. LIST OF EXHIBITS.
(1) Articles of Incorporation of the Trustee.
(2) Certificate of Authority of the Trustee to commence business.
Incorporated by reference to Exhibit (2) filed with Amendment No. 1
to Form T-1 Statement, Registration No. 22-4501.
(3) Authorization of the Trustee to exercise corporate trust
powers. Incorporated by reference to Exhibit (3) filed with
Amendment No. 1 to Form T-1 Statement, Registration No. 22-4501.
(4) By-laws of the Trustee.
(5) Not Applicable.
(6) Consent by the Trustee required by Section 321 (b) of the Trust
Indenture Act of 1939. Incorporated by reference to Exhibit (6)
filed with Amendment No. 1 to Form T-1 Statement, Registration No.
22-4501.
(7) Report of condition of Trustee.
(8) Not applicable.
(9) Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the Trustee, NBD Bank, a Michigan banking corporation organized and existing
under the laws of the State of Michigan, has duly caused this Statement of
Eligibility and Qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Detroit, State of Michigan on the
5th day of March, 1997.
NBD BANK, Trustee
By: /s/ James D. Khami
--------------------
James D. Khami
Trust Officer
<PAGE> 5
EXHIBIT #1
[NBD LOGO]
ARTICLES OF
INCORPORATION
AND
BYLAWS
NBD BANK
DETROIT, MICHIGAN
CHARTER NO. 970
<PAGE> 6
ARTICLES OF INCORPORATION
EFFECTIVE JANUARY 1, 1995
FIRST.
THE NAME OF THIS BANK SHALL BE NBD BANK.
SECOND.
THE PLACE WHERE THE PRINCIPAL OFFICE OF THIS BANK IS LOCATED IS IN THE CITY OF
DETROIT, WAYNE COUNTY, STATE OF MICHIGAN.
THE BOARD OF DIRECTORS SHALL HAVE THE POWER TO CHANGE THE LOCATION OF THE MAIN
OFFICE ANYWHERE WITHIN THE CITY OF DETROIT WITHOUT THE APPROVAL OF THE
SHAREHOLDERS AND SHALL HAVE THE POWER TO ESTABLISH OR CHANGE THE LOCATION OF
ANY BRANCH OR BRANCHES OF THIS BANK TO ANY OTHER LOCATION WITHOUT THE APPROVAL
OF THE SHAREHOLDERS.
THIRD.
THE PURPOSE OF THIS BANK IS TO CARRY ON THE BUSINESS OF BANKING PURSUANT TO THE
MICHIGAN BANKING CODE OF 1969, AS AMENDED.
FOURTH.
THE AUTHORIZED AMOUNT OF THE CAPITAL STOCK OF THIS BANK SHALL BE 10,000,000
SHARES OF COMMON STOCK OF THE PAR VALUE OF $12.50 EACH. THE AUTHORIZED AMOUNT
OF THE CAPITAL STOCK OF THIS BANK MAY BE INCREASED OR DECREASED FROM TIME TO
TIME IN ACCORDANCE WITH PROVISIONS OF THE LAWS OF THE STATE OF MICHIGAN.
FIFTH.
THE PERIOD FOR WHICH THIS BANK IS ORGANIZED IS PERPETUAL.
SIXTH.
A DIRECTOR OF THE BANK SHALL NOT BE PERSONALLY LIABLE TO THE BANK OR ITS
SHAREHOLDERS FOR MONETARY DAMAGES FOR A BREACH OF FIDUCIARY DUTY AS A DIRECTOR,
EXCEPT FOR LIABILITY: (A) FOR ANY BREACH OF THE DIRECTOR'S DUTY OF LOYALTY TO
THE BANK OR ITS SHAREHOLDERS; (B) FOR ACTS OR OMISSIONS NOT IN GOOD FAITH OR
WHICH INVOLVE INTENTIONAL MISCONDUCT OR A KNOWING VIOLATION OF LAW; (C)
RESULTING FROM A VIOLATION OF SECTION 43 OF THE MICHIGAN BANKING CODE, AS
AMENDED; (D) FOR ANY TRANSACTION FROM WHICH THE DIRECTOR DERIVED AN IMPROPER
PERSONAL BENEFIT; OR (E) FOR ANY ACT OR OMISSION OCCURRING PRIOR TO THE DATE
UPON WHICH THIS ARTICLE IS DULY ADOPTED AND FILED AS REQUIRED BY LAW. IF,
FOLLOWING APPROVAL OF THIS ARTICLE BY THE SHAREHOLDERS, THE MICHIGAN BANKING
CODE IS AMENDED TO AUTHORIZE CORPORATE ACTION FURTHER ELIMINATING OR LIMITING
THE PERSONAL LIABILITY OF
DIRECTORS, THEN THE LIABILITY OF A DIRECTOR OF THE BANK SHALL BE ELIMINATED OR
LIMITED TO THE FULLEST EXTENT PERMITTED BY THE MICHIGAN BANKING CODE, AS
AMENDED. ANY REPEAL, MODIFICATION OR ADOPTION OF ANY PROVISIONS IN THESE
ARTICLES OF INCORPORATION INCONSISTENT WITH THIS ARTICLE SHALL NOT ADVERSELY
AFFECT ANY RIGHT OR PROTECTION OF A DIRECTOR OF THE BANK EXISTING AT THE TIME
OF SUCH REPEAL, MODIFICATION OR ADOPTION.
SEVENTH.
THESE ARTICLES OF INCORPORATION MAY BE CHANGED OR AMENDED AT ANY TIME BY A VOTE
OF THE SHAREHOLDERS OWNING A MAJORITY OF THE STOCK OF THIS BANK IN ANY MANNER
NOT INCONSISTENT WITH THE PROVISIONS OF LAW.
<PAGE> 7
EXHIBIT #4
NBD BANK
DETROIT, MICHIGAN
BYLAWS
EFFECTIVE JANUARY 1, 1995
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. Annual Meetings. The regular Annual Meeting of the stockholders of
this Bank for the election of directors and for the transaction of any other
business as may properly come before the meeting shall be held on the third
Monday in May of each year or at such other date as from time to time may be
designated by the Board of Directors. If the election of directors shall not
be held on the day designated for an annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a
meeting of the stockholders as soon thereafter as convenient. Nominations for
election to the Board of Directors may be made by the Board of Directors or by
any stockholders entitled to vote for the election of directors.
Section 2. Special Meetings. Except as otherwise specifically provided by
statute, special meetings of the stockholders may be called for any purpose at
any time by the Board of Directors or by the holders of at least ten per cent
(10%) of the then outstanding shares of stock.
Section 3. Place of Meetings. Annual meetings or special meetings of the
stockholders shall be held at the main office of the Bank or at such other
place within or without the State of Michigan as is established by the Board of
Directors.
Section 4. Proxies. All proxies secured for any annual or special meeting of
stockholders shall be dated and filed by the Secretary with the records of the
meeting.
Section 5. Notice of Meetings. Written notice stating the place, day and hour
of the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten days, before
the date of the meeting either personally or by mail, by or at the direction of
the President, or the Secretary, or the officer or persons calling the meeting
to each stockholder of record entitled to vote at such meeting. If mailed,
such notices shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
records of the Bank with postage thereon prepaid. Such notice may be waived in
writing.
<PAGE> 8
Section 6. Fixing the Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders,
annual or special, or entitled to receive payment of any dividend, or in order
to make a determination of stockholders for any other proper purpose, the Board
of Directors shall fix in advance a record date and hour for any such
determination of stockholders, such date in any case to be not more than fifty
(50) days and, in case of a meeting of stockholders, not less than ten (10)
days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. When a determination of
stockholders entitled to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
Section 7. Stockholders' Action Without A Meeting. Unless otherwise
restricted in the Articles of Incorporation or these Bylaws, any action which
may be taken at the annual or any special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by all stockholders
entitled to vote with respect to the subject matter thereof.
ARTICLE II
DIRECTORS
Section 1. Size and Vacancies. The Board of Directors shall consist of such
number of persons, not less than five nor more than twenty-five, as from time
to time shall be determined by a majority of the votes to which all
stockholders are at the time entitled or by resolution adopted by the
affirmative vote of a majority of the Board of Directors. Any vacancies in the
Board of Directors may be filled by action of a majority of the remaining
Directors between meetings of stockholders. Subject to the limitation as to
the number of Directors, the stockholders may elect not to exceed two less than
the full Board, and the unfilled directorships shall be considered as vacancies
and may be filled thereafter by the Board of Directors.
Section 2. Powers. The Board of Directors, a majority of whom shall be a
quorum to transact business, shall have power to manage and administer the
business and affairs of the Bank and to prescribe Bylaws for the regulation of
the business of the Bank and the conduct of its affairs not inconsistent with
law, the Articles of Incorporation and these Bylaws. Except as expressly
limited by law, all corporate powers of the Bank shall be vested in and may be
exercised by the Board of Directors.
Section 3. Officers and Employees. The Board of Directors shall have power to
elect or appoint such officers and employees as may be required to transact the
business of the Bank, to define their duties, to require bonds from them and to
fix the penalty thereof, and to continue them in office or dismiss them.
Section 4. Meetings. The regular meetings of the Board of Directors shall be
held on such date and at such time each month, within or without the State of
Michigan as shall from time to time be determined by the Board of Directors by
resolution, except that in the month in which the regular annual meeting of the
stockholders is held, the regular meeting of the Board of Directors shall
<PAGE> 9
be held following and on the same day as the regular meeting of the
stockholders. When any regular meeting of the Board of Directors falls upon a
holiday, the meeting shall be held on such other day as the Board of Directors
may previously designate. Special meetings of the Board of Directors may be
called at any time by the Secretary or by any officer of higher rank than Vice
President, or any three Directors. Notice of each special meeting shall be
given personally or by duly mailing, telephoning, or telegraphing the same, at
least twenty-four hours before the meeting. Any or all Directors may waive
notice of any meeting either before or after the meeting.
Section 5. Participation In Meetings By Telephone. Unless otherwise
restricted by the Articles of Incorporation or these Bylaws, members of the
Board of Directors or any committee designated by the Board may participate in
a meeting of the Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Section 6. Directors' Action Without A Meeting. Unless otherwise restricted
by the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent thereto
is signed by all members of the Board or of such committee as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
or committee.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. There shall be a committee composed of not
less than four (4) members to be known as the Executive Committee which shall
consist of all the officer-directors of the Bank and two (2) other directors
appointed as shall be provided by the Board of Directors. Provision shall be
made by the Board of Directors for the appointment of alternates to act for
members in the event of their absence or disability.
1.1 Presiding Officer. The Chairman of the Board shall act as presiding
officer at any meeting of the Executive Committee. In the event of the absence
or disability of the Chairman of the Board, the President shall act as
presiding officer. In the event of the absence or disability of the Chairman
of the Board and President, another officer-director, if present, shall act as
presiding officer. If no officer-director member is present, an Executive Vice
President of the Bank may serve as the presiding officer or the other members
present at the meeting shall elect one of their members as presiding officer.
1.2 Quorum. Any two (2) persons, each of whom is a member or alternate member
of the Executive Committee, of whom not less than one (1) shall be non-officer
directors, shall constitute a quorum for the transaction of business at any
meeting of the Executive Committee.
1.3 Duties. The Executive Committee shall function from day to day or such
other short intervals as shall be found requisite and expedient in the
<PAGE> 10
carrying on of the business and affairs of the Bank, and between meetings of
the Board of Directors, said Committee, within the scope of the jurisdiction
and functions assigned by the Board of Directors to such Committee, shall have
and may exercise, so far as may be permitted by law, all power and authority of
the Board of Directors (including the right to authorize the seal of the Bank
to be affixed to all instruments on which the same may be required or
appropriate) and shall have power, but not by way of limitation of its general
powers, to discount and purchase bills, notes, and other evidences of debt, and
to buy and sell bills of exchange. A record of the meetings of the Committee
shall be kept, which shall be accessible to inspection by the Directors at all
times, and the Committee shall, at each regular meeting of the Board of
Directors and at such other times as the Board of Directors may request, submit
in writing a full report of its actions. The Board of Directors shall approve
or disapprove the report of the Executive Committee, such action to be recorded
in the minutes of the meeting; provided, however, that no rights of third
parties shall be affected by any action of the Board of Directors, if such
rights have attached by virtue of action of the Executive Committee within the
scope of the jurisdiction and functions assigned by the Board of Directors to
said Committee.
Section 2. Audit Committee. There shall be appointed annually by the Board of
Directors an Audit Committee composed of not less than three (3) Directors none
of whom shall be officers of the Bank.
2.1 Duties. The Audit Committee shall:
(i) Cause to be made by the Auditing Department of the Bank a suitable
examination of the financial records and operations of the Bank through a
program of continuous internal audits. The Committee may employ independent
certified public accounting firms of recognized standing to make such
additional examinations and audits as it may deem advisable. The examinations
caused to be made by the Committee shall meet any examination requirements
prescribed from time to time by the Michigan Financial Institutions Bureau or
other regulatory authorities having jurisdiction and may be made in conjunction
with examinations of the Michigan Financial Institutions Bureau.
(ii) Report to the Board of Directors at least once in each calendar year
the results of the examinations made and such conclusions and recommendations
as the Committee deems appropriate.
Section 3. Other Committees. The Board of Directors may create and appoint
such other committees as it may, at any time or from time to time, find
necessary or desirable to facilitate and expedite the management and
administration of the affairs of the Bank. The Board of Directors shall have
power to specify the number of members of any such other committee, to
designate the powers and duties of any such other committee, and to provide for
the tenure in office of its members, its method of organization, and its
procedure for the transaction of business.
ARTICLE IV
OFFICERS
Section 1. Appointment and Titles. The officers of this Bank shall include a
Chairman of the Board and a President and may include one or more Vice
<PAGE> 11
Chairman of the Board, each of whom shall be a member of the Board of
Directors, and shall further include one or more Vice Presidents, a Secretary,
one or more Assistant Secretaries, and such other officers as may be from time
to time required for the prompt and orderly transaction of its business, to be
elected by the Board of Directors. The same person may hold any two or more
offices, and in any such case, these Bylaws shall be construed and understood
accordingly; provided that the same person may not hold the offices of Chairman
of the Board and Secretary or President and Secretary. The duties and
authorities of the officers of the Bank, other than those mentioned in these
Bylaws, shall be those usually pertaining to their respective offices, or as
may be designated by the Chairman of the Board, subject to the supervision and
direction of the Board of Directors.
Section 2. Term of Office of Officer-Directors. The Chairman of the Board,
the President and any Vice Chairman of the Board shall hold office for the
current year for which the Board of Directors of which they shall be members
was elected, unless they shall resign, become disqualified, or be removed; and
any vacancy occurring in any of such offices may be filled by the remaining
members of the Board of Directors.
Section 3. Chairman of the Board and President. The Chairman of the Board
shall be the chief executive officer of the Bank, shall preside at meetings of
stockholders and directors, shall have general supervision and direction of the
business of the Bank, and perform such other duties as may be designated by the
Board of Directors. The President shall perform such duties as may be
designated by the Board of Directors and, in the event of the absence or
disability of the Chairman of the Board, shall have his powers and duties. The
Vice Chairman of the Board shall perform such duties as may be designated by
the Board of Directors.
Section 4. Officers. All other officers shall be elected to hold their
respective offices at the pleasure of the Board of Directors of the Bank, and
shall have such duties, other than those mentioned herein, as shall be
prescribed by the Board of Directors.
Section 5. Secretary. The Secretary or Assistant Secretary or other officers
designated by the Board of Directors shall be responsible for stock books and
records, and other valuables of the Bank, and shall keep accurate minutes of
all meetings. The Secretary shall attend to the giving of all notices required
by these Bylaws to be given. He shall be custodian of the corporate seal,
records, documents and papers of the Bank. He shall provide for the keeping of
proper records of all transactions of the Bank. The Secretary, or Assistant
Secretary in his absence, shall have the power to sign indemnity agreements and
appoint agents by executing powers of attorney or such other similar documents
deemed necessary in the ordinary course of transacting the Bank's business. He
shall serve as Cashier, and he or his Deputy Cashiers shall have and may
exercise any and all other powers and duties pertaining by law, regulation or
practice, to the office of the Cashier, or imposed by these Bylaws. He shall
also perform such other duties as may be assigned to him, from time to time, by
the Board of Directors.
Section 6. Officers, Employees and Agents. All other officers, employees and
agents of this Bank shall be responsible for all such sums of money and
property of every kind as may be entrusted to their care or placed in their
hands by the Board of Directors, or otherwise come into their hands as
<PAGE> 12
officers, employees or agents; and shall qualify under the bankers blanket bond
covering the bank officers and employees, approved as to type and amount from
year to year by the Board of Directors, conditioned for the honest and faithful
discharge of their duties as such officers, employees or agents, and that they
will faithfully and honestly apply and account for all sums of money and other
property of this Bank that may come into their hands as such officers,
employees or agents and pay over and deliver the same to the order of the Board
of Directors, or to any other person or persons authorized by the Board of
Directors to receive the same.
ARTICLE V
SEAL
The Board may adopt a seal of the Bank in any form including a raised
impression or a stamp bearing the name of the Bank and the city and state of
its principal place of business. The Secretary shall be the official custodian
of the seal and shall be responsible for the safekeeping and proper use
thereof. The seal shall not be used or affixed to any paper or document
whatsoever except by the Secretary or any Assistant Secretary, or such other
officers or employees of the Bank as may be authorized by the Secretary or any
Assistant Secretary to affix the seal.
ARTICLE VI
EXECUTION OF INSTRUMENTS
Section 1. Conveyance of Real Estate. All transfers and conveyances of real
estate shall be made by the Bank, under seal, and shall be signed by the
President or any Vice President or any other officer, employee or agent of the
Bank as may be designated by the Secretary, and shall be attested by the
Secretary or any Assistant Secretary, or such other officer or employee of this
Bank as may be authorized by the Secretary to affix the seal.
Section 2. Contracts. All contracts, checks, drafts, etc., shall be signed by
the Secretary, or any officer of the rank of Vice President or higher rank, or
any other officer or employee designated by the Secretary.
Section 3. Absence of Resolution. No resolution of the Board of Directors
shall be necessary in order to authorize the execution, acknowledgment or
verification of any document by any officer who is authorized under these
Bylaws to do so, and he or she shall have full authority to act as if he or she
were duly authorized by resolution of the Board of Directors in each particular
case.
ARTICLE VII
BANKING HOURS
The Bank shall be open for business upon such hours of each day of the
year as the Chief Executive Officer or his delegate shall from time to time
direct and the Chief Executive Officer or his delegate may, in his discretion,
prescribe different banking hours for different classes of business and
different banking hours for one or more branch offices, than prescribed for the
principal banking office.
<PAGE> 13
ARTICLE VIII
MINUTE BOOK
The organization papers of this Bank, the returns of the judges of the
elections, the proceedings of all regular and special meetings of the Board of
Directors and of the stockholders, the Bylaws and any amendments thereto, and
reports of the committees of the Board of Directors shall be recorded in the
minute book and the minutes of each meeting shall be signed by the person
presiding at such meeting and attested by the Secretary.
ARTICLE IX
TRANSFERS OF STOCK
Section 1. Transfers. The stock of this Bank shall be assignable and
transferable only on the books of this Bank, subject to the restrictions and
provisions of the law; and a transfer book shall be provided in which all
assignments and transfers of stock shall be made.
Section 2. Record Date. The stock transfer books of the Bank shall not be
closed for the determination of stockholders entitled to dividends, but any
dividend can be made payable to stockholders of record on the date such
dividend is declared, or any subsequent date. The Bank shall be fully
protected in giving notices of meetings, paying dividends and doing such other
things as require a knowledge of the names of the stockholders of the Bank, in
relying upon the names of the stockholders as they appear upon the stock books
of the Bank.
Section 3. Form and Issuance. Certificates of stock, bearing the manual or
facsimile signature of the Chairman of the Board, President or any Vice
President, and the Secretary, or the manual or facsimile signature of any two
of such other employees of the Bank as may be designated for such purpose from
time to time by resolution of the Board of Directors, and bearing the impressed
or facsimile seal of the Bank, may be issued to stockholders. The death,
resignation, discharge or incapacity of any person whose manual or facsimile
signature appears on any certificate, shall not affect the validity of such
certificate of stock, whether such certificate has theretofore or is thereafter
issued. All certificates of stock shall state upon the face thereof that the
stock is transferable only upon the books of the Bank; and when stock is
transferred, the certificates therefore shall be returned to the Bank,
canceled, preserved and new certificates issued.
ARTICLE X
PROXIES AND CONSENTS
Proxies to vote and written consent with respect to shares of stock of
other corporations owned by or standing in the name of the Bank may be executed
and delivered from time to time on behalf of the Bank by two officers, one of
whom shall be the Chairman, President, Executive Vice President, Senior Vice
President or a Vice President and the other of whom shall be the Secretary or
an Assistant Secretary of the Bank; or by any other person or persons duly
authorized by the Board of Directors.
<PAGE> 14
ARTICLE XI
TRUST DIVISION
Section 1. Exercise of Fiduciary Powers. All fiduciary powers of the Bank
shall be exercised through the Trust Division under the supervision of the
Trust Committee, subject to the Michigan Banking Code and subject to such
regulations as the Michigan Financial Institutions Bureau shall from time to
time establish. All books and records relating to fiduciary activities shall
be kept separate and distinct from the other books and records of the Bank.
Section 2. Officer in Charge. The Trust Division shall be placed under the
management and immediate supervision of an officer in charge appointed by the
Board of Directors. The duties of such officer shall be to cause the policies
and instructions of the Board of Directors, the chief executive officer and the
Trust Committee, with respect to the fiduciary accounts entrusted to the Bank,
to be carried out, and to supervise the due performance of such accounts in
accordance with law and their terms.
Section 3. Other Officers. Any other officer specifically appointed for the
performance of fiduciary activities shall exercise such powers and perform such
duties as are prescribed by these Bylaws, or as may be assigned to them by the
Board of Directors, the chief executive officer or the officer in charge of
fiduciary activities.
Section 4. Signature and Authentication of Instruments. All instruments in
which the Bank is named as Trustee or in any other fiduciary capacity and all
authentications or certificates by the Bank as Trustee under any mortgage, deed
of trust or other instrument securing bonds, debentures, notes or other
obligations of any individual, association or corporation, and all certificates
as Registrar or Transfer Agent and all certificates of deposit for stocks and
bonds, interim certificates, trust certificates and any other certificates,
document or instrument requiring execution may be signed or countersigned in
behalf of the Bank by any Trust Officer or officer of equal or higher rank
specifically elected or appointed for the performance of fiduciary duties or
the Secretary or any officer of the rank of Vice President or higher rank or by
any other person appointed for that purpose by the Board of Directors.
Section 5. Custody of Investments. The investments of each fiduciary account
shall be kept separate from the assets of the Bank, and shall be placed in the
joint custody or control of not less than two of the officers or employees of
the Bank designated for that purpose by the Board of Directors. All such
officers and employees shall be adequately bonded. The investments of each
such fiduciary account shall be either: kept separate from those of all other
accounts, except as provided under the regulations of the Michigan Financial
Institutions Bureau for collective investment, or adequately identified as the
property of the relevant account.
Section 6. Trust Committee. There shall be a Trust Committee which shall be
composed of not less than five (5) members of the Board of Directors, at least
three (3) of whom shall be non-officer directors, and may include one or more
officers of the Bank who are not directors, appointed by the Board of Directors
to serve during its pleasure. The Trust Committee shall have
<PAGE> 15
general supervision of and shall determine the policies relating to the
administration of fiduciary relationships. It shall have general supervision
of the Trust Division, the other committees to which the exercise of fiduciary
powers of the Bank are assigned, and the investment of funds and disposition of
investments held by the Bank in a fiduciary capacity. It shall have such other
powers and duties relating to the administration of fiduciary accounts
entrusted to the Bank as may be conferred upon it from time to time by the
Board of Directors. The Trust Committee shall meet at least once a month and
shall keep minutes of its meetings showing the disposition of all matters
considered and passed upon, and shall make monthly reports to the Board of
Directors. Any three (3) persons, each of whom is a member of the Trust
Committee, of whom not less than two (2) shall be nonofficer directors, shall
constitute a quorum for the transaction of business at any meeting of the Trust
Committee.
ARTICLE XII
QUORUM
Except as otherwise provided by statute or in the Articles of
Incorporation or these Bylaws, a majority of all the stockholders or Directors,
as the case may be, shall be required to constitute a quorum to do business.
Should there be no quorum at any regular or special meeting of stockholders or
Directors, the stockholders or Directors present may adjourn from day to day
until a quorum is in attendance.
ARTICLE XIII
INDEMNIFICATION AND INSURANCE
The Bank shall indemnify and reimburse any director, officer, employee,
or agent to the fullest extent permitted by the laws of the State of Michigan,
as amended from time to time.
ARTICLE XIV
AMENDMENTS TO BYLAWS
These Bylaws may be repealed, altered, or amended, in whole or in part, by
the vote of a majority of the Directors, at any regular or special meeting of
the Board of Directors.
<PAGE> 16
EXHIBIT #7
Charter No. 13671 Comptroller of the Currency District
REPORT OF CONDITION CONSOLIDATING
DOMESTIC AND FOREIGN SUBSIDIARIES OF THE
NBD BANK
in the State of Michigan, at the close of business on Dec. 31, 1996 pub-
lished in response to call made by Comptroller of the Currency, under
title 12, United States Code, Section 161.
ASSETS
<TABLE>
<CAPTION>
Thousands
of dollars
<S> <C>
Cash and balances due from depository institutions
Noninterest-bearing balances and currency
and coin.............................................................. 1,803,709
Interest-bearing balances............................................. 0
Securities:
Held-to-maturity securities........................................... 0
Available-for-sale securities......................................... 1,986,590
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds sold.................................................. 60,900
Securities purchased under agreements to resell..................... 0
Loans and lease financing receivables:
Loans and leases, net of unearned income................. 17,800,147
LESS: Allowance for loan and lease losses................ 277,304
Loans and leases, net of unearned income and
allowance............................................................. 17,522,843
Assets held in trading accounts......................................... 55,513
Premises and fixed assets (including
capitalized leases)................................................... 341,544
Other real estate owned................................................. 11,729
Investments in unconsolidated subsidiaries and
associated companies.................................................. -
Customers' liability to this bank on acceptances
outstanding........................................................... 59,348
Intangible assets....................................................... 30,286
Other assets............................................................ 601,383
----------
Total assets............................................................ 22,473,845
==========
</TABLE>
<PAGE> 17
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices..................................................... 16,307,056
Noninterest-bearing.................................. 4,825,339
Interest-bearing..................................... 11,481,717
In foreign offices, Edge and Agreement
subsidiaries, and IBFs.................................................. 178,079
Noninterest-bearing.................................. 0
Interest-bearing..................................... 178,079
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................................. 912,684
Securities sold under agreements to repurchase....................... 5,520
Demand notes issued to the U.S. Treasury.................................. 247,100
Trading liabilities....................................................... 44,258
Other borrowed money:
With remaining maturity of one year or less.......................... 1,073,626
With remaining maturity of more than one year........................ 252,636
Mortgage indebtedness and obligations
under capitalized leases................................................ 12,163
Bank's liability on acceptances executed and
outstanding............................................................. 59,348
Notes and debentures subordinated to
deposits................................................................ 700,000
Other liabilities......................................................... 482,846
----------
Total liabilities......................................................... 20,275,316
----------
EQUITY CAPITAL
Common stock.............................................................. 111,858
Surplus................................................................... 642,824
Undivided profits and capital reserves.................................... 1,432,796
Net unrealized holding gains (losses) on available-for-sale securities.... 11,051
Cumulative foreign currency translation
adjustments............................................................. 0
----------
Total equity capital...................................................... 2,198,529
----------
Total liabilities and equity capital...................................... 22,473,845
==========
</TABLE>
I, Jason N. Hansen, Vice President of the above-named bank do hereby
declare that this Report of Condition is true and correct to the best of my
knowledge and belief.
JASON N. HANSEN
January 30, 1997
We, the undersigned directors, attest to the correctness of this state-
ment of resources and liabilities. We declare that it has been examined by us,
and to the best of our knowledge and belief has been prepared in conformance
with the instructions and is true and correct.
PETER W. STROH
THOMAS H. JEFFS II
ALFRED R. GLANCY III
Directors
