<PAGE> 1
As filed with the Securities and Exchange Commission on February 5, 1997.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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
To Be Applied For
To Be Applied For
(I.R.S. Employer
Identification No.)
------------------------
500 Griswold Street, Detroit, Michigan 48226, (313) 256-5500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------
DANIEL L. SCHIFFER, ESQ.
Senior Vice President, General Counsel and Secretary
MCN CORPORATION
500 Griswold Street, Detroit, Michigan 48226, (313) 256-5500
(Name, Address, Including Zip Code, and Telephone Number, Area Code, of Agent
for Service for Each Registrant)
Copies to:
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]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF REGISTERED OFFERING PRICE PER AGGREGATE OFFERING
SECURITIES TO BE REGISTERED (1)(6) UNIT(1)(2)(3) PRICE(1)(2)(3)
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<S> <C> <C> <C>
Preferred Securities of MCN Financing II.................
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Preferred Securities of MCN Financing III................
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Preferred Securities of MCN Financing IV.................
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Guarantees of Preferred Securities of MCN Financing II,
MCN Financing III and MCN Financing IV by MCN
Corporation(4).........................................
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Subordinated Debt Securities of MCN Corporation..........
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Senior Debt Securities of MCN Corporation................
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Stock Purchase Contracts of MCN Corporation(5)...........
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Stock Purchase Units of MCN Corporation(5)...............
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Common Stock, $.01 par value of MCN Corporation(6).......
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Total.................................................... $500,000,000 100% $500,000,000
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<CAPTION>
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AMOUNT OF
TITLE OF EACH CLASS OF REGISTRATION
SECURITIES TO BE REGISTERED FEE(2)(7)
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<S> <C>
Preferred Securities of MCN Financing II.................
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Preferred Securities of MCN Financing III................
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Preferred Securities of MCN Financing IV.................
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Guarantees of Preferred Securities of MCN Financing II,
MCN Financing III and MCN Financing IV by MCN
Corporation(4).........................................
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Subordinated Debt Securities of MCN Corporation..........
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Senior Debt Securities of MCN Corporation................
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Stock Purchase Contracts of MCN Corporation(5)...........
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Stock Purchase Units of MCN Corporation(5)...............
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Common Stock, $.01 par value of MCN Corporation(6).......
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Total.................................................... $151,516
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</TABLE>
(1) Such indeterminate number of Preferred Securities of MCN Financing II, MCN
Financing III and MCN Financing IV and such indeterminate principal amount
of Subordinated Debt Securities, Senior Debt Securities, Stock Purchase
Contracts, Stock Purchase Units, and Common Stock of MCN Corporation as may
from time to time be issued at indeterminate prices. Subordinated Debt
Securities may be issued and sold to MCN Financing II, MCN Financing III and
MCN Financing IV, in which event each Subordinated Debt Securities may later
be distributed to the holders of Preferred Securities upon a dissolution of
MCN Financing II, MCN Financing III or MCN Financing IV and the distribution
of the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate public offering price of the Preferred
Securities of MCN Financing II, MCN Financing III and MCN Financing IV, and
the Subordinated Debt Securities, Senior Debt Securities, Stock Purchase
Contracts, Stock Purchase Units and Common Stock of MCN Corporation
registered hereby will not exceed $500,000,000.
(3) Exclusive of accrued interest and distributions, if any.
(4) Includes the rights of holders of the Preferred Securities under the
Guarantees of Preferred Securities and back-up undertakings, consisting of
obligations by MCN Corporation, as set forth in the Amended and Restated
Declaration of Trust, the Subordinated Debt Securities Indenture and
Supplemental Indentures thereto, in each case as further described in the
Registration Statement. No separate consideration will be received for any
Guarantees or any back-up undertakings.
(5) Includes an indeterminable number of shares of Common Stock to be issuable
by MCN Corporation upon settlement of the Stock Purchase Contracts or Stock
Purchase Units issued by MCN Corporation.
(6) Includes Preferred Share Purchase Rights ("Rights"). The Rights are
associated with and trade with the Common Stock. The value, if any,
attributed to the Rights is reflected in the market price of the Common
Stock.
(7) Does not include certain securities of MCN Corporation covered by
Registration Statement No. 333-01521 which are being carried over to this
Registration Statement. Also does not include the Registration Fee of
$63,830 which was previously paid with respect to such securities.
Pursuant to the provisions of Rule 429 under the Securities Act of 1933, the
Prospectus contained in this Registration Statement also relates to $185,105,000
of unsold securities covered by the Registration Statement on Form S-3
(Registration No. 333-01521) of MCN Corporation and MCN Financing II which are
being carried forward in connection with this Registration Statement. Such
Registration Statement is accordingly amended to reflect the information
contained herein, including the addition of MCN Financing III and MCN Financing
IV as registrants. In the event that any of such previously registered
Securities are offered prior to the effective date of this Registration
Statement, the amount of such Securities will not be included in any Prospectus
hereunder. The amount of Securities being registered, together with the
remaining Securities registered under Registration Statement No. 333-01521,
represents the maximum amount of Securities which are expected to be offered for
sale.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains 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 FEBRUARY 5, 1997
PROSPECTUS SUPPLEMENT
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(TO PROSPECTUS DATED , 1997)
6,000,000 PREFERRED SECURITIES
MCN FINANCING II
% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPRSSM")
(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-6 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."
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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>
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INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
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<S> <C> <C> <C>
Per Preferred Security...................... $25.00 (3) $25.00
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Total....................................... $150,000,000 (3) $150,000,000
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</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 $1,366
million at September 30, 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."
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 5
MCN ENERGY GROUP INC.
SELECTED HISTORICAL FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
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1996 1995 1994 1993 1992 1991
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(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS(1)
Operating Revenues........................... $1,911,760 $1,495,232 $1,473,633 $1,420,754 $1,395,341 $1,236,852
Operating Income............................. $ 218,521 $ 188,229 $ 147,914 $ 138,694 $ 120,744 $ 96,754
Net income from:
Continuing Operations...................... $ 111,414 $ 93,169 $ 74,598 $ 70,173 $ 54,537 $ 34,312
Discontinued Operations.................... 38,696 3,587 3,170 2,617 2,581 766
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 150,110 $ 96,756 $ 77,768 $ 72,790 $ 57,118 $ 35,078
========== ========== ========== ========== ========== ==========
Earnings Per Share from:
Continuing Operations...................... $ 1.67 $ 1.44 $ 1.26 $ 1.20 $ 1.00 $ 0.69
Discontinued Operations.................... 0.58 0.05 0.05 0.04 0.05 0.02
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 2.25 $ 1.49 $ 1.31 $ 1.24 $ 1.05 $ 0.71
========== ========== ========== ========== ========== ==========
Average Number of Common Shares
Outstanding (000's)........................ 66,711 64,743 59,394 58,642 54,216 49,386
GAS DISTRIBUTION (MMCF)(2):
Gas sales.................................. 225,697 209,816 204,384 205,372 203,110 192,770
End user transportation.................... 150,149 145,761 140,020 128,643 129,722 119,846
Intermediate transportation................ 521,192 374,428 322,969 302,662 209,360 130,831
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. 897,038 730,005 667,373 636,677 542,192 443,447
========== ========== ========== ========== ========== ==========
Customers.................................. 1,161,000 1,172,613 1,154,545 1,141,986 1,130,165 1,124,792
DIVERSIFIED ENERGY(2)
Exploration & Production
Gas Production (MMcf).................... 50,430 31,420 16,513 2,307 -- --
Oil Production (Mbbl).................... 757 388 85 -- -- --
Gas and Oil Production (MMcf
Equivalent)............................ 54,972 33,748 17,023 2,307 -- --
Pipelines & Processing (MMcf)(3)
Gas Processed............................ 36,518 14,588 1,942 -- -- --
Transportation........................... 72,268 4,994 1,194 294 -- --
Energy Marketing & Power Generation (MMcf)
Gas Sales................................ 212,532 170,668 142,352 122,782 112,263 91,968
Exchange Gas Deliveries.................. 24,283 16,462 13,301 10,016 2,443 --
---------- ---------- ---------- ---------- ---------- ----------
236,815 187,130 155,653 132,798 114,706 91,968
========== ========== ========== ========== ========== ==========
CAPITAL INVESTMENTS(4).........................
Gas Distribution............................. $ 229,858 $ 241,494 $ 153,059 $ 143,120 $ 130,776 $ 122,428
Diversified Energy........................... 537,939 385,114 196,030 60,925 34,608 14,854
MCN's Share of Joint Venture................. 15,362 52,850 40,422 36,502 31,203 5,139
Discontinued Operations(1)................... 9,810 9,380 12,458 5,064 5,484 2,600
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 792,969 $ 688,838 $ 401,969 $ 245,611 $ 202,071 $ 145,021
========== ========== ========== ========== ========== ==========
TOTAL ASSETS................................... $3,161,642 $2,898,640 $2,240,973 $1,881,900 $1,648,989 $1,517,387
========== ========== ========== ========== ========== ==========
</TABLE>
(continued on next page)
S-3
<PAGE> 6
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(5)............................... $1,054,144 $ 993,407 $ 685,519 $ 494,821 $ 379,811 $ 328,052
========== ========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED SECURITIES
OF SUBSIDIARIES(5)........................... $ 96,542 $ 96,449 $ 98,967 $ 5,618 $ 9,000 $ 12,000
========== ========== ========== ========== ========== ==========
MCN-OBLIGATED MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF MCN FINANCING I
HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES
OF THE COMPANY............................... $ 77,218 -- -- -- -- --
========== ========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of period)....... $ 26.875 $ 23.25 $ 18.00 $ 17.38 $ 15.44 $ 12.19
Dividends Paid Per Share..................... $ .9300 $ .9000 $ .8675 $ .8450 $ .8250 $ .8200
</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 MCN
Investment, 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), 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.
As of September 30, 1996, MCN was a $3.2 billion (assets) diversified
energy holding company with gas markets and investments in various regions in
North America. Its principal operating subsidiaries are Michigan Consolidated
Gas Company ("MichCon"), a natural gas distribution and intrastate transmission
company, and MCN Investment Corporation ("MCN Investment"), a holding company
with subsidiaries involved in energy-related investments.
MCN's major business segments are the Gas Distribution group and the
Diversified Energy group.
MCN's strategy is to aggressively invest in a diverse portfolio of domestic
and international energy-related projects. MCN's intent is:
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion;
- to invest in a portfolio of projects including investments in
exploration and production, power generation, gas gathering and
processing systems, and gas storage; and
- to continue to market natural gas to large-volume users and utilities.
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.
Gas Distribution operates the largest natural gas distribution and
intrastate transmission system in Michigan and one of the largest in the United
States. For the twelve months ended September 30, 1996, operating revenues in
the Gas Distribution group were approximately $1.3 billion. In addition, at
September 30, 1996, the segment had total assets of approximately $2.0 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 billion cubic feet (Bcf). Gas Distribution continues to increase its
markets by reaching customers in new communities, offering new services to
current customers and expanding its intrastate gas transportation network.
Diversified Energy 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 September 30, 1996, operating revenues
for the segment exceeded $650 million and, at September 30, 1996, total assets
exceeded $1.2 billion, including interests in the assets of joint ventures. For
the twelve month period ended September 30, 1996, MCN Investment invested
approximately $560 million in various projects, of which approximately $400
million was for exploration and production projects. Expanding opportunities
throughout North America should enable Diversified Energy to continue to grow
its markets and increase its asset-based investments.
At December 31, 1995, MCN Investment owned 858 Bcf of proved gas reserves,
and proved oil reserves totaled 4.7 million barrels, or the equivalent of
another 28 Bcf of natural gas. The number of producing oil and gas wells totaled
1,972 at December 31, 1995.
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
RECENT DEVELOPMENTS
On January 21, 1997, MCN reported 1996 earnings from continuing operations
of $112.6 million, compared with $93.2 million in 1995. Earnings per share from
continuing operations increased 17 percent to $1.68 compared with $1.44 in 1995.
Earnings from discontinued operations in 1996 were $37.8 million, compared with
$3.6 million in 1995. The 1996 amount includes a $36.2 million gain on the June
1996 sale of Genix. Earnings per share from discontinued operations in 1996 were
$.57, compared with $.05 in 1995. The 1996 amount includes a gain of $.54 per
share on the sale of Genix.
The Company's return on equity was 15.8% for 1996, reflecting the
achievements of both the Gas Distribution group and the Diversified Energy
group. The Gas Distribution group reported 1996 net income of $81.4 million,
compared with $75.6 million in 1995 and the Diversified Energy group reported
1996 net income of $31.2 million, up from $17.6 million in 1995. Diversified
Energy contributed 28 percent of the Company's earnings from continuing
operations, up from 19 percent in 1995.
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
S-6
<PAGE> 9
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.
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 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 September
30, 1996, Senior Indebtedness aggregated approximately $1,366 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
S-7
<PAGE> 10
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 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."
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<PAGE> 11
OPTION TO EXTEND INTEREST PAYMENT PERIOD
MCN has the right under the Indenture (as such term is defined in
"Description of Junior Subordinated Debentures" herein) to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period at any time, and from time to time, on the Junior Subordinated
Debentures. As a consequence of such an extension, quarterly distributions on
the Preferred Securities would be deferred (but despite such deferral would
continue to accrue with interest thereon compounded quarterly) by MCN Financing
during any such extended interest payment period. Such right to extend the
interest payment period for the Junior Subordinated Debentures is limited to a
period not exceeding 20 consecutive quarters, 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 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."
S-9
<PAGE> 12
PROPOSED TAX LEGISLATION
On March 19, 1996, the U.S. Treasury Department proposed certain tax law
changes (the "Proposed Legislation") that would, among other things, generally
deny corporate issuers a deduction for interest in respect of certain debt
obligations, such as the Junior Subordinated Debentures, issued on or after
December 7, 1995. On March 29, 1996, Senate Finance Committee Chairman William
V. Roth, Jr. and House Ways and Means Committee Chairman Bill Archer issued a
joint statement (the "Joint Statement") indicating their intent that the
Proposed Legislation, if adopted by either of the taxwriting committees of
Congress, would have an effective date that is no earlier than the date of
"appropriate Congressional action." In addition, subsequent to the publication
of the Joint Statement, Senator Daniel Patrick Moynihan and Representatives Sam
M. Gibbons and Charles B. Rangel wrote letters to the Treasury Department
concurring with the view expressed in the Joint Statement (the "Democrat
Letters"). While the Proposed Legislation is not now pending in Congress, it is
anticipated that the Clinton Administration will propose similar legislation in
1997. Based upon the Joint Statement and the Democrat Letters it is expected
that if the Proposed Legislation were to be enacted, such legislation would not
apply to the Junior Subordinated Debentures. There can be no assurances,
however, that the effective date guidance contained in the Joint Statement will
be incorporated into the Proposed Legislation, if enacted, or that other
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 of a Special Event that is a Tax Event, in certain circumstances,
MCN shall have the right to redeem the Junior Subordinated Debentures, in whole
or in part, in lieu of a distribution of the Junior Subordinated Debentures by
the Trust; in which event the Trust will redeem the Trust Securities on a pro
rata basis to the same extent as the Junior Subordinated Debentures are redeemed
by MCN. See "Description of the Preferred Securities -- Special Event Redemption
or Distribution."
Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of MCN Financing would not
be a taxable event to holders of the Preferred Securities. Upon occurrence of a
Special Event, however, a dissolution of MCN Financing in which holders of the
Preferred Securities receive cash would be a taxable event to such holders. See
"United States Federal Income Taxation -- Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of MCN Financing."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that a holder of Preferred Securities may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Junior Subordinated
Debentures upon the occurrence of a Special Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein and in the
accompanying Prospectus. See "Description of the Preferred Securities -- Special
Event Redemption or Distribution" and "Description of the Junior Subordinated
Debentures -- General."
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<PAGE> 13
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> 14
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>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
MCN(1)(2)(3)..................................... 2.41 2.55 2.70 3.15 2.82 2.17
</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> 15
CAPITALIZATION
The following table sets forth the unaudited summary capitalization at
September 30, 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 SEPTEMBER 30, 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)..................... $ 311,797 $
========== ==========
Long-Term Debt (including capital leases)(2)................ $1,054,144 $
Redeemable Cumulative Preferred Securities of
Subsidiaries.............................................. 96,542
MCN-obligated mandatorily redeemable preferred securities of
MCN Financing I and MCN Financing II holding solely Junior
Subordinated Debentures of the Company(3)................. 77,218
Common Stockholders' Equity................................. 731,869
---------- ----------
Total Capitalization........................................ $1,959,773 $
========== ==========
</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 MCN Financing I are the 8 5/8% Junior Subordinated
Debentures due 2036 of MCN with a principal amount of $82,474,250, and the
sole assets of MCN Financing II will be the % Junior Subordinated
Debentures of MCN due 2037 with a principal amount of approximately
$ . Upon redemption of such debt, the preferred securities of such
trusts 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 the Trust.
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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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 quarter will bear interest thereon at
the rate per annum of % thereof compounded quarterly. The term "distribution"
as used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 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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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 and
may be redeemed, in whole or in part, at any time on or after ,
2002, or at any time in certain circumstances upon the occurrence of a Tax Event
(as defined herein). Upon the repayment of the Junior Subordinated Debentures,
whether at maturity or upon redemption, the proceeds from such repayment or
payment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Debentures so repaid or redeemed at the Redemption Price;
provided, that holders of Trust Securities shall be given not less than 30 nor
more than 60 days notice of such redemption, except in the case of payments upon
maturity. See "Description of the Junior Subordinated Debentures -- Optional
Redemption." In the event that fewer than all of the outstanding Preferred
Securities are to be redeemed, the Preferred Securities will be redeemed pro
rata as described under "Book-Entry Only Issuance -- The Depository Trust
Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after such date), there is more than an
insubstantial risk that (i) the Trust would be subject to United States federal
income tax with respect to income accrued or received on the Junior Subordinated
Debentures, (ii) interest payable to the Trust on the Junior Subordinated
Debentures would not be deductible by MCN for United States federal income tax
purposes or (iii) the Trust would be subject to more than a de minimis amount of
other taxes, duties or other governmental charges, which change or amendment
becomes effective on or after the date of this Prospectus Supplement.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
1940 Act (as defined herein) to the effect that, as a result of the occurrence
of a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act"), which Change in 1940 Act Law becomes
effective on or after the date of this Prospectus Supplement.
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 (the "Liquidation Distribution"), unless, in connection with such
Liquidation, Junior Subordinated Debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Preferred Securities have been
distributed on a pro rata basis to the holders of the Preferred Securities in
exchange for such Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Preferred Securities, except that
if a Declaration Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the Common Securities with regard to
such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on 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 the
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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 "Effects 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 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
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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 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
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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. (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.
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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.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Preferred Securities in accordance
with its procedures. Although voting with respect to the Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor Cede & Co.
will itself consent or vote with respect to Preferred Securities. Under its
usual procedures, DTC would mail an Omnibus Proxy to the Trust as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co. consenting
or voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy). MCN and the Trust believe that the arrangements among DTC,
Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights that
can be directly exercised by a holder of a beneficial interest in the Trust.
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Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of DTC,
the Trust or MCN, subject to any statutory or regulatory requirements to the
contrary that may be in effect from time to time. Payment of distributions to
DTC is the responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with the consent of
MCN) may decide to discontinue use of the system of book-entry transfers through
DTC (or any successor depositary) with respect to the Preferred Securities. In
that event, certificates for the Preferred Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that MCN and MCN Financing believe to be
reliable, but neither MCN nor MCN Financing takes responsibility for the
accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The holders of Preferred Securities will not be required to
offer such indemnity in the event such holders, by exercising their voting
rights, direct the Institutional Trustee to take any action it is empowered to
take under the Declaration following a Declaration Event of Default. The
Institutional Trustee also serves as trustee under the Guarantee.
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
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.
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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 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.
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<PAGE> 27
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
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
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Senior Indebtedness then outstanding, the rights of the holders of the Junior
Subordinated Debentures will be subrogated to the rights of the holders of
Indebtedness of MCN to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Junior Subordinated Debentures are
paid in full.
The term "Senior Indebtedness" means the principal of and premium, if any,
and interest on the following, whether outstanding on the date of execution of
the Subordinated Debt Securities Indenture or thereafter incurred or created:
(i) indebtedness of MCN for money borrowed by MCN (including purchase money
obligations with an original maturity in excess of one year) or evidenced by
debentures (other than the Subordinated Debt Securities), notes, bankers'
acceptances or other corporate debt securities or similar instruments issued by
MCN; (ii) obligations with respect to letters of credit; (iii) indebtedness of
MCN constituting a guarantee of indebtedness of others of the type referred to
in the preceding clauses (i) and (ii); or (iv) renewals, extensions or
refundings of any of the indebtedness referred to in the preceding clauses (i),
(ii) and (iii) unless, in the case of any particular indebtedness, renewal,
extension or refunding, under the express provisions of the instrument creating
or evidencing the same, or pursuant to which the same is outstanding, such
indebtedness or such renewal extension or refunding thereof is not superior in
right of payment to the Subordinated Debt Securities. In November 1994, MCN
issued $101 million of Series A Subordinated Debentures to MCN Michigan Limited
Partnership, a financing entity which issued cumulative preferred securities
that rank pari passu with the Preferred Securities and in July 1996, MCN issued
approximately $82 million of junior subordinated debentures due 2036 (the
"8 5/8% Debentures") to MCN Financing I, which issued the 8 5/8% Trust
Originated Preferred Securities (the "8 5/8% Preferred Securities") that rank
pari passu with the Preferred Securities.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by MCN. As of September 30, 1996, Senior Indebtedness of MCN
aggregated approximately $1,366 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 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 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.
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PROPOSED TAX LEGISLATION
On March 19, 1996, the U.S. Treasury Department proposed the Proposed
Legislation that would, among other things, generally deny corporate issuers a
deduction for interest in respect of certain debt obligations, such as the
Junior Subordinated Debentures, issued on or after December 7, 1995. On March
29, 1996, Senate Finance Committee Chairman William V. Roth, Jr. and House Ways
and Means Committee Chairman Bill Archer issued the Joint Statement indicating
their intent that the Proposed Legislation, if adopted by either of the
tax-writing committees of Congress, would have an effective date that is no
earlier than the date of "appropriate Congressional action." In addition,
subsequent to the publication of the Joint Statement, Senator Daniel Patrick
Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote the
Democrat Letters, concurring with the views expressed in the Joint Statement.
While the Proposed Legislation is not now pending in Congress, it is anticipated
that the Clinton Administration will propose similar legislation in 1997. Based
upon the Joint Statement and the Democrat Letters, it is expected that if the
Proposed Legislation were to be enacted, such legislation would not apply to the
Junior Subordinated Debentures. There can be no assurance, however, that the
effective date guidance contained in the Joint Statement will be incorporated
into the Proposed Legislation, if enacted, or that other 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 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
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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 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.
S-28
<PAGE> 31
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 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.
S-29
<PAGE> 32
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
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<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
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<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 March 19, 1996, the U.S. Treasury Department proposed the Proposed
Legislation that would, among other things, generally deny corporate issuers a
deduction for interest in respect of certain debt obligations, such as the
Junior Subordinated Debentures, issued on or after December 7, 1995. On March
29, 1996, Senate Finance Committee Chairman William V. Roth, Jr. and House Ways
and Means Committee Chairman Bill Archer issued the Joint Statement indicating
their intent that the Proposed Legislation, if adopted by either of the
tax-writing committees of Congress, would have an effective date that is no
earlier than the date of "appropriate Congressional action." In addition,
subsequent to the publication of the Joint Statement, Senator Daniel Patrick
Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote the
Democrat Letters, concurring with the view expressed in the Joint Statement.
While the Proposed Legislation is not now pending in Congress, it is anticipated
that the Clinton Administration will propose similar legislation in 1997. Based
upon the Joint Statement and the Democrat Letters, it is expected that if the
Proposed Legislation were to be enacted, such legislation would not apply to the
Junior Subordinated Debentures. There can be no assurance, however, that the
effective date guidance contained in the Joint Statement will be incorporated
into the Proposed Legislation, if enacted, or that other 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.
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<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..........................................
==========
</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).
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<PAGE> 38
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 23,844 shares
of MCN as of December 31, 1996. 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
Recent Developments........................ S-6
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-12
Capitalization............................. S-13
Accounting Treatment....................... S-13
Use of Proceeds............................ S-13
Description of the Preferred Securities.... S-14
Description of the Guarantee............... S-24
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...................... 2
Incorporation of Certain Documents by
Reference................................ 3
MCN Energy Group Inc....................... 4
The MCN Trusts............................. 4
Use of Proceeds............................ 5
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.... 6
Description of MCN Debt Securities......... 7
Particular Terms of the Senior Debt
Securities............................... 11
Particular Terms of the Subordinated Debt
Securities............................... 15
Description of MCN Capital Stock........... 19
Description of the MCN Trust Preferred
Securities............................... 22
Description of the Preferred Securities
Guarantees............................... 24
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....................... 28
Validity of Securities..................... 29
Experts.................................... 29
</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 FEBRUARY 5, 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 $1,366
million at September 30, 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."
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED, IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
S-3
<PAGE> 43
MCN ENERGY GROUP INC.
SELECTED HISTORICAL FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS(1)
Operating Revenues........................... $1,911,760 $1,495,232 $1,473,633 $1,420,754 $1,395,341 $1,236,852
Operating Income............................. $ 218,521 $ 188,229 $ 147,914 $ 138,694 $ 120,744 $ 96,754
Net income from:
Continuing Operations...................... $ 111,414 $ 93,169 $ 74,598 $ 70,173 $ 54,537 $ 34,312
Discontinued Operations.................... 38,696 3,587 3,170 2,617 2,581 766
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 150,110 $ 96,756 $ 77,768 $ 72,790 $ 57,118 $ 35,078
========== ========== ========== ========== ========== ==========
Earnings Per Share from:
Continuing Operations...................... $ 1.67 $ 1.44 $ 1.26 $ 1.20 $ 1.00 $ 0.69
Discontinued Operations.................... 0.58 0.05 0.05 0.04 0.05 0.02
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 2.25 $ 1.49 $ 1.31 $ 1.24 $ 1.05 $ 0.71
========== ========== ========== ========== ========== ==========
Average Number of Common Shares
Outstanding (000's)........................ 66,711 64,743 59,394 58,642 54,216 49,386
GAS DISTRIBUTION (MMCF)(2):
Gas sales.................................. 225,697 209,816 204,384 205,372 203,110 192,770
End user transportation.................... 150,149 145,761 140,020 128,643 129,722 119,846
Intermediate transportation................ 521,192 374,428 322,969 302,662 209,360 130,831
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. 897,038 730,005 667,373 636,677 542,192 443,447
========== ========== ========== ========== ========== ==========
Customers.................................. 1,161,000 1,172,613 1,154,545 1,141,986 1,130,165 1,124,792
DIVERSIFIED ENERGY(2)
Exploration & Production
Gas Production (MMcf).................... 50,430 31,420 16,513 2,307 -- --
Oil Production (Mbbl).................... 757 388 85 -- -- --
Gas and Oil Production (MMcf
Equivalent)............................ 54,972 33,748 17,023 2,307 -- --
Pipelines & Processing (MMcf)(3)
Gas Processed............................ 36,518 14,588 1,942 -- -- --
Transportation........................... 72,268 4,994 1,194 294 -- --
Energy Marketing & Power Generation (MMcf)
Gas Sales................................ 212,532 170,668 142,352 122,782 112,263 91,968
Exchange Gas Deliveries.................. 24,283 16,462 13,301 10,016 2,443 --
---------- ---------- ---------- ---------- ---------- ----------
236,815 187,130 155,653 132,798 114,706 91,968
========== ========== ========== ========== ========== ==========
CAPITAL INVESTMENTS(4).........................
Gas Distribution............................. $ 229,858 $ 241,494 $ 153,059 $ 143,120 $ 130,776 $ 122,428
Diversified Energy........................... 537,939 385,114 196,030 60,925 34,608 14,854
MCN's Share of Joint Venture................. 15,362 52,850 40,422 36,502 31,203 5,139
Discontinued Operations(1)................... 9,810 9,380 12,458 5,064 5,484 2,600
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 792,969 $ 688,838 $ 401,969 $ 245,611 $ 202,071 $ 145,021
========== ========== ========== ========== ========== ==========
TOTAL ASSETS................................... $3,161,642 $2,898,640 $2,240,973 $1,881,900 $1,648,989 $1,517,387
========== ========== ========== ========== ========== ==========
</TABLE>
(continued on next page)
S-4
<PAGE> 44
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
========== ========== ========== ========== ========== ==========
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(5)............................... $1,054,144 $ 993,407 $ 685,519 $ 494,821 $ 379,811 $ 328,052
========== ========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED SECURITIES
OF SUBSIDIARIES(5)........................... $ 96,542 $ 96,449 $ 98,967 $ 5,618 $ 9,000 $ 12,000
========== ========== ========== ========== ========== ==========
MCN-OBLIGATED MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF MCN FINANCING I
HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES
OF THE COMPANY............................... $ 77,218 -- -- -- -- --
========== ========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of period)....... $ 26.875 $ 23.25 $ 18.00 $ 17.38 $ 15.44 $ 12.19
Dividends Paid Per Share..................... $ .9300 $ .9000 $ .8675 $ .8450 $ .8250 $ .8200
</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 MCN
Investment, with recourse to MCN Corporation limited to certain events,
including the realization of tax credits and performance under swap
contracts.
S-5
<PAGE> 45
MCN ENERGY GROUP INC.
In January 1997, MCN Corporation began doing business under the name MCN
Energy Group Inc. (MCN), 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.
As of September 30, 1996, MCN was a $3.2 billion (assets) diversified
energy holding company with gas markets and investments in various regions in
North America. Its principal operating subsidiaries are Michigan Consolidated
Gas Company ("MichCon"), a natural gas distribution and intrastate transmission
company, and MCN Investment Corporation ("MCN Investment"), a holding company
with subsidiaries involved in energy-related investments.
MCN's major business segments are the Gas Distribution group and the
Diversified Energy group.
MCN's strategy is to aggressively invest in a diverse portfolio of domestic
and international energy-related projects. MCN's intent is:
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion;
- to invest in a portfolio of projects including investments in
exploration and production, power generation, gas gathering and
processing systems, and gas storage; and
- to continue to market natural gas to large-volume users and utilities.
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.
Gas Distribution operates the largest natural gas distribution and
intrastate transmission system in Michigan and one of the largest in the United
States. For the twelve months ended September 30, 1996, operating revenues in
the Gas Distribution group were approximately $1.3 billion. In addition, at
September 30, 1996, the segment had total assets of approximately $2.0 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 billion cubic feet (Bcf). Gas Distribution continues to increase its
markets by reaching customers in new communities, offering new services to
current customers and expanding its intrastate gas transportation network.
Diversified Energy 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 September 30, 1996, operating revenues
for the segment exceeded $650 million and, at September 30, 1996, total assets
exceeded $1.2 billion, including interests in the assets of joint ventures. For
the twelve month period ended September 30, 1996, MCN Investment invested
approximately $560 million in various projects, of which approximately $400
million was for exploration and production projects. Expanding opportunities
throughout North America should enable Diversified Energy to continue to grow
its markets and increase its asset-based investments.
At December 31, 1995, MCN Investment owned 858 Bcf of proved gas reserves,
and proved oil reserves totaled 4.7 million barrels, or the equivalent of
another 28 Bcf of natural gas. The number of producing oil and gas wells totaled
1,972 at December 31, 1995.
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
RECENT DEVELOPMENTS
On January 21, 1997, MCN reported 1996 earnings from continuing operations
of $112.6 million, compared with $93.2 million in 1995. Earnings per share from
continuing operations increased 17 percent to $1.68 compared with $1.44 in 1995.
Earnings from discontinued operations in 1996 were $37.8 million, compared with
$3.6 million in 1995. The 1996 amount includes a $36.2 million gain on the June
1996 sale of Genix. Earnings per share from discontinued operations in 1996 were
$.57, compared with $.05 in 1995. The 1996 amount includes a gain of $.54 per
share on the sale of Genix.
The Company's return on equity was 15.8 percent for 1996, reflecting the
achievements of both the Gas Distribution group and the Diversified Energy
group. The Gas Distribution group reported 1996 net income of $81.4 million,
compared with $75.6 million in 1995 and the Diversified Energy group reported
1996 net income of $31.2 million, up from $17.6 million in 1995. Diversified
Energy contributed 28 percent of the Company's earnings from continuing
operations, up from 19 percent in 1995.
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 Guarantee" 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
S-7
<PAGE> 47
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.
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, with which they rank 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 September 30,
1996, Senior Indebtedness aggregated approximately $1,366 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
S-8
<PAGE> 48
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 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.
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 (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
S-9
<PAGE> 49
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 exceed 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 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 March 19, 1996, the U.S. Treasury Department proposed certain tax law
changes (the "Proposed Legislation") that would, among other things, generally
deny corporate issuers a deduction for interest in
S-10
<PAGE> 50
respect of certain debt obligations, such as the Junior Subordinated Debentures,
issued on or after December 7, 1995. On March 29, 1996, Senate Finance Committee
Chairman William V. Roth, Jr. and House Ways and Means Committee Chairman Bill
Archer issued a joint statement (the "Joint Statement") indicating their intent
that the Proposed Legislation, if adopted by either of the tax-writing
committees of Congress, would have an effective date that is no earlier than the
date of "appropriate Congressional action." In addition, subsequent to the
publication of the Joint Statement, Senator Daniel Patrick Moynihan and
Representatives Sam M. Gibbons and Charles B. Rangel wrote letters to the
Treasury Department concurring with the view expressed in the Joint Statement
(the "Democrat Letters"). While the Proposed Legislation is not now pending in
Congress, it is anticipated that the Clinton Administration will propose similar
legislation in 1997. Based upon the Joint Statement and the Democrat Letters, it
is expected that if the Proposed Legislation were to be enacted, such
legislation would not apply to the Junior Subordinated Debentures. There can be
no assurances, however, that the effective date guidance contained in the Joint
Statement will be incorporated into the Proposed Legislation, if enacted, or
that other 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 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. Moreover, 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."
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<PAGE> 51
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> 52
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>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
MCN(1)(2)(3)..................................... 2.41 2.55 2.70 3.15 2.82 2.17
</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> 53
CAPITALIZATION
The following table sets forth the unaudited summary capitalization at
September 30, 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 SEPTEMBER 30, 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)..................... $ 311,797 $
========== ==========
Long-Term Debt (including capital leases)(2)................ $1,054,144 $
Redeemable Cumulative Preferred Securities of
Subsidiaries.............................................. 96,542
MCN-obligated mandatorily redeemable preferred securities of
MCN Financing I and MCN Financing IV holding solely Junior
Subordinated Debentures of the Company(3)................. 77,218
Common Stockholders' Equity................................. 731,869
---------- ----------
Total Capitalization........................................ $1,959,773 $
========== ==========
</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 MCN Financing I are the 8 5/8% Junior Subordinated
Debentures due 2036 of MCN with a principal amount of $82,474,250, and the
sole assets of MCN Financing IV will be the % Junior Subordinated
Debentures of MCN due 2037 with a principal amount of approximately
$ . Upon redemption of such debt, the preferred securities of
such trusts 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 the Trust. 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> 54
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> 55
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. See
"Description of the Junior Subordinated
S-16
<PAGE> 56
Debentures." Upon the repayment of the Junior Subordinated 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. 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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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 (the "Liquidation Distribution"), unless, in connection with such
Liquidation, Junior Subordinated Debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the 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 further 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
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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 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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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.
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).
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
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receive payments on such payment date. Payments by Participants and Indirect
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and 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. Additionally, the Trust (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 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.
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 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 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
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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 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
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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 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.
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The term "Senior Indebtedness" means the principal of and premium, if any,
and interest on the following, whether outstanding on the date of execution of
the Subordinated Debt Securities Indenture or thereafter incurred or created:
(i) indebtedness of MCN for money borrowed by MCN (including purchase money
obligations with an original maturity in excess of one year) or evidenced by
debentures (other than the Subordinated Debt Securities), notes, bankers'
acceptances or other corporate debt securities or similar instruments issued by
MCN; (ii) obligations with respect to letters of credit; (iii) indebtedness of
MCN constituting a guarantee of indebtedness of others of the type referred to
in the preceding clauses (i) and (ii); or (iv) renewals, extensions or
refundings of any of the indebtedness referred to in the preceding clauses (i),
(ii) and (iii) unless, in the case of any particular indebtedness, renewal,
extension or refunding, under the express provisions of the instrument creating
or evidencing the same, or pursuant to which the same is outstanding, such
indebtedness or such renewal extension or refunding thereof is not superior in
right of payment to the Subordinated Debt Securities. In November 1994, MCN
issued $101 million of Series A Subordinated Debentures to MCN Michigan Limited
Partnership, a financing entity which issued cumulative preferred securities
that rank pari passu with the Capital Securities and in July 1996, MCN issued
approximately $82 million of junior subordinated debentures due 2036 (the
"8 5/8% Debentures") to MCN Financing I, which issued the 8 5/8% Preferred
Securities that ranks pari passu with the Capital Securities.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by MCN. As of September 30, 1996, Senior Indebtedness of MCN
aggregated approximately $1,366 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 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
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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 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
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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.
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 March 19, 1996, the U.S. Treasury Department proposed the Proposed
Legislation that would, among other things, generally deny corporate issuers a
deduction for interest in respect of certain debt obligations, such as the
Junior Subordinated Debentures, issued on or after December 7, 1995. On March
29, 1996, Senate Finance Committee Chairman William V. Roth, Jr. and House Ways
and Means Committee Chairman Bill Archer issued the Joint Statement indicating
their intent that the Proposed Legislation, if adopted by either of the
tax-writing committees of Congress, would have an effective date that is no
earlier than the date of "appropriate Congressional action." In addition,
subsequent to the publication of the Joint Statement, Senator Daniel Patrick
Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote the
Democrat Letters, concurring with the views expressed in the Joint Statement.
While the Proposed Legislation is not now pending in Congress, it is anticipated
that the Clinton Administration will propose similar legislation in 1997. Based
upon the Joint Statement and the Democrat Letters, it is expected that if the
Proposed Legislation were to be enacted, such legislation would not apply to the
Junior Subordinated Debentures. There can be no assurance, however, that the
effective date guidance contained in the Joint Statement will be incorporated
into the Proposed Legislation, if enacted, or that other 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, 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
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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 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
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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 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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<PAGE> 70
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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<PAGE> 72
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
S-33
<PAGE> 73
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
S-34
<PAGE> 74
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-35
<PAGE> 75
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 March 19, 1996, the U.S. Treasury Department proposed the Proposed
Legislation that would, among other things, generally deny corporate issuers a
deduction for interest in respect of certain debt obligations, such as the
Junior Subordinated Debentures, issued on or after December 7, 1995. On March
29, 1996, Senate Finance Committee Chairman William V. Roth, Jr. and House Ways
and Means Committee Chairman Bill Archer issued the Joint Statement indicating
their intent that the Proposed Legislation, if adopted by either of the
tax-writing committees of Congress, would have an effective date that is no
earlier than the date of "appropriate Congressional action." In addition,
subsequent to the publication of the Joint Statement, Senator Daniel Patrick
Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote the
Democrat Letters, concurring with the view expressed in the Joint Statement.
While the Proposed Legislation is not now pending in Congress, it is anticipated
that the Clinton Administration will propose similar legislation in 1997. Based
upon the Joint Statement and the Democrat Letters, it is expected that if the
Proposed Legislation were to be enacted, such legislation would not apply to the
Junior Subordinated Debentures. There can be no assurance, however, that the
effective date guidance contained in the Joint Statement will be incorporated
into the Proposed Legislation, if enacted, or that other 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-36
<PAGE> 76
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
UNDERWRITERS SECURITIES
------------ ----------
<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).
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.
S-37
<PAGE> 77
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 23,844 shares of MCN as of
December 31, 1996. LeBoeuf, Lamb, Greene & MacRae, L.L.P. from time to time
renders legal services to MCN.
S-38
<PAGE> 78
------------------------------------------------------
------------------------------------------------------
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
Recent Developments........................ S-7
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-13
Capitalization............................. S-14
Accounting Treatment....................... S-14
Use of Proceeds............................ S-14
Description of the Capital Securities...... S-15
Description of the Guarantee............... S-24
Description of the Junior Subordinated
Debentures............................... S-24
Effect of Obligations Under the Junior
Subordinated Debentures and the
Guarantee................................ S-32
United States Federal Income Taxation...... S-33
Underwriting............................... S-37
Legal Matters.............................. S-38
PROSPECTUS
Available Information...................... 2
Incorporation of Certain Documents by
Reference................................ 3
MCN Energy Group Inc....................... 4
The MCN Trusts............................. 4
Use of Proceeds............................ 5
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.... 6
Description of MCN Debt Securities......... 7
Particular Terms of the Senior Debt
Securities............................... 11
Particular Terms of the Subordinated Debt
Securities............................... 15
Description of MCN Capital Stock........... 19
Description of the MCN Trust Preferred
Securities............................... 22
Description of the Preferred Securities
Guarantees............................... 24
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....................... 28
Validity of Securities..................... 29
Experts.................................... 29
</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> 79
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 FEBRUARY 5, 1997
PROSPECTUS SUPPLEMENT
- ----------------------------------
(TO PROSPECTUS DATED , 1997)
3,600,000 FELINE PRIDES(SM)
MCN ENERGY GROUP INC. LOGO MCN
FINANCING
III
The securities offered hereby are 3,600,000 FELINE PRIDES(SM) (the
"Securities") consisting of Income PRIDES(SM) and Growth PRIDES(SM) (each as
defined herein) of MCN Corporation, doing business as MCN Energy Group Inc.
("MCN" or the "Company"). Each FELINE PRIDES has a Stated Amount of $ .
Each Income PRIDES offered hereby will consist of (a) a stock purchase
contract (the "Purchase Contract") under which (i) the holder will purchase from
the Company on , 2000 (the "Purchase Contract Settlement Date"),
for an amount in cash 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 unsecured, subordinated yield enhancement payments
("Yield Enhancement Payments"), and (b) a % Trust Originated Preferred
Security (the "Trust Preferred Securities") 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"), which assets consist solely of % Junior Subordinated Debentures of
the Company, due , 2002 (the "Junior Subordinated Debentures") having
an aggregate principal amount equal to the aggregate Stated Amount. 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 will be made to list the Income PRIDES on the New York
Stock Exchange ("NYSE") under the symbol " ". The Growth PRIDES and the Trust
Preferred Securities are not currently expected to be listed. On ,
1997, the last reported sale price of the Common Stock on the NYSE was
$ per share, which is equal to the Stated Amount.
------------------------
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) TRUST(3)(4)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Per Security...................... $ $ $
- -------------------------------------------------------------------------------------------------------------
Total(5).......................... $ $ $
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued distributions, 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) MCN has agreed to pay to the Underwriters a commission ("Underwriters'
Commission") of $ per Security (or $ in the aggregate).
(4) Before deducting estimated expenses payable by the Company estimated at
$ .
(5) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 540,000 Securities 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 Trust will be $ .
------------------------
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.
------------------------
The date of this Prospectus Supplement is , 1997.
- ---------------
(SM) Service Mark of Merrill Lynch & Co. Inc.
<PAGE> 80
(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 , 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 Yield Enhancement 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 Yield
Enhancement Payments. As a consequence of such deferral, quarterly distributions
on the Income PRIDES would be deferred, but would continue to accrue with
interest compounded quarterly.
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 (as defined), with a remaining term equal to the
remaining term of the Purchase Contract, in a principal amount per Purchase
Contract equal to the Stated Amount per Trust Preferred Security. Income PRIDES
with respect to which Treasury Securities have been substituted for Trust
Preferred Securities will be referred to as Growth PRIDES. Payments of % of
the Stated Amount per annum will be made on each Growth PRIDES on March 31, June
30, September 30 and December 31 of each year from the time each Growth PRIDES
was created, consisting of Yield Enhancement Payments, payable by the Company at
the rate of % of the Stated Amount per annum. In addition, interest would
accrue on the underlying Treasury Securities. Distributions on any Trust
Preferred Securities still outstanding after the Purchase Contract Settlement
Date 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 an Income PRIDES by
delivering a Trust Preferred Security back to the Collateral Agent, which would
then release the underlying Treasury Securities to such holder.
On the Purchase Contract Settlement Date, unless a holder of the 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, then such
holder of Income PRIDES will be deemed to have requested the Trust to put its
Junior Subordinated Debenture to the Company, and the Stated Amount of such
Junior Subordinated Debenture per Purchase Contract or, in the case of Growth
PRIDES, the principal of the Treasury Securities, when paid at maturity, will
automatically be applied to the purchase of between of a share and one
share of Common Stock (depending on the Applicable Market Value of the Common
Stock on the Purchase Contract Settlement Date, as described below), subject to
adjustment under certain circumstances. See "Description of Securities."
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES, THE
TRUST PREFERRED SECURITIES, THE COMMON STOCK OR OTHER SECURITIES OF THE COMPANY
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED WITH RESPECT TO THE INCOME PRIDES AND THE COMMON
STOCK ON THE NYSE OR OTHERWISE, AND WITH RESPECT TO THE GROWTH PRIDES AND THE
TRUST PREFERRED SECURITIES IN THE OVER-THE-COUNTER MARKETS OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 81
MCN ENERGY GROUP INC.
SELECTED HISTORICAL FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS(1)
Operating Revenues........................... $1,911,760 $1,495,232 $1,473,633 $1,420,754 $1,395,341 $1,236,852
Operating Income............................. $ 218,521 $ 188,229 $ 147,914 $ 138,694 $ 120,744 $ 96,754
Net income from:
Continuing Operations...................... $ 111,414 $ 93,169 $ 74,598 $ 70,173 $ 54,537 $ 34,312
Discontinued Operations.................... 38,696 3,587 3,170 2,617 2,581 766
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 150,110 $ 96,756 $ 77,768 $ 72,790 $ 57,118 $ 35,078
========== ========== ========== ========== ========== ==========
Earnings Per Share from:
Continuing Operations...................... $ 1.67 $ 1.44 $ 1.26 $ 1.20 $ 1.00 $ 0.69
Discontinued Operations.................... 0.58 0.05 0.05 0.04 0.05 0.02
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 2.25 $ 1.49 $ 1.31 $ 1.24 $ 1.05 $ 0.71
========== ========== ========== ========== ========== ==========
Average Number of Common Shares
Outstanding (000's)........................ 66,711 64,743 59,394 58,642 54,216 49,386
GAS DISTRIBUTION (MMCF)(2):
Gas sales.................................. 225,697 209,816 204,384 205,372 203,110 192,770
End user transportation.................... 150,149 145,761 140,020 128,643 129,722 119,846
Intermediate transportation................ 521,192 374,428 322,969 302,662 209,360 130,831
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. 897,038 730,005 667,373 636,677 542,192 443,447
========== ========== ========== ========== ========== ==========
Customers.................................. 1,161,000 1,172,613 1,154,545 1,141,986 1,130,165 1,124,792
DIVERSIFIED ENERGY(2)
Exploration & Production
Gas Production (MMcf).................... 50,430 31,420 16,513 2,307 -- --
Oil Production (Mbbl).................... 757 388 85 -- -- --
Gas and Oil Production (MMcf
Equivalent)............................ 54,972 33,748 17,023 2,307 -- --
Pipelines & Processing (MMcf)(3)
Gas Processed............................ 36,518 14,588 1,942 -- -- --
Transportation........................... 72,268 4,994 1,194 294 -- --
Energy Marketing & Power Generation (MMcf)
Gas Sales................................ 212,532 170,668 142,352 122,782 112,263 91,968
Exchange Gas Deliveries.................. 24,283 16,462 13,301 10,016 2,443 --
---------- ---------- ---------- ---------- ---------- ----------
236,815 187,130 155,653 132,798 114,706 91,968
========== ========== ========== ========== ========== ==========
CAPITAL INVESTMENTS(4).........................
Gas Distribution............................. $ 229,858 $ 241,494 $ 153,059 $ 143,120 $ 130,776 $ 122,428
Diversified Energy........................... 537,939 385,114 196,030 60,925 34,608 14,854
MCN's Share of Joint Venture................. 15,362 52,850 40,422 36,502 31,203 5,139
Discontinued Operations(1)................... 9,810 9,380 12,458 5,064 5,484 2,600
---------- ---------- ---------- ---------- ---------- ----------
Total.................................. $ 792,969 $ 688,838 $ 401,969 $ 245,611 $ 202,071 $ 145,021
========== ========== ========== ========== ========== ==========
TOTAL ASSETS................................... $3,161,642 $2,898,640 $2,240,973 $1,881,900 $1,648,989 $1,517,387
========== ========== ========== ========== ========== ==========
</TABLE>
(continued on next page)
S-3
<PAGE> 82
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(5)............................... $1,054,144 $ 993,407 $ 685,519 $ 494,821 $ 379,811 $ 328,052
========== ========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED SECURITIES
OF SUBSIDIARIES(5)........................... $ 96,542 $ 96,449 $ 98,967 $ 5,618 $ 9,000 $ 12,000
========== ========== ========== ========== ========== ==========
MCN-OBLIGATED MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF MCN FINANCING I
HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES
OF THE COMPANY............................... $ 77,218 -- -- -- -- --
========== ========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of period)....... $ 26.875 $ 23.25 $ 18.00 $ 17.38 $ 15.44 $ 12.19
Dividends Paid Per Share..................... $ .9300 $ .9000 $ .8675 $ .8450 $ .8250 $ .8200
</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 MCN
Investment, with recourse to MCN Corporation limited to certain events,
including the realization of tax credits and performance under swap
contracts.
S-4
<PAGE> 83
THE OFFERING
Securities Offered......... FELINE PRIDES.
Issuer..................... MCN Energy Group Inc. ("MCN" or the "Company")
Stated Amount.............. $ per FELINE PRIDES.
FELINE PRIDES.............. FELINE PRIDES consist of Income PRIDES and Growth
PRIDES. 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").
Components of Income
PRIDES..................... Each Income PRIDES offered hereby will consist of
(a) a stock purchase contract (the "Purchase
Contract") under which (i) the holder will purchase
from the Company on , 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 Yield Enhancement Payments to
the holder, and (b) a % Trust Preferred
Security representing a preferred, undivided
beneficial interest in the assets of the Trust. The
sole assets of the Trust will consist of the %
Junior Subordinated Debentures of the Company, due
, 2002 (the "Junior Subordinated
Debentures"), having a principal amount equal to
the Stated Amount. In the event of a Tax Event or
an Investment Company Event, 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 a Tax Event or an
Investment Company Event. The Junior Subordinated
Debentures will have provisions with respect to
interest, term and certain other terms
substantially similar to those of the Trust
Preferred Securities. 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."
Substitution of Pledged
Securities to Create Growth
PRIDES..................... 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 to secure such holder's obligation
under the Purchase Contracts, zero-coupon U.S.
Treasury Securities maturing on ,
2000 (the "Treasury Securities"), with a remaining
term equal to the remaining term of the Purchase
Contract and in a principal amount per Purchase
Contract equal to the Stated Amount per Trust
Preferred Security. At such time, Income PRIDES
with respect to which Treasury Securities have been
substituted for Trust Preferred
S-5
<PAGE> 84
Securities will be referred to as Growth PRIDES
(and, together with the Income PRIDES, the "FELINE
PRIDES").
Recreating Income PRIDES... A holder of Growth PRIDES will have the right to
subsequently recreate an Income PRIDES by
delivering a Trust Preferred Security back to the
Collateral Agent, which would then release the
underlying Treasury Securities to such holder. See
"Description of FELINE PRIDES -- Substitution of
Pledged Securities."
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. 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 Yield
Enhancement 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 Yield Enhancement Payments are
subordinate and junior in right of payment to all
liabilities of the Company.
Subject to the Company's rights of deferral
described herein, in the event holders of Income
PRIDES elect to substitute Treasury Securities for
the Trust Preferred Securities, holders of Growth
PRIDES would receive the quarterly distributions of
Yield Enhancement 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.
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 and to defer
Yield Enhancement Payments. As a consequence of
such deferral, quarterly distributions on the
FELINE 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). If interest
payments on the Junior Subordinated Debentures or
the Yield Enhancement Payments are deferred (such
deferred installments of Yield Enhancement Payments
together with the additional Yield Enhancement
Payments are referred to herein as "Deferred Yield
Enhancement Payments"), 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 Yield Enhancement 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 Yield Enhancement
Payments payable to a holder of Securities
S-6
<PAGE> 85
divided by (y) the Applicable Market Value. See
"Description of the Purchase Contracts -- Yield
Enhancement 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 , 1997, through and
including (i) in the case of the Purchase
Contracts, 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
liquidation 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, such holder will be
deemed to have requested the Trust to put its
Junior Subordinated Debenture to the Company, and
the Stated Amount of such Junior Subordinated
Debenture per Purchase Contract will automatically
be applied to the purchase of between of a share
and one share of Common Stock (depending on the
Applicable Market Value of the Common Stock on the
Purchase Contract Settlement Date, as described
below), subject to adjustment under certain
circumstances.
In the event that a holder of Growth PRIDES fails
to settle the related Purchase Contract with
separate cash on the Purchase Contract Settlement
Date, a principal amount of the Treasury Securities
equal to the Stated Amount will automatically be
applied to purchase the Common Stock in the manner
described above.
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 greater than $ (the
"Threshold Appreciation Price"), the Settlement
Rate will be , (b) if the Applicable Market Value
is less than or equal to the Threshold Appreciation
Price, but greater than the Stated Amount, the
Settlement Rate will equal the Stated Amount
divided by the Applicable Market Value, and (c) if
the Applicable Market Value is less than or equal
to the Stated Amount, the Settlement Rate will be
one. "Applicable Market Value" means the average of
the Closing 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.
S-7
<PAGE> 86
Early Settlement........... A holder of FELINE 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 FELINE 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 Security and deliver the Securities 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 Yield Enhancement Payments, if any, on the
Purchase Contracts being settled will be forfeited,
and (ii) the holder's right to receive additional
Yield Enhancement 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 Yield Enhancement
Payments and the obligation to purchase Common
Stock) will automatically terminate upon the
occurrence of certain events of bankruptcy,
insolvency or reorganization with respect to the
Company. Upon such termination, the 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.
Listing of the Income
PRIDES..................... Application will be made to list the Income PRIDES
on the New York Stock Exchange (the "NYSE") under
the symbol " ." The Growth PRIDES and the Trust
Preferred Securities are not currently expected to
be listed.
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................. 3,600,000 of % Trust Preferred Securities
(liquidation amount $
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
S-8
<PAGE> 87
Securities and will be payable at the annual rate
of % of the liquidation amount of $
per 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 , 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 "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 an amount equal
to the aggregate of the stated liquidation amount
of $ per Trust Preferred Security, plus an
amount equal to any accrued and unpaid
distributions thereon to the date of payment,
unless the Junior Subordinated Debentures are
distributed to such holders in an aggregate stated
principal amount equal to the aggregate stated
liquidation amount of the Trust Preferred
Securities.
Put Option................. On the Purchase Contract Settlement Date, each
holder will have the right assuming the holder has
not previously exercised its option of Early
Settlement to request the Trust to put the Junior
Subordinated Debentures to the Company at an amount
per Junior Subordinated Debenture equal to
$ , plus accumulated and unpaid
distributions. A holder of Income PRIDES will be
deemed to have exercised the right to have the
Trust put the Junior Subordinated Debentures to the
Company in the circumstances described under "--
Purchase Contract Settlement Date."
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
S-9
<PAGE> 88
the Junior Subordinated Debentures held by the
Trust) or an Investment 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.
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.
Junior Subordinated
Debentures................. The Junior Subordinated Debentures will mature on
, 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. 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 junior subordinated
debentures issued by MCN and with all unsecured
trade creditors of the Company. See "Description of
the Junior Subordinated Debentures."
Voting Rights.............. Holders of Income PRIDES and Trust Preferred
Securities will generally have no voting rights and
will not be entitled to vote to appoint, remove or
replace, or to increase or decrease the number of
Regular Trustees. See "Description of Trust
Preferred Securities -- Voting Rights." Holders of
Growth PRIDES will have no voting rights.
S-10
<PAGE> 89
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 Yield
Enhancement Payments as income to holders of Income
PRIDES and Growth PRIDES, but holders should
consult their tax advisors concerning the
possibility that the Yield Enhancement 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 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."
S-11
<PAGE> 90
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.
As of September 30, 1996, MCN was a $3.2 billion (assets) diversified
energy holding company with gas markets and investments in various regions in
North America. Its principal operating subsidiaries are Michigan Consolidated
Gas Company ("MichCon"), a natural gas distribution and intrastate transmission
company, and MCN Investment Corporation ("MCN Investment"), a holding company
with subsidiaries involved in energy-related investments.
MCN's major business segments are the Gas Distribution group and the
Diversified Energy group.
MCN's strategy is to aggressively invest in a diverse portfolio of domestic
and international energy-related projects. MCN's intent is:
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion;
- to invest in a portfolio of projects including investments in exploration
and production, power generation, gas gathering and processing systems,
and gas storage; and
- to continue to market natural gas to large-volume users and utilities.
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.
Gas Distribution operates the largest natural gas distribution and
intrastate transmission system in Michigan and one of the largest in the United
States. For the twelve months ended September 30, 1996, operating revenues in
the Gas Distribution group were approximately $1.3 billion. In addition, at
September 30, 1996, the segment had total assets of approximately $2.0 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 billion cubic feet (Bcf). Gas Distribution continues to increase its
markets by reaching customers in new communities, offering new services to
current customers and expanding its intrastate gas transportation network.
Diversified Energy 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 September 30, 1996, operating revenues
for the segment exceeded $650 million and, at September 30, 1996, total assets
exceeded $1.2 billion, including interests in the assets of joint ventures. For
the twelve month period ended September 30, 1996, MCN Investment invested
approximately $560 million in various projects, of which approximately $400
million was for exploration and production projects. Expanding opportunities
throughout North America should enable Diversified Energy to continue to grow
its markets and increase its asset-based investments.
At December 31, 1995, MCN Investment owned 858 Bcf of proved gas reserves,
and proved oil reserves totaled 4.7 million barrels, or the equivalent of
another 28 Bcf of natural gas. The number of producing oil and gas wells totaled
1,972 at December 31, 1995.
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
RECENT DEVELOPMENTS
On January 21, 1997, MCN reported 1996 earnings from continuing operations
of $112.6 million, compared with $93.2 million in 1995. Earnings per share from
continuing operations increased 17 percent to $1.68 compared with $1.44 in 1995.
Earnings from discontinued operations in 1996 were $37.8 million, compared with
$3.6 million in 1995. The 1996 amount includes a $36.2 million gain on the June
1996 sale of Genix. Earnings per share from discontinued operations in 1996 were
$.57, compared with $.05 in 1995. The 1996 amount includes a gain of $.54 per
share on the sale of Genix.
The Company's return on equity was 15.8% for 1996, reflecting the
achievements of both the Gas Distribution group and the Diversified Energy
group. The Gas Distribution group reported 1996 net income of $81.4 million,
compared with $75.6 million in 1995 and the Diversified Energy group reported
1996 net income of $31.2 million, up from $17.6 million in 1995. Diversified
Energy contributed 28 percent of the Company's earnings from continuing
operations, up from 19 percent in 1995.
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, until removed or replaced by the holder of
the Common Securities. See "Description of the Trust 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
S-13
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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> 93
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
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 amount to be received by a
holder of FELINE PRIDES on the Purchase Contract Settlement Date will only
exceed the Stated Amount of such Securities if the Applicable Market Value of
the Common Stock exceeds the Threshold Appreciation Price (which represents an
appreciation of % over the Stated Amount). Moreover, holders of the FELINE
PRIDES will only be entitled to receive on the Purchase Contract Settlement Date
% (the percentage equal to the Stated Amount divided by the Threshold
Appreciation Price) of any appreciation of the value of Common Stock in excess
of the Threshold Appreciation Price. If the Applicable Market Value of the
Common Stock is less than the Stated Amount, such amount to be received by the
holder on the Purchase Contract Settlement Date will be less than the Stated
Amount paid for the Securities, in which case an investment in the Securities
will result in a loss. Accordingly, a holder of the Securities assumes the risk
that the market value of the Common Stock may decline, and that such decline
could be substantial.
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.
VOTING RIGHTS
Holders of Income PRIDES and Trust Preferred Securities will generally have
no voting rights and will not be entitled to vote to appoint, remove or replace,
or to increase or decrease the number of Regular Trustees. See "Description of
Trust Preferred Securities -- Voting Rights." Holders of 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 the
FELINE PRIDES. 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 FELINE PRIDES.
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<PAGE> 94
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
It is not possible to predict how the Income PRIDES will trade in the
secondary market or whether such market will be liquid or illiquid. The Income
PRIDES are novel securities and there is currently no secondary market for the
Income PRIDES. Application will be made to list the Income PRIDES on the NYSE.
The Growth PRIDES and the Trust Preferred Securities are not currently expected
to be listed. 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 active
trading markets for the Income PRIDES, the Growth PRIDES or the Trust Preferred
Securities will develop. 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.
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.
RIGHT TO DEFER CURRENT PAYMENTS
The Company may, at its option, defer the payment of Yield Enhancement
Payments on the Purchase Contracts until the Purchase Contract Settlement Date.
However, deferred installments of Yield Enhancement Payments will bear
additional Yield Enhancement Payments at the rate of % per annum
(compounding on each succeeding Payment Date) until paid (such deferred
installments of Yield Enhancement Payments together with the additional Yield
Enhancement Payments shall be referred to herein as the "Deferred Yield
Enhancement Payments"). If the Purchase Contracts are settled early or
terminated (upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company), the right to receive Yield
Enhancement Payments, and Deferred Yield Enhancement Payments, will terminate.
In the event that the Company elects to defer the payment of Yield
Enhancement Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each holder of FELINE 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 Yield Enhancement
Payments payable to a holder of Securities divided by (y) the Applicable Market
Value. See "Description of the Purchase Contracts -- Yield Enhancement
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."
S-16
<PAGE> 95
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 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 "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 Junior Subordinated Debentures) may be more volatile than 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 YIELD ENHANCEMENT PAYMENTS AND SUBORDINATE OBLIGATIONS UNDER THE
GUARANTEE AND JUNIOR SUBORDINATED DEBENTURES
The Company's obligations with respect to Yield Enhancement Payments are
subordinate and junior in right of payment to all liabilities of the Company.
There are no terms in the Purchase Contract Agreement or the Purchase Contracts
that limit the Company's ability to incur obligations that rank senior to the
Yield Enhancement Payments.
MCN's obligations under the Guarantee are subordinate and junior in right
of payment to all liabilities of MCN (other than MCN's guarantee of other junior
subordinated debentures, with which they rank 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 other junior 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 September 30, 1996, Senior Indebtedness aggregated
approximately $1,366 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 Yield Enhancement Payments, the Junior Subordinated Debentures and
the Guarantee. See "Description of the Trust Preferred Securities
Guarantees -- Status of the Trust Preferred Securities Guarantees", "Description
of the Purchase Contracts -- Yield Enhancement Payments" and "Description of the
Junior Subordinated Debentures" in the accompanying Prospectus, and "Description
of the Junior Subordinated Debentures -- Subordination" herein.
PROPOSED TAX LEGISLATION
On March 19, 1996, as part of the 1997 fiscal budget submitted to Congress,
the Clinton Administration proposed a number of changes to federal income tax
laws. While such proposed legislation is not now pending
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<PAGE> 96
in Congress, it is anticipated that the Clinton Administration will propose
similar legislation in 1997. One proposal would treat as equity, for U.S.
federal income tax purposes, debt instruments with a maximum term of more than
20 years that are not shown as indebtedness on the issuer's consolidated balance
sheet. Another proposal would preclude the issuer from deducting interest with
respect to debt payable in equity of the issuer or a related party. It is not
expected that either proposal, if enacted into law in its current form, would
apply to the Junior Subordinated Debentures because the Junior Subordinated
Debentures do not have a maximum term of more than 20 years and are not payable
in stock of the issuer or a related party. Further, statements by Congressional
leaders have indicated that such proposed legislation would have an effective
date that is no earlier than the date of "appropriate Congressional 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 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 January 31, 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 January 31,
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 December 31, 1996,
the approximate number of holders of record of Common Stock was 23,431.
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>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ----------------------------
1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
MCN(1)(2)(3).................. 2.41 2.55 2.70 3.15 2.82 2.17
</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
September 30, 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 SEPTEMBER 30, 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)..................... $ 311,797 $
========== ==========
Long-Term Debt (including capital leases)(2)................ $1,054,144 $
Redeemable Cumulative Preferred Securities of
Subsidiaries.............................................. 96,542
MCN-obligated mandatorily redeemable preferred securities of
MCN Financing I and MCN-obligated preferred securities of
MCN Financing III holding solely Junior Subordinated
Debentures of the Company(3).............................. 77,218
Common Stockholders' Equity................................. 731,869
---------- ----------
Total Capitalization........................................ $1,959,773 $
========== ==========
</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 MCN Financing I are the 8 5/8% Junior Subordinated
Debentures due 2036 of MCN with a principal amount of $82,474,250 and the
sole assets of MCN Financing III will be the % Junior Subordinated
Debentures of MCN due 2002 with a principal amount of approximately
$ .
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 preferred securities of trusts holding solely junior
subordinated debentures of the Company. 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".
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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 have a Stated Amount of $ and will be
issued under a Purchase Contract Agreement between the Company and the Purchase
Contract Agent. Each FELINE PRIDES will consist of either an Income PRIDES or a
Growth PRIDES. Each Income PRIDES of (a) a Purchase Contract under which (i) the
holder will purchase from the Company on the Purchase Contract Settlement Date
of , 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 Yield Enhancement Payments to the holder, and (b) (i) a % Trust
Preferred Security representing a preferred, undivided beneficial interest in
the assets of the Trust, which will consist solely of the Junior Subordinated
Debentures each having a principal amount equal to the Stated Amount, or (ii) in
the case of a Tax Event or an Investment Company Event, as described below,
Junior Subordinated Debentures of the Company having a principal amount equal to
the Stated Amount (the Trust Preferred Securities and the Junior Subordinated
Debentures are hereinafter referred to collectively as the "Trust Related
Securities"). Upon issuance of the FELINE PRIDES in the form of Income PRIDES,
the Trust Preferred Securities will be pledged with the Collateral Agent to
secure the holder's obligation to purchase Common Stock under the Purchase
Contract.
SUBSTITUTION OF PLEDGED SECURITIES
Following the issuance of the FELINE PRIDES in the form of Income PRIDES,
each holder of Income PRIDES will have the right, at any time after issuance, to
substitute for all of the Trust Preferred Securities held by the Collateral
Agent to secure such holder's obligation under a Purchase Contract, Treasury
Securities with a remaining term equal to the remaining term of the Purchase
Contract and in a principal amount per Purchase Contract equal to the Stated
Amount per Trust Preferred Security. At such time, Income PRIDES with respect to
which Treasury Securities have been substituted for Trust Related Securities
will be referred to as "Growth PRIDES." A holder of an Income PRIDES who has
previously substituted Treasury Securities for Trust Preferred Securities will
have the right to subsequently substitute Trust Preferred Securities for
Treasury Securities by delivering a Trust Preferred Security back to the
Collateral Agent, which would then release the underlying U.S. Treasury
Securities to such holder.
CURRENT PAYMENTS
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) Yield Enhancement Payments, payable by the
Company, at the rate of % per annum.
The ability of the Trust to make 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 and to defer
Yield Enhancement Payments. As a consequence of such deferral, quarterly
distributions to holders would be deferred (but despite such deferral, would
continue to accrue with interest thereon compounded quarterly at the same rate
as interest on the Junior Subordinated Debentures).
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See "Description of the Purchase Contracts -- Yield Enhancement 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 Yield Enhancement
Payments. In addition, interest would accrete on the underlying Treasury
Securities.
VOTING RIGHTS
Except in the limited circumstances indicated below under "Description of
the Trust Preferred Securities -- Voting Rights," holders of the FELINE PRIDES
will have no voting rights.
LISTING OF THE SECURITIES
Application will be made to list the Income PRIDES on the NYSE under the
symbol " ." The Growth PRIDES and the Trust Preferred Securities are not
currently expected to be listed.
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 the
FELINE PRIDES 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 greater than the Threshold
Appreciation Price, the Settlement Rate will be , (b) if the
Applicable Market Value is less than or equal to the Threshold Appreciation
Price but greater than the Stated Amount, the Settlement Rate will equal the
Stated Amount divided by the Applicable Market Value, and (c) if the Applicable
Market Value is less than or equal to the Stated Amount, the Settlement Rate
will be one. "Applicable Market Value" means the average of the Closing Prices
(as defined) per share of Common Stock on each of the twenty consecutive Trading
Days (as defined) ending on the 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 FELINE 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
has settled the underlying Purchase Contracts prior to the Purchase Contract
Settlement Date through the delivery of cash or has notified the Purchase
Contract Agent of its intention to settle the related Purchase Contract with
separate cash in the manner described under "-- Early Settlement" and under
"-- Notice to Settle with Cash", respectively, or an event described under
"-- Termination" below occurs, such holder will be deemed to have requested the
Trust to put its Junior Subordinated Debenture underlying such Income PRIDES to
the Company, with the principal amount of such Junior Subordinated Debenture
being 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 Growth PRIDES outstanding on the
Purchase Contract Settlement Date, the principal amount of the Treasury
Securities underlying such Growth PRIDES will be automatically transferred to
the Company to satisfy in full the holder's obligation to purchase Common Stock
under the Purchase Contracts. 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
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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.
Prior to the date on which shares of Common Stock are issued in settlement
of a Purchase Contract, the Common Stock underlying the related FELINE PRIDES
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 FELINE
PRIDES. See "Description of Trust Preferred Securities -- Voting Rights."
Each holder of FELINE PRIDES, by acceptance thereof, will under the terms
of the Purchase Contract Agreement and the FELINE PRIDES be deemed to have (a)
irrevocably agreed to be bound by the terms of the related Purchase Contracts
for so long as such holder remains a holder of such 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 FELINE PRIDES may settle the underlying Purchase Contracts
prior to the Purchase Contract Settlement Date by presenting and surrendering
the FELINE PRIDES Certificate evidencing such FELINE 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 in immediately available funds) 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 1000 FELINE PRIDES.
Upon early settlement of Purchase Contracts underlying any FELINE PRIDES,
(a) the holder will receive of a share of Common Stock per Security
(regardless of the market price of the Common Stock on the date of purchase),
subject to adjustment under certain circumstances, (b) the Trust Preferred
Securities or, if substituted, the Treasury Securities underlying the FELINE
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
Yield Enhancement Payments (as defined below), if any, on the Purchase Contracts
being settled will be forfeited and (d) the holder's right to receive future
Yield Enhancement 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 FELINE 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 FELINE 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 FELINE 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 in immediately available funds) of an amount equal to the Stated
Amount times the number of Purchase Contracts being settled.
YIELD ENHANCEMENT PAYMENTS
Yield Enhancement Payments will be fixed at a rate per annum of % of
the Stated Amount per FELINE PRIDES. Yield Enhancement Payments in arrears for
more than one quarter will bear interest thereon at the rate per annum of %
thereof compounded quarterly. Yield Enhancement Payments payable for any period
will be computed on the basis of a 360-day year of twelve 30 day-months. Yield
Enhancement 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.
Yield Enhancement 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 FELINE 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 Yield Enhancement Payments for the benefit of
the holders of the FELINE 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 FELINE 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 Yield
Enhancement Payments are to be made on the FELINE PRIDES is not a Business Day,
then payment of the Yield Enhancement 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 Yield Enhancement Payments are
subordinate and junior in right of payment to all liabilities of the Company.
OPTION TO DEFER YIELD ENHANCEMENT PAYMENTS
The Company may, at its option and upon prior written notice to the holders
of FELINE PRIDES and the Purchase Contract Agent, defer the payment of Yield
Enhancement Payments ("Deferred Yield Enhancement Payments") on the Purchase
Contracts until no later than the Purchase Contract Settlement Date. However,
deferred installments of Yield Enhancement Payments will bear additional Yield
Enhancement Payments at the rate of % per annum (compounding on each
succeeding Payment Date) until paid. If the Purchase Contracts are terminated
(upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company), the right to receive Yield
Enhancement Payments and Deferred Yield Enhancement Payments will terminate.
In the event that the Company elects to defer the payment of Yield
Enhancement Payments on the Purchase Contracts until the 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
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number of shares of Common Stock equal to the Settlement Rate) equal to (x) the
aggregate amount of Deferred Yield Enhancement Payments payable to a holder of
FELINE 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 Yield Enhancement Payments on the Purchase
Contract Settlement Date. In lieu of fractional shares otherwise issuable with
respect to such payment of Deferred Yield Enhancement Payments, the holder will
be entitled to receive an amount in cash equal to such fraction of a share times
the Applicable Market Value.
In the event the Company exercises its option to defer the payment of Yield
Enhancement Payments, then, until the Deferred Yield Enhancement Payments have
been 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
"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 Yield Enhancement Payments or Deferred Yield Enhancement Payments and
the right and obligation to purchase Common Stock), will automatically terminate
upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company. Upon such termination, the
Collateral Agent will release the 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 or, if substituted, the Treasury Securities
(together, the Pledged Securities) underlying the FELINE PRIDES 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 FELINE PRIDES to the underlying
Pledged Securities will be subject to the Company's security interest therein
created by the Pledge Agreement. No holder of FELINE PRIDES will be permitted to
withdraw the Pledged Securities underlying such FELINE 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 to Create Growth PRIDES") or
(iii) upon the termination or early settlement of the related Purchase
Contracts. Subject to such security interest, however, holders of FELINE PRIDES
will have full beneficial ownership of the underlying Pledged Securities. 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 Yield Enhancement Payments
received from the Company, to the persons in whose names the related FELINE
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 New
York Stock Exchange, the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the Depositary system is also
available to others, such as securities brokers and dealers, banks and trust
companies that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant either directly or indirectly
("Indirect Participants"). The rules applicable to the Depositary and its
Participants are on file with the Securities and Exchange Commission.
No 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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Related 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 Security Certificates evidencing the FELINE PRIDES at the
office of the Purchase Contract Agent.
If a holder of outstanding FELINE PRIDES fails to present and surrender the
FELINE PRIDES Certificate evidencing such FELINE 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 Yield Enhancement 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 FELINE 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
Security Certificate is presented or the holder provides the evidence and
indemnity described above.
The Purchase Contract Agent will have no obligation to invest or to pay
interest on any amounts held by the Purchase Contract Agent pending
distribution, as described above.
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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 FELINE PRIDES 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 FELINE PRIDES affected thereby, (a) change any Payment Date, (b)
change the amount or type of Pledged Securities underlying the FELINE PRIDES,
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 Yield Enhancement Payments or any
Deferred Yield Enhancement Payments, (d) impair the right to institute suit for
the enforcement of any Purchase Contract, (e) reduce the amount of Common Stock
purchasable under any Purchase Contract, 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
FELINE PRIDES 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 FELINE PRIDES, by acceptance thereof, will under the terms
of the Purchase Contract Agreement and the FELINE 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.
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
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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 FELINE 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 FELINE
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 FELINE 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 FELINE 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 FELINE 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 FELINE
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.
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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 Trust Preferred Securities
Guarantees" in the accompanying Prospectus. The Guarantee will be held by
Wilmington Trust Company, the Guarantee Trustee, for the benefit of the holders
of the 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
"-- Voting Rights" and "-- Declaration Events of Default."
DISTRIBUTIONS
Distributions on the Trust Preferred Securities will be fixed at a rate per
annum of % of the stated liquidation amount of $ 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 ,
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 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,
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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 Trust 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 payment date.
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 , 2002. Upon the
repayment of the Junior Subordinated Debentures at maturity, the proceeds
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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 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, 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
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 Contract.
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 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
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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 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, distributions in
an amount equal to the aggregate of the stated liquidation amount of $
per Trust Preferred Security plus accrued and unpaid distributions thereon to
the date of payment (the "Liquidation Distribution"), unless, in connection with
such Liquidation, Junior Subordinated Debentures in an aggregate stated
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, the Trust Preferred
Securities have been distributed on a pro rata basis to the holders of the Trust
Preferred Securities in exchange for such Trust 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 Trust 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 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 ,
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 a Special 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 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
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(or in the case of redemption, the redemption date), 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 "Effects 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. Each of the Company
and the Trust is 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 Trust Preferred Securities
Guarantees -- Modification of the Trust 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 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
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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 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.
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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.
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.
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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.
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 (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. 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.
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 Institutional Trustee. 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
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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.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payments in respect of the Trust 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. 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 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.
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 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.
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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."
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 , 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 $ and
integral multiples thereof and
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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.
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 $101 million Series A Subordinated Debentures to MCN Michigan Limited
Partnership, a financing entity which issued cumulative preferred securities
that rank pari passu with the Trust Preferred Securities and in July 1996, MCN
issued approximately $82 million aggregate principal amount of 8 5/8% Junior
Subordinated Debentures due July 30, 2036 that rank pari passu in right of
payment 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 September 30, 1996, Senior Indebtedness
of the Company aggregated approximately $1,366 million.
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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, the Company shall have the right to select
record dates, which shall be more than one Business Day prior to the Interest
Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed,
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
PROPOSED TAX LEGISLATION
On March 19, 1996, as part of the 1997 fiscal budget submitted to Congress,
the Clinton Administration proposed a number of changes to federal income tax
laws. While such proposed legislation is not now pending in Congress, it is
anticipated that the Clinton Administration will propose similar legislation in
1997. One proposal would treat as equity, for U.S. federal income tax purposes,
debt instruments with a maximum term of more than 20 years that are not shown as
indebtedness on the issuer's consolidated balance sheet. Another proposal would
preclude the issuer from deducting interest with respect to debt payable in
equity of the issuer or a related party. It is not expected that either
proposal, if enacted into law in its current form, would apply to the Junior
Subordinated Debentures because the Junior Subordinated Debentures do not have a
maximum term of more than 20 years and are not payable in stock of the issuer or
a related party. Further, statements by Congressional leaders have indicated
that such proposed legislation would have an effective date that is no earlier
than the date of "appropriate Congressional 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 Preferred Securities. See "Description of the Trust Preferred
Securities -- Special Event Distribution."
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 Subordinated Debenture equal to $ , 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 Debenture. 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
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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 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 Extension
Period, including all such previous and further extensions, may not extend
beyond 20 consecutive quarters or the maturity 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 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 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
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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, then 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.
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
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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.
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
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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 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 March 19, 1996, as part of the 1997 fiscal budget submitted to Congress,
the Clinton Administration proposed a number of changes to federal income tax
laws. While such proposed legislation is not now pending in Congress, it is
anticipated that the Clinton Administration will propose similar legislation in
1997. One
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proposal would treat as equity, for U.S. federal income tax purposes, debt
instruments with a maximum term of more than 20 years that are not shown as
indebtedness on the issuer's consolidated balance sheet. Another proposal would
preclude the issuer from deducting interest with respect to debt payable in
equity of the issuer or a related party. It is not expected that either
proposal, if enacted into law in its current form, would apply to the Junior
Subordinated Debentures because the Junior Subordinated Debentures do not have a
maximum term of more than 20 years and are not payable in stock of the issuer or
a related party. Further, statements by Congressional leaders have indicated
that such proposed legislation would have an effective date that is no earlier
than the date of "appropriate Congressional 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 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
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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.
YIELD ENHANCEMENT PAYMENTS
There is no authority for the treatment of the Yield Enhancement Payments
under current law. The Company intends to take the position that the Yield
Enhancement 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
Yield Enhancement Payments and Deferred Yield Enhancement Payments, including
the possibility that the receipt of a Yield Enhancement Payment may be treated
as a loan, purchase price adjustment, rebate or option premium rather than being
includible in income on a current basis. In addition, if the Company elects to
defer a Yield Enhancement Payment in a taxable year, the Company may determine
to report the amount of such Deferred Yield Enhancement Payment as constructive
taxable income to holders for such taxable year, and such Deferred Yield
Enhancement Payment may result in holders recognizing taxable income or gain for
such taxable year prior to the receipt of cash or additional shares of Common
Stock. Accordingly, holders should consult their respective tax advisors as to
whether or not Deferred Yield Enhancement Payments should be treated as
constructive taxable distributions and, if taxable, whether such income would be
recognized prior to the receipt of cash or additional shares of Common Stock or
upon the Purchase Contract Settlement Date. The Company does not intend to
deduct the Yield Enhancement Payments or Deferred Yield Enhancement Payments
because it views them as a cost of issuing the Common Stock. Yield Enhancement
Payments and Deferred Yield Enhancement 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 a Trust Preferred Security held by the Collateral Agent generally will not
recognize taxable gain or loss upon release of the Trust Preferred Security to
the holder, and the holder's tax basis in the Trust Preferred Security and
Purchase Contract will remain unchanged. 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 a Trust Preferred Security to the
Collateral Agent generally will not recognize taxable gain or loss upon release
of the Treasury Security to the holder.
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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 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 Yield
Enhancement 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 Yield Enhancement 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
generally should 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.
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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.
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UNDERWRITING
Subject to the terms and conditions set forth in a Purchase Agreement (the
"Purchase Agreement") between the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, and , who are acting as
representatives (the "Representatives") for the underwriters named below (the
"Underwriters"), the Company has agreed to sell to the Underwriters, and each of
the Underwriters severally has agreed to purchase from the Company, the number
of Income PRIDES set forth opposite each Underwriter's name. In the Purchase
Agreement, the several Underwriters severally have agreed, subject to the terms
and conditions set forth therein, to purchase all of the Income PRIDES offered
hereby if any of the Income PRIDES are purchased. In the event of default by an
Underwriter, the Purchase Agreement provides that, in certain circumstances, the
purchase commitments of the nondefaulting Underwriters may be increased or the
Purchase Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS INCOME PRIDES
------------ -------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
---------
Total............................................. 3,600,000
=========
</TABLE>
The Representatives have advised the Company 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.
The Company has granted to the Underwriters an option, exercisable for 30
days following the date of this Prospectus Supplement, to purchase up to an
aggregate of additional Income PRIDES 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 has 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 or
Common Stock or any securities of the Company similar to the Income PRIDES,
Purchase Contracts or Common Stock or any security convertible into or
exchangeable or exercisable for Income PRIDES, Purchase Contracts or Common
Stock other than to the Underwriters pursuant to the Purchase Agreement, other
than shares of Common Stock or options for shares of Common Stock issued
pursuant to or sold in connection with any employee benefit, dividend
reinvestment and stock option and stock purchase plans of the Company and its
subsidiaries and other than 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 and the Representatives. In determining the
terms of the Income PRIDES, including the public offering price, the Company and
the Representatives considered the market price of the Company's Common Stock
and also considered the Company's recent results of operations, the future
prospects of the Company and the industry in general, market prices and terms
of, and yields on, securities of other companies considered to be comparable to
the
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Company and prevailing conditions in the securities markets. Application will be
made to list the Income PRIDES on the NYSE under the symbol " ." The
Growth PRIDES and the Trust Preferred Securities are not currently expected to
be listed. 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.
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 23,844 shares of MCN Common Stock as of December 31,
1996. LeBoeuf, Lamb, Greene & MacRae, L.L.P., from time to time renders legal
services to the Company.
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------------------------------------------------------
------------------------------------------------------
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 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 CORPORATION 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
The Offering.................................... S-5
MCN Energy Group Inc. .......................... S-12
Recent Developments............................. S-13
MCN Financing III............................... S-13
Risk Factors.................................... S-15
Price Range of Common Stock and Dividends....... S-18
Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and
Preferred Stock Dividends..................... S-19
Use of Proceeds................................. S-19
Capitalization.................................. S-20
Accounting Treatment............................ S-20
Description of the FELINE PRIDES................ S-21
Description of the Purchase Contracts........... S-22
Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement............ S-28
Description of the Trust Preferred Securities... S-31
Description of the Guarantee.................... S-40
Description of the Junior Subordinated
Debentures.................................... S-40
Effect of Obligations Under the Junior
Subordinated Debentures and the Guarantee..... S-45
Certain Federal Income Tax Consequences......... S-47
Underwriting.................................... S-52
Legal Matters................................... S-53
PROSPECTUS
Available Information........................... 2
Incorporation of Certain Documents by
Reference..................................... 3
MCN Energy Group Inc. .......................... 4
The MCN Trusts.................................. 4
Use of Proceeds................................. 5
Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and
Preferred Stock Dividends..................... 6
Description of MCN Debt Securities.............. 7
Particular Terms of the Senior Debt
Securities.................................... 11
Particular Terms of the Subordinated Debt
Securities.................................... 15
Description of MCN Capital Stock................ 19
Description of the MCN Trust Preferred
Securities.................................... 22
Description of the Preferred Securities
Guarantees.................................... 24
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............................ 28
Validity of Securities.......................... 29
Experts......................................... 29
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
3,600,000 FELINE PRIDES(SM)
MCN ENERGY GROUP INC. LOGO
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
, 1997
(SM)Service Mark of Merrill Lynch & Co. Inc.
------------------------------------------------------
------------------------------------------------------
<PAGE> 133
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 FEBRUARY 5, 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> 134
(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.
<PAGE> 135
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.
2
<PAGE> 136
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by MCN (File No. 1-10070) with the SEC
pursuant to the 1934 Act are incorporated by reference herein and made a part
hereof:
1. Annual Report on Form 10-K for the year ended December 31, 1995.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996, June 30, 1996, and September 30, 1996.
3. The description of MCN's Common Stock as contained in its Form 8-B
dated September 29, 1988.
4. The description of MCN's Preferred Share Purchase Rights contained
in its Form 8-A dated December 28, 1989.
5. MCN's Current Reports on Form 8-K dated January 10, 1996, February
6, 1996, April 8, 1996, April 18, 1996, April 22, 1996, May 6, 1996, June
5, 1996, July 18, 1996, July 24, 1996 and 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.
3
<PAGE> 137
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 natural gas holding company. Its principal operating
subsidiaries are Michigan Consolidated Gas Company ("MichCon"), a natural gas
distribution and intrastate transmission company; and MCN Investment Corporation
("MCN Investment"), a holding company with subsidiaries involved in
energy-related investments. MCN, organized in 1988, is exempt from most
provisions of the Public Utility Holding Company Act of 1935.
MCN's major business segments are the Gas Distribution group and the
Diversified Energy group.
GAS DISTRIBUTION operates the largest natural gas distribution and
intrastate transmission system in Michigan and one of the largest in the United
States. This segment includes the following companies:
MichCon -- A Michigan corporation organized in 1898 that, with its
predecessors has been in business for nearly 150 years. MichCon is a public
utility, engaged in the distribution and transmission of natural gas in the
State of Michigan serving over 1.2 million residential, commercial and
industrial customers.
Citizens Gas Fuel Company -- Citizens is a gas utility that conducts
all of its business in the State of Michigan serving 13,000 residential,
commercial and industrial customers.
DIVERSIFIED ENERGY is an integrated energy group with investments in:
exploration and production, gas gathering and processing, energy marketing, gas
storage and electric power generation.
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
4
<PAGE> 138
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 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.
5
<PAGE> 139
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>
TWELVE
MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- ------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
MCN(1)(2)(3).............. 2.41 2.55 2.70 3.15 2.82 2.17
</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.
6
<PAGE> 140
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
7
<PAGE> 141
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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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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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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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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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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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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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 September 30, 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 December 31, 1996, there were no shares of
MCN Preferred Stock outstanding and 67,303,908 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 January 31, 1997)...... 32 5/8 28 1/2 .2425
</TABLE>
The closing price of MCN Common Stock on January 31, 1997 was $32 3/8 per
share. The book value of the Company's Common Stock on September 30, 1996 was
$10.90 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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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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<PAGE> 156
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 March 19, 1996, the U.S. Treasury Department proposed certain tax law
changes (the "Proposed Legislation") that would, among other things, generally
deny corporate issuers a deduction for interest in respect of certain debt
obligations, such as the Junior Subordinated Debentures, issued on or after
December 7, 1995. On March 29, 1996, Senate Finance Committee Chairman William
V. Roth, Jr. and
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<PAGE> 157
House Ways and Means Committee Chairman Bill Archer issued a joint statement
(the "Joint Statement") indicating their intent that the Proposed Legislation,
if adopted by either of the tax-writing committees of Congress, would have an
effective date that is no earlier than the date of "appropriate Congressional
action." In addition, subsequent to the publication of the Joint Statement,
Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons and Charles
B. Rangel wrote letters to the Treasury Department concurring with the view
expressed in the Joint Statement (the "Democrat Letters"). While the Proposed
Legislation is not now pending in Congress, it is anticipated that the Clinton
Administration will propose similar legislation in 1997. Based upon the Joint
Statement and the Democrat Letters, it is expected that if the Proposed
Legislation were to be enacted, such legislation would not apply to the Junior
Subordinated Debentures. There can be no assurances, however, that the effective
date guidance contained in the Joint Statement will be incorporated into the
Proposed Legislation, if enacted, or that other 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 Trust
Preferred Securities -- Special Event Distribution."
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
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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.
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.
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<PAGE> 159
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 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.
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<PAGE> 160
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 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.
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<PAGE> 161
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 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.
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<PAGE> 162
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 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 23,844 shares
of MCN Common Stock as of December 31, 1996. Certain matters of Delaware law
relating to the validity of the Preferred Securities will be passed upon on
behalf of the MCN Trusts by Skadden, Arps, Slate, Meagher & Flom (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, 1995 have been audited by
DELOITTE & TOUCHE LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
MCN's Annual Report on Form 10-K for the year ended December 31, 1995,
includes various oil and gas reserve information summarized from reports
prepared by the independent petroleum consultants Ryder Scott Company; Miller
and Lents, Ltd.; Lee Keeling & Associates, Inc. and S.A. Holditch & Associates,
Inc. This reserve information and related schedules have been incorporated
herein by reference in reliance upon such reports given upon the authority of
said firms as experts in oil and gas reserve estimation.
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<PAGE> 163
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............................................ *
Printing and Engraving...................................... *
Rating Agency Fee........................................... *
Accounting Fees............................................. *
Legal Fees.................................................. *
Blue Sky Fees............................................... *
Transfer Agent's Fees....................................... *
Fees of Trustee, Purchase Contract Agent and Collateral
Agent..................................................... *
Miscellaneous............................................... *
--------
Total............................................. $ *
========
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") contain detailed provisions concerning the indemnification of directors
and officers against judgments, penalties, fines and amounts paid in settlement
of litigation.
Article VI, Section 6.1 of the By-Laws of MCN provides that MCN shall
indemnify its officers, directors, employees, agents and other persons to the
fullest extent of the MBCA.
Article NINTH of MCN's Articles of Incorporation provides that a director
of MCN shall not be personally liable to MCN or its shareholders for monetary
damages for breach of fiduciary duty as a director, except for liability for (i)
any breach of the director's duty of loyalty to MCN or its shareholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) a violation of Section 551(1) of the MBCA, or
(iv) any transaction from which the director derived an improper personal
benefit. If the MBCA is amended after the date of MCN's Articles of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of MCN shall
be eliminated or limited to the fullest extent permitted by the MBCA, as so
amended.
MCN has entered into indemnification contracts with each officer and
director of MCN, and certain officers of its subsidiaries, that contain
provisions essentially similar to the provisions of the MBCA and MCN's Articles
of Incorporation referred to above. In addition, MCN maintains directors' and
officers' liability insurance which covers certain liabilities arising from the
performance of their responsibilities as directors and officers.
The Declaration of each MCN Trust provides that no Institutional Trustee or
any of its Affiliates, Delaware Trustee or any of its Affiliates, or officer,
director, shareholder, member, partner, employee, representative or agent of the
Institutional Trustee or the Delaware Trustee (each a "Fiduciary Indemnified
Person"), and no Regular Trustee, Affiliate of any Regular Trustee, Affiliate of
any Regular Trustee, or any officer, director, shareholder, member, partner,
employee, representative or agent of any Regular Trustee, or any employee or
agent of the MCN Trust or its Affiliates (each a "Company Indemnified Person")
shall be liable, responsible or accountable in damages or otherwise to such
Trust or any officer, director, shareholder, partner, member, representative,
employee or agent of the MCN Trust or its Affiliates for any loss, damage or
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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 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.
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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 (included in Exhibit
4-24).**
4-9 Form of Junior Subordinated Debenture to be used in
connection with Income PRIDES (included in Exhibit 4-25).**
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>
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<PAGE> 166
<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.**
4-25 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with issuance
of Junior Subordinated Debentures related to Income
PRIDES.**
4-26 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with issuance
of Junior Subordinated Debentures related to Capital
Securities.**
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 September 30, 1996, Form 10-Q).
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).**
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>
II-4
<PAGE> 167
<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.
** To be filed by amendment.
References are to MCN (File No. 1-10070) for documents incorporated by
reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by MCN pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 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
II-5
<PAGE> 168
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> 169
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 Registration Statement to be signed on their
behalf by the undersigned, thereunto duly authorized, in the City of Detroit and
State of Michigan on February 5, 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> 170
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
Certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Detroit, State of Michigan, on February 5, 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
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>
/s/ ALFRED R. GLANCY III Chairman, President, Chief February 5, 1997
- -------------------------------------------------------- Executive Officer and
Alfred R. Glancy III Director
* Vice Chairman, Chief February 5, 1997
- -------------------------------------------------------- Financial Officer and
William K. McCrackin Director
/s/ HAROLD GARDNER Vice President, Controller February 5, 1997
- -------------------------------------------------------- and Chief Accounting Officer
Harold Gardner
* Director February 5, 1997
- --------------------------------------------------------
Stephen E. Ewing
* Director February 5, 1997
- --------------------------------------------------------
Roger Fridholm
* Director February 5, 1997
- --------------------------------------------------------
Frank M. Hennessey
* Director February 5, 1997
- --------------------------------------------------------
Thomas H. Jeffs II
* Director February 5, 1997
- --------------------------------------------------------
Dale A. Johnson
* Director February 5, 1997
- --------------------------------------------------------
Helen O. Petrauskas
* Director February 5, 1997
- --------------------------------------------------------
Howard F. Sims
Director February 5, 1997
- --------------------------------------------------------
Bill M. Thompson
*By /s/ HAROLD GARDNER
----------------------------------------------------
Harold Gardner
Attorney-in-Fact
</TABLE>
II-8
<PAGE> 171
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 (included in Exhibit
4-24).**
4-9 Form of Junior Subordinated Debenture to be used in
connection with Income PRIDES (included in Exhibit 4-25).**
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.*
4-17 Certificate of Trust of MCN Financing IV.*
</TABLE>
<PAGE> 172
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
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.**
4-25 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with issuance
of Junior Subordinated Debentures related to Income
PRIDES.**
4-26 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with issuance
of Junior Subordinated Debentures related to Capital
Securities.**
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 September 30, 1996, Form 10-Q).
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).**
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.*
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.*
</TABLE>
<PAGE> 173
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
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.
** To be filed by amendment.
References are to MCN (File No. 1-10070) for documents incorporated by
reference.
<PAGE> 1
EXHIBIT 4.16
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:
1. The name of the business trust being formed hereby (the
"Trust") is MCN Financing III.
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
3. This Certificate of Trust shall be effective as of the date of
filing.
Dated: February 3, 1997
/s/ Daniel L. Schiffer
------------------------------
Daniel L. Schiffer, as Trustee
/s/ Sebastian Coppola
------------------------------
Sebastian Coppola, as Trustee
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Norma Closs
---------------------------
Name: Norma Closs
Title: Vice President
<PAGE> 1
EXHIBIT 4.17
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:
1. The name of the business trust being formed hereby (the
"Trust") is MCN Financing IV.
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
3. This Certificate of Trust shall be effective as of the date of
filing.
Dated: February 3, 1997
/s/ Daniel L. Schiffer
------------------------------
Daniel L. Schiffer, as Trustee
/s/ Sebastian Coppola
------------------------------
Sebastian Coppola, as Trustee
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Norma Closs
---------------------------
Name: Norma Closs
Title: Vice President
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our reports dated February 8, 1996, appearing in and incorporated
by reference in the Annual Report on Form 10-K of MCN Energy Group, Inc.
(formerly MCN Corporation) for the year ended December 31, 1995 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Detroit, Michigan
February 5, 1997
<PAGE> 1
EXHIBIT 23.2
[S. A. HOLDITCH & ASSOCIATES LETTERHEAD]
January 31, 1997
MCN Corporation
500 Griswold
Detroit, MI 48226
Re: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of S.A. Holditch & Associates, Inc. consents to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated
December 28, 1995, appearing in the Annual Report on Form 10-K of MCN
Corporation for the year ended December 31, 1995, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration statement of
MCN Corporation relating to the securities included in this Registration
Statement on Form S-3 filed after the date hereof pursuant to Rule 462(b) under
the Securities Act of 1933, as amended.
Very truly yours,
S. A. HOLDITCH & ASSOCIATES, INC.
/s/ W. Denton Copeland
W. Denton Copeland, P.E.
Vice President
<PAGE> 1
EXHIBIT 23.3
[LEE KEELING AND ASSOCIATES, INC. LETTERHEAD]
January 29, 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 16, 1996, appearing in the Annual Report on Form 10-K
of MCN Corporation for the year ended December 31, 1995, and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may by 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/ Lee Keeling and Associates, Inc.
LEE KEELING AND ASSOCIATES, INC.
PETROLEUM CONSULTANTS
<PAGE> 1
EXHIBIT 23.4
[RYDER SCOTT COMPANY PETROLEUM ENGINEERS LETTERHEAD]
January 29, 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 16, 1996, appearing in the Annual Report on Form 10-K of
MCN Corporation for the year ended December 31, 1995, and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Corporation relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
Very truly yours,
/s/ Ryder Scott Company
Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
<PAGE> 1
EXHIBIT 23.5
[MILLER AND LENTS, LTD. LETTERHEAD]
January 29, 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 12, 1996, appearing in the Annual Report on Form 10-K of MCN
Corporation for the year ended December 31, 1995, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Corporation relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
Miller and Lents, Ltd. has no interest in MCN Corporation or in any
affiliated companies or subsidiaries and is not to receive such interest as
payment for such reports and has no director, officer, or employee otherwise
connected with MCN Corporation. We are not employed by MCN Corporation on a
contingent basis.
Yours very truly,
MILLER AND LENTS, LTD.
By /s/ P. G. Von Tungeln
-----------------------
P. G. Von Tungeln
Chairman
<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 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/ William K. McCrackin
----------------------------
William K. McCrackin
<PAGE> 2
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Alfred R. Glancy III and Daniel L. Schiffer, and each of them, his true
and lawful attorneys and agents, each with full power and authority (acting
alone and without the other) to execute in the name and on behalf of the
undersigned as such director or officer, a Registration Statement on Form S-3,
including any post-effective amendments and any subsequent Registration
Statement filed by MCN Corporation pursuant to Rule 462(b) of the Securities
Act of 1933, as amended (the "1933 Act"), or other filings in connection
therewith, under the 1933 Act, as amended, with respect to the issuance of up
to $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/ Harold Gardner
----------------------------
Harold Gardner
<PAGE> 3
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/ Stephen E. Ewing
----------------------------
Stephen E. Ewing
<PAGE> 4
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/ Roger Fridholm
----------------------------
Roger Fridholm
<PAGE> 5
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/ Frank M. Hennessey
----------------------------
Frank M. Hennessey
<PAGE> 6
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/ Thomas H. Jeffs II
----------------------------
Thomas H. Jeffs II
<PAGE> 7
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/ Dale A. Johnson
---------------
Dale A. Johnson
<PAGE> 8
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/ Helen O. Petrauskas
----------------------------
Helen O. Petrauskas
<PAGE> 9
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/ Howard F. Sims
----------------------------
Howard F. Sims
<PAGE> 1
EXHIBIT 24.2
MCN CORPORATION
SECRETARY'S CERTIFICATE
The undersigned, Senior Vice President, General Counsel and Secretary of
MCN Corporation, a Michigan corporation, hereby certifies that the following is
a true and correct copy of a resolution duly adopted at a Regular Meeting of the
Board of Directors of MCN Corporation on January 22, 1997, and such resolution
has not been amended or rescinded and remains in full force and effect on the
date hereof.
RESOLVED, it is in the best interest of the Corporation to issue,
from time to time, debentures, notes and/or other debt obligations
(the "Debt Securities"), Common Stock and/or Preferred Securities (the
"Stock"), guarantees, Forward Purchase Contracts, Stock Purchase Units
or such other forms of investment contracts as may be deemed necessary
or desirable by the Authorized Officers (as defined below) (the "Other
Securities"; collectively the Debt Securities, the Stock and the Other
Securities are hereinafter referred to as the "Securities"). The
Securities may be denominated or payable in or issued for an
equivalent amount of foreign currencies or foreign currency units, may
be convertible into or obligate the Corporation or any Subsidiary
Entity (as defined below) to issue or deliver securities of the
Corporation or any other entity or may be issued at original issue
discount, the aggregate amount of Securities hereby authorized being
that amount as may result in the initial offering prices to the public
for all Securities aggregating up to $500,000,000 (determined in the
case of foreign currencies or foreign currency units based upon the
equivalent in U.S. Dollars, or in the case of other Securities or
property, based on the fair market value thereof, determined by the
Authorized Officers in good faith and consistent with any applicable
rules and regulations of the Securities and Exchange Commission (the
"SEC"));
FURTHER RESOLVED, that the Corporation is authorized to form such
business trusts, partnerships or other subsidiary entities
<PAGE> 2
(collectively, the "Subsidiary Entities"), as may be necessary or desirable to
effectuate the issuance of the Securities and to cause any such Subsidiary
Entity to issue Securities, trust certificates or partnership interests. The
Chairman of the Board, Vice-Chairman, or any Vice President (each an "Authorized
Officer") are hereby authorized, by and in the name of the Corporation, to
execute and deliver such agreements, declarations, certificates and other
documents as may be necessary or desirable in connection with the formation of a
Subsidiary Entity or the creation, issuance, sale or delivery of Securities,
trust certificates or partnership interests by such Subsidiary Entity.
FURTHER RESOLVED, that the Corporation is authorized, subject to the
limitations set forth below, to create, issue and sell the Securities on such
terms and conditions as shall be determined by the pricing committee of
directors and officers of the Corporation (the "Pricing Committee") appointed
by the Board of Directors' resolutions.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized, and empowered to execute and deliver on behalf of the
Corporation an indenture or indentures, including one or more supplements to
any Indenture, in the form approved or authorized by the Pricing Committee
under the corporate seal to be thereto affixed and attested by the Secretary,
with the Trustee or Trustees appointed, such indenture or indentures, or
supplement or supplements, to be in such form and content and bear such date as
may be approved by the Authorized Officer executing the same, such approval to
be conclusively evidenced by the execution of said indenture or indentures, or
supplement or supplements.
FURTHER RESOLVED, that subject to the authority of the Pricing
Committee to determine any discount received by, or commission paid to, any
underwriters or agents, any one Authorized Officer is hereby authorized and
empowered to execute from time to time, on behalf of the Corporation, a
purchase agreement or agreements, an underwriting agreement or agreements or
any other type of agreement between the Corporation and the underwriter or
representatives of the underwriters (or any agents) or any other purchaser
appointed and named in such underwriting agreement or agreements or (other type
of agreement) providing for the sale by the
2
<PAGE> 3
Corporation and the purchase of Securities by said underwriters, agents or
other purchasers.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized, in the name and on behalf of the Corporation, to
execute and deliver such other agreements, documents, certificates, and
instruments as may be required by any Fiduciary in connection with an
indenture, purchase contract agreement, pledge agreement, trust agreement,
partnership agreement or other similar certificate, declaration or other
document as may be necessary or appropriate in connection with the issuance and
sale of the Securities.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
is hereby authorized and empowered to appoint a Property Trustee, Purchase
Contract Agent, Collateral Agent and any other agent or trustee necessary or
appropriate in connection with the issuance or sale of the Securities.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized and empowered to execute the Securities in temporary and
definitive form, under his or her manual or facsimile signature and under the
facsimile seal of the Corporation, attested by the manual or facsimile
signature of the Secretary.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized, in the name and on behalf of the Corporation and any
Subsidiary Entity, to prepare, execute and file, or cause to be prepared and
filed, with the SEC one or more Registration Statements with respect to the
Securities under the Securities Act of 1933, as amended, together with all
documents required as exhibits to said Registration Statement or Statements, or
any amendments or supplements thereto, and all certificates, letters,
instruments, applications and other documents which may be required to be filed
with the SEC with respect to the registration and offering of Securities, and
to take any and all actions that any such Authorized Officer shall deem
necessary or advisable.
FURTHER RESOLVED, that it is desirable and in the best interest of the
Corporation that the Securities be qualified or
3
<PAGE> 4
registered for sale in various states; that any one Authorized
Officer is hereby authorized to perform on behalf of the Corporation
and any Subsidiary Entity any and all such acts as they may deem
necessary or advisable in order to comply with the applicable laws
of any states, and in connection therewith to execute and file all
requisite papers and documents.
FURTHER RESOLVED, that any one Authorized Officer be, and each
of them hereby is, authorized, in the name and on behalf of the
Corporation and any Subsidiary Entity, to make application to such
securities exchange as the officer acting shall deem necessary or
appropriate for the listing thereon of any issues of Securities by
the Corporation or any Subsidiary Entity.
FURTHER RESOLVED, that any one Authorized Officer be, and each
of them hereby is, authorized, and directed to do and perform, or
cause to be done and performed, all such acts, deeds and things to
make, execute and deliver, or cause to be made, executed and
delivered, all such agreements, undertakings, documents, instruments
or certificates in the name and on behalf of the Corporation or
otherwise as each such officer may deem necessary or appropriate to
effectuate or carry out fully the purpose and intent of the
foregoing resolutions, including the performance of the obligations
of the Corporation under Purchase Agreements, Underwriting
Agreements or Sales Agreements, Indentures, Purchase Contract
Agreements, Pledge Agreements, Trust Agreements, Partnership
Agreements or other similar agreements, certificates or
declarations, the Securities, any Registration Statement or any
other agreements related to the Securities.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of
February, 1997.
/s/ Daniel L. Schiffer
-------------------------------
Daniel L. Schiffer, Senior Vice
President, General Counsel and
Secretary
4
<PAGE> 1
EXHIBIT 25.3
Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
MCN CORPORATION
(Exact name of obligor as specified in its charter)
Michigan 38-2820658
(State of incorporation) (I.R.S. employer identification no.)
500 Griswold Street
Detroit, Michigan 48226
(Address of principal executive offices) (Zip Code)
Guarantee of Preferred Securities of MCN Financing II
by MCN Corporation
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee and
upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of January, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ Lloyd O. Martin By:/s/ Christopher L. Kaiser
-------------------- --------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and generally to
use, exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or necessary
for the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands
or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between the
two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
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<PAGE> 6
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any trust, office, duty, contract or
agreement, either by itself or in conjunction with any other person,
or persons, corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within the
State of Delaware or elsewhere, or which may now or hereafter be
required by any law, judge, officer or court in the State of Delaware
or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or authority
such trustee, trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as security for
the performance of the duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any private,
public or municipal corporation within and without the State of
Delaware, or of the Government of the United States, or of any state,
territory, colony, or possession thereof, or of any foreign
government or country; to receive, collect, receipt for, and dispose
of interest, dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property
held and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property,
any and all the rights, powers and privileges of individual
3
<PAGE> 7
owners thereof, including the right to vote thereon; to invest and
deal in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper, and
from time to time to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or mortgages of or
upon the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when the Board
of Directors shall determine, and in the promotion of its said
corporate business of investment and to the extent authorized by law,
to lease, purchase, hold, sell, assign, transfer, pledge, mortgage
and convey real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of, real
and personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any
foreign country or place.
4
<PAGE> 8
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and
the preferences and relative, participating, optional and other special
rights of each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
Directors of the Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance of any shares
of a particular series of Preferred Stock, the voting powers and the
designations, preferences and relative, optional and other special rights,
and the qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of
5
<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding-up, of the Corporation, the
holders of the Common Stock shall be entitled to
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<PAGE> 10
receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of
Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
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<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from
time to time by the affirmative vote of the holders of a majority of the
stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such
election, the stockholders shall elect a successor to such director to
hold office until the next election of the class for which such director
shall have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the term
of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the
8
<PAGE> 12
Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or more
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose
as one class).
FOURTEENTH: - Meetings of the Directors may be held outside of the State
of Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
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<PAGE> 14
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or more,
or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on
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<PAGE> 15
such business combination, or immediately prior to the consummation of any
such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
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<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an Affiliate
or Associate of another, (3) whether a person has an agreement,
arrangement or understanding with another as to the matters referred
to in paragraph (3) of section (c), or (4) whether the assets subject
to any business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON DECEMBER 21, 1995
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors shall be held on
the third Thursday of each month at the principal office of the Company, or at
such other place and
<PAGE> 19
time as may be designated by the Board of Directors, the Chairman of the Board,
or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine
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members who shall be selected by the Board of Directors from its own members
and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and
in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office
during the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at least once a month. A majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when
a quorum is present.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of
the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more than
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<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board of Directors shall preside at all
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<PAGE> 23
meetings of the Board of Directors at which the Chairman of the Board shall not
be present and shall have such further authority and powers and shall perform
such duties as the Board of Directors or the Chairman of the Board may from
time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve
as members of committees, other than salaried employees of the Company, shall
be paid such reasonable honoraria or fees for services as members of committees
as the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In
any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: January 30, 1997 By: /s/ Christopher L. Kaiser
-----------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been approved
by any state banking authorities. Refer to your appropriate state
banking authorities for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ------------------------------------------ ------------
Name of Bank City
in the State of DELAWARE, at the close of business on September 30, 1996.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,288
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,620,289
LESS: Allowance for loan and lease losses. . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . . . . . 3,570,568
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,675
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,457,641
Noninterest-bearing . . . . . . . . 740,731
Interest-bearing. . . . . . . . . . 2,716,910
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,999
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,119
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,705
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . (696)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,628
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
2
<PAGE> 1
EXHIBIT 25.4
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
MCN CORPORATION
(Exact name of obligor as specified in its charter)
Michigan 38-2820658
(State of incorporation) (I.R.S. employer
identification no.)
500 Griswold Street
Detroit, Michigan 48226
(Address of principal executive offices) (Zip Code)
Guarantee of Preferred Securities of MCN Financing III
by MCN Corporation
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of January, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Lloyd O. Martin By: /s/ Christopher L. Kaiser
----------------------- -----------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and generally to
use, exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or necessary
for the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands
or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between the
two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
2
<PAGE> 6
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any trust, office, duty, contract or
agreement, either by itself or in conjunction with any other person,
or persons, corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within the
State of Delaware or elsewhere, or which may now or hereafter be
required by any law, judge, officer or court in the State of Delaware
or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or authority
such trustee, trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as security for
the performance of the duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any private,
public or municipal corporation within and without the State of
Delaware, or of the Government of the United States, or of any state,
territory, colony, or possession thereof, or of any foreign
government or country; to receive, collect, receipt for, and dispose
of interest, dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property
held and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property,
any and all the rights, powers and privileges of individual
3
<PAGE> 7
owners thereof, including the right to vote thereon; to invest and
deal in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper, and
from time to time to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or mortgages of or
upon the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when the Board
of Directors shall determine, and in the promotion of its said
corporate business of investment and to the extent authorized by law,
to lease, purchase, hold, sell, assign, transfer, pledge, mortgage
and convey real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of, real
and personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any
foreign country or place.
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<PAGE> 8
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and
the preferences and relative, participating, optional and other special
rights of each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
Directors of the Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance of any shares
of a particular series of Preferred Stock, the voting powers and the
designations, preferences and relative, optional and other special rights,
and the qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of
5
<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding-up, of the Corporation, the
holders of the Common Stock shall be entitled to
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<PAGE> 10
receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of
Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
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<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from
time to time by the affirmative vote of the holders of a majority of the
stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such
election, the stockholders shall elect a successor to such director to
hold office until the next election of the class for which such director
shall have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the term
of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the
8
<PAGE> 12
Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or more
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose
as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
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<PAGE> 14
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or more,
or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on
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<PAGE> 15
such business combination, or immediately prior to the consummation of any
such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
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(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an Affiliate
or Associate of another, (3) whether a person has an agreement,
arrangement or understanding with another as to the matters referred
to in paragraph (3) of section (c), or (4) whether the assets subject
to any business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON DECEMBER 21, 1995
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors shall be held on
the third Thursday of each month at the principal office of the Company, or at
such other place and
<PAGE> 19
time as may be designated by the Board of Directors, the Chairman of the Board,
or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than nine
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members who shall be selected by the Board of Directors from its own members
and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and
in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office
during the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at least once a month. A majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when
a quorum is present.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of
the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board of Directors shall preside at all
5
<PAGE> 23
meetings of the Board of Directors at which the Chairman of the Board shall not
be present and shall have such further authority and powers and shall perform
such duties as the Board of Directors or the Chairman of the Board may from
time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve
as members of committees, other than salaried employees of the Company, shall
be paid such reasonable honoraria or fees for services as members of committees
as the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In
any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: January 30, 1997 By: /s/ Christopher L. Kaiser
------------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------- -----------------
Name of Bank City
in the State of DELAWARE , at the close of business on September 30, 1996.
--------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,288
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,620,289
LESS: Allowance for loan and lease losses. . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . . 3,570,568
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,675
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,457,641
Noninterest-bearing . . . . . . . . 740,731
Interest-bearing. . . . . . . . . . 2,716,910
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,999
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,119
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,705
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . (696)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,628
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
2
<PAGE> 1
EXHIBIT 25.5
Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
MCN CORPORATION
(Exact name of obligor as specified in its charter)
Michigan 38-2820658
(State of incorporation) (I.R.S. employer identification no.)
500 Griswold Street
Detroit, Michigan 48226
(Address of principal executive offices) (Zip Code)
Guarantee of Preferred Securities of MCN Financing IV
by MCN Corporation
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of January, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ Lloyd O. Martin By:/s/ Christopher L. Kaiser
------------------- -------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and generally to
use, exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or necessary
for the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands
or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between the
two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
2
<PAGE> 6
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any trust, office, duty, contract or
agreement, either by itself or in conjunction with any other person,
or persons, corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within the
State of Delaware or elsewhere, or which may now or hereafter be
required by any law, judge, officer or court in the State of Delaware
or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or authority
such trustee, trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as security for
the performance of the duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any private,
public or municipal corporation within and without the State of
Delaware, or of the Government of the United States, or of any state,
territory, colony, or possession thereof, or of any foreign
government or country; to receive, collect, receipt for, and dispose
of interest, dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property
held and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property,
any and all the rights, powers and privileges of individual
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<PAGE> 7
owners thereof, including the right to vote thereon; to invest and
deal in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper, and
from time to time to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or mortgages of or
upon the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when the Board
of Directors shall determine, and in the promotion of its said
corporate business of investment and to the extent authorized by law,
to lease, purchase, hold, sell, assign, transfer, pledge, mortgage
and convey real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of, real
and personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any
foreign country or place.
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<PAGE> 8
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and
the preferences and relative, participating, optional and other special
rights of each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
Directors of the Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance of any shares
of a particular series of Preferred Stock, the voting powers and the
designations, preferences and relative, optional and other special rights,
and the qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of
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<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding-up, of the Corporation, the
holders of the Common Stock shall be entitled to
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<PAGE> 10
receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of
Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
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<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from
time to time by the affirmative vote of the holders of a majority of the
stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such
election, the stockholders shall elect a successor to such director to
hold office until the next election of the class for which such director
shall have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the term
of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the
8
<PAGE> 12
Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or more
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose
as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
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(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or more,
or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on
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<PAGE> 15
such business combination, or immediately prior to the consummation of any
such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
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<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an Affiliate
or Associate of another, (3) whether a person has an agreement,
arrangement or understanding with another as to the matters referred
to in paragraph (3) of section (c), or (4) whether the assets subject
to any business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON DECEMBER 21, 1995
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors shall be held on
the third Thursday of each month at the principal office of the Company, or at
such other place and
<PAGE> 19
time as may be designated by the Board of Directors, the Chairman of the Board,
or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than nine
2
<PAGE> 20
members who shall be selected by the Board of Directors from its own members
and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and
in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office
during the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at least once a month. A majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when
a quorum is present.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of
the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board of Directors shall preside at
all
5
<PAGE> 23
meetings of the Board of Directors at which the Chairman of the Board shall not
be present and shall have such further authority and powers and shall perform
such duties as the Board of Directors or the Chairman of the Board may from
time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve
as members of committees, other than salaried employees of the Company, shall
be paid such reasonable honoraria or fees for services as members of committees
as the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In
any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: January 30, 1997 By: /s/ Christopher L. Kaiser
-----------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been approved
by any state banking authorities. Refer to your appropriate state
banking authorities for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ------------------------------------------ ---------------
Name of Bank City
in the State of DELAWARE , at the close of business on September 30, 1996.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,288
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,620,289
LESS: Allowance for loan and lease losses. . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . . . . 3,570,568
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,675
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,457,641
Noninterest-bearing . . . . . . . . 740,731
Interest-bearing. . . . . . . . . . 2,716,910
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,999
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,119
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,705
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . (696)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,628
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
2
<PAGE> 1
EX. 25-6
Registration No.
_______________________________________________________________________________
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
MCN CORPORATION
MCN FINANCING II
(Exact name of obligor as specified in its charter)
Michigan 38-2820658
Delaware 38-6668275
(State of incorporation) (I.R.S. employer identification no.)
500 Griswold Street
Detroit, Michigan 48226
(Address of principal executive offices) (Zip Code)
Preferred Securities of MCN Financing II
(Title of the indenture securities)
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of January, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ Lloyd O. Martin By: /s/ Christopher L.Kaiser
----------------------------- --------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt,
to receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
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<PAGE> 6
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual
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<PAGE> 7
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
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<PAGE> 8
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of
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<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to
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<PAGE> 10
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
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<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
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<PAGE> 12
Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
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<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
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<PAGE> 14
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
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such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
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(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or
more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON DECEMBER 21, 1995
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10 days before said meeting,
at his last known address, a written or printed notice fixing the time and
place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors shall be held
on the third Thursday of each month at the principal office of the Company, or
at such other place and
<PAGE> 19
time as may be designated by the Board of Directors, the Chairman of the Board,
or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine
2
<PAGE> 20
members who shall be selected by the Board of Directors from its own members
and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at least once a month. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Trust Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board of Directors shall
preside at all
5
<PAGE> 23
meetings of the Board of Directors at which the Chairman of the Board shall not
be present and shall have such further authority and powers and shall perform
such duties as the Board of Directors or the Chairman of the Board may from
time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: January 30, 1997 By: /s/ Christopher L. Kaiser
-------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------------------- ------------------
Name of Bank City
in the State of DELAWARE , at the close of business on September 30, 1996.
------------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,288
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,620,289
LESS: Allowance for loan and lease losses. . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . . 3,570,568
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,675
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,457,641
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740,731
Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,716,910
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,999
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,119
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,705
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . (696)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,628
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
2
<PAGE> 1
EXHIBIT 25.7
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthhia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
MCN CORPORATION
MCN FINANCING III
(Exact name of obligor as specified in its charter)
Michigan 38-2820658
Delaware To Be Applied For
(State of incorporation) (I.R.S. employer
identification no.)
500 Griswold Street
Detroit, Michigan 48226
(Address of principal executive offices) (Zip Code)
Preferred Securities of MCN Financing III
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of January, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ Lloyd O. Martin By: /s/ Christopher L. Kaiser
--------------------- ---------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt,
to receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and
enjoy all the powers, rights, privileges and franchises
incident to a corporation which are proper or necessary for
the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
2
<PAGE> 6
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual
3
<PAGE> 7
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
4
<PAGE> 8
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of
5
<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to
6
<PAGE> 10
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
7
<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
8
<PAGE> 12
Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
10
<PAGE> 14
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
11
<PAGE> 15
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
12
<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or
more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON DECEMBER 21, 1995
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10 days before said meeting,
at his last known address, a written or printed notice fixing the time and
place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors shall be held
on the third Thursday of each month at the principal office of the Company, or
at such other place and
<PAGE> 19
time as may be designated by the Board of Directors, the Chairman of the Board,
or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine
2
<PAGE> 20
members who shall be selected by the Board of Directors from its own members
and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at least once a month. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Trust Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board of Directors shall preside
at all
5
<PAGE> 23
meetings of the Board of Directors at which the Chairman of the Board shall not
be present and shall have such further authority and powers and shall perform
such duties as the Board of Directors or the Chairman of the Board may from
time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: January 30, 1997 By: /s/ Christopher L. Kaiser
-----------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------- ----------------
Name of Bank City
in the State of DELAWARE, at the close of business on September 30, 1996.
--------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,288
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,620,289
LESS: Allowance for loan and lease losses. . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . . 3,570,568
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,675
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,457,641
Noninterest-bearing . . . . . . . . 740,731
Interest-bearing. . . . . . . . . . 2,716,910
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,999
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,119
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,705
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . (696)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,628
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
2
<PAGE> 1
EXHIBIT 25.8
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
MCN CORPORATION
MCN FINANCING IV
(Exact name of obligor as specified in its charter)
Michigan 38-2820658
Delaware To Be Applied For
(State of incorporation) (I.R.S. employer identification no.)
500 Griswold Street
Detroit, Michigan 48226
(Address of principal executive offices) (Zip Code)
Preferred Securities of MCN Financing IV
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of January, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ Lloyd O. Martin By:/s/ Christopher L. Kaiser
------------------------ --------------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt,
to receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
2
<PAGE> 6
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual
3
<PAGE> 7
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
4
<PAGE> 8
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of
5
<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to
6
<PAGE> 10
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
7
<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
8
<PAGE> 12
Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
10
<PAGE> 14
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
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<PAGE> 15
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
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<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or
more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
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<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON DECEMBER 21, 1995
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10 days before said meeting,
at his last known address, a written or printed notice fixing the time and
place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors shall be held
on the third Thursday of each month at the principal office of the Company, or
at such other place and
<PAGE> 19
time as may be designated by the Board of Directors, the Chairman of the Board,
or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine
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<PAGE> 20
members who shall be selected by the Board of Directors from its own members
and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at least once a month. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Trust Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than
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<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board of Directors shall
preside at all
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<PAGE> 23
meetings of the Board of Directors at which the Chairman of the Board shall not
be present and shall have such further authority and powers and shall perform
such duties as the Board of Directors or the Chairman of the Board may from
time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
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<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: January 30, 1997 By: /s/ Christopher L. Kaiser
---------------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------- ----------------------
Name of Bank City
in the State of DELAWARE , at the close of business on September 30, 1996.
------------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . 198,288
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,620,289
LESS: Allowance for loan and lease losses. . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . 3,570,568
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . 83,675
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . 85
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,457,641
Noninterest-bearing . . . . . . . . 740,731
Interest-bearing. . . . . . . . . . 2,716,910
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . 94,999
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . 844,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,119
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . 363,705
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . (696)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,628
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . 5,303,592
</TABLE>
2
