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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 1, 1998
MCN ENERGY GROUP INC
(Exact name of registrant as specified in its charter)
MICHIGAN 1-10070 38-2820658
State of Incorporation (Commission File (I.R.S. Employer
Number Identification No.)
500 GRISWOLD STREET, DETROIT, MICHIGAN 48226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(313) 256-5500
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ITEM 5. OTHER EVENTS
The registrant is filing herewith the following in connection with the
offering by MCN Investment Corporation ("MCN Investment") of its 6 3/8%
REset Put Securities due 2008 (the "REPS") pursuant to the registration
statement of the registrant and MCN Investment on Form S-3 (No. 333-47137)
filed with the Securities and Exchange Commission under the Securities Act of
1933.
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
1-1 Underwriting Agreement dated April 1, 1998 with respect to the
REPS.
4-1 Form of Note with respect to the REPS.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MCN ENERGY GROUP INC.
By /s/ Sebastian Coppola
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Sebastian Coppola
Senior Vice President and Treasurer
Date: April 7, 1998
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EXHIBIT 1-1
MCN INVESTMENT CORPORATION
(A MICHIGAN CORPORATION)
DEBT SECURITIES
ENTITLED TO THE BENEFIT OF A SUPPORT AGREEMENT BY
MCN ENERGY GROUP INC.
UNDERWRITING AGREEMENT
April 1, 1998
MORGAN STANLEY & CO. INCORPORATED
FIRST CHICAGO CAPITAL MARKETS, INC.
As the Representatives of the several Underwriters
named in Schedule II hereto
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
MCN Investment Corporation (the "Company"), a Michigan corporation and
a wholly-owned subsidiary of MCN Energy Group Inc. ("MCN"), a Michigan
corporation, confirms its agreement with Morgan Stanley & Co. Incorporated
("Morgan Stanley") and each of the other Underwriters named in Schedule II
hereto (collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Morgan Stanley and First Chicago Capital Markets, Inc. ("First Chicago") are
acting as representatives (in such capacity, the "Representatives"), with
respect to the issue and sale by the Company and the purchase by the
Underwriters, acting severally and not jointly, of the respective principal
amounts set forth in Schedule II of $100,000,000 aggregate principal amount of
the Company's 6 3/8% REset Put Securities(SM) due 2008 (the REPS(SM)) (the
"Securities"). The Securities will be issued by the Company under its Indenture,
dated as of September 1, 1995 (the "Indenture"), between the Company and NBD
Bank, as trustee (the "Trustee"). The Securities will have the benefit of a
Support Agreement, dated as of September 1, 1995 (the "Support Agreement"),
between the Company and MCN. The Company proposes to sell to the Underwriters
Securities of the designation, with the terms and the aggregate principal amount
specified in Schedule I hereto.
The Company and MCN have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-47137) covering the registration
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of debt securities of the Company, including the Securities, and the obligations
pursuant to the Support Agreement under the Securities Act of 1933, as amended
(the "1933 Act") and the offering thereof from time to time in accordance with
Rule 415 of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations") and the Company and MCN have filed such post-effective
amendments thereto as may be required prior to the execution of this Agreement.
Such registration statement, as so amended, has been declared effective by the
Commission. Such registration statement, as so amended, including the exhibits
and schedules thereto, if any, and the information, if any, deemed to be a part
thereof pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A
Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information"), is referred to herein as the "Registration Statement"; and the
final prospectus and the prospectus supplement relating to the offering of the
Securities, are collectively referred to herein as the "Prospectus"; provided,
however, that all references to the "Registration Statement" shall be deemed to
include all documents incorporated therein by reference pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to the
execution of this Agreement; provided, further, that if the Company and MCN file
a registration statement with the Commission pursuant to Section 462(b) of the
1933 Act Regulations (the "Rule 462(b) Registration Statement"), then after such
filing, all references to "Registration Statement" shall be deemed to include
the Rule 462(b) Registration Statement; and provided, further, that if the
Company and MCN elect to rely upon Rule 434 of the 1933 Act Regulations, the
term "Prospectus" shall refer to the final or preliminary prospectus and the
applicable term sheet (a "Term Sheet") and all references in this Agreement to
the date of such Prospectus shall mean the date of the applicable Term Sheet. A
"preliminary prospectus" shall be deemed to refer to any prospectus used before
the registration statement became effective and any prospectus that omitted, as
applicable, the Rule 430A Information, the Rule 434 Information or other
information to be included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any
amendment or supplement to any of the foregoing shall be deemed to include the
electronically transmitted copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
SECTION 1. Representations and Warranties.
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(a) The Company and MCN jointly and severally represent and warrant to
each Underwriter that:
(i) No stop order suspending the effectiveness of the
Registration Statement or any Rule 464(b) Registration Statement has been issued
under the 1933 Act and no proceeding for that purpose has been instituted or are
pending or, to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional information has
been complied with.
(ii) Each of the Company and MCN meets the requirements for
the use of Form S-3 under the 1933 Act. Each of the Registration Statement and
any Rule 462(b) Registration Statement has become effective under the 1933 Act.
At the respective times the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendments thereto (including the filing of the
Company's most recent Annual Report on Form 10-K with the Commission) became
effective and as of the date hereof, the Registration Statement, any Rule 462
Registration Statement and any amendments or supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the Trust Indenture Act of 1939, as amended (the
"1939 Act") and the rules and regulations of the Commission under the 1939 Act
(the "1939 Act Regulations") and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at the time
that the Prospectus or any such amendment or supplement was issued and on the
Closing Date, included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Company and MCN elect to rely upon Rule 434 of the
1933 Act Regulations, the Company and MCN will comply with the requirements of
Rule 434. Notwithstanding the foregoing, the representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in conformity
with information furnished to the Company in writing by any Underwriter through
the Representatives expressly for use in the Registration Statement or the
Prospectus.
Each preliminary prospectus and prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for use
in connection with the offering of the Securities will, at the time of such
delivery, be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(iii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement and the Prospectus, at the time they
were or hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the
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1934 Act, and the rules and regulations of Commission thereunder (the "1934 Act
Regulations"), and, when read together with the other information in the
Prospectus, at the time the Registration Statement became effective, at the time
the Prospectus was issued and on the Closing Date, did not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were or are made, not misleading.
(iv) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(v) The financial statements of MCN included or incorporated
by reference in the Registration Statement and the Prospectus, together with the
related schedules and notes, present fairly the financial position of MCN and
its consolidated subsidiaries at the dates indicated and the statements of
operations, stockholders' equity and cash flows of MCN and its consolidated
subsidiaries for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The supporting
schedules, if any, included or incorporated by reference in the Registration
Statement and the Prospectus present fairly in accordance with GAAP the
information required to be stated therein. The ratio of earnings to fixed
charges included in the Prospectus has been calculated in compliance with Item
503(d) of Regulation S-K of the Commission. The selected financial information
and the summary financial data included in the Prospectus present fairly the
information shown therein and have been compiled on a basis consistent with that
of the audited financial statements included in the Registration Statement.
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated therein, (A) there has been no material adverse change and no development
which could reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company or MCN and their respective subsidiaries,
considered as one enterprise (a "Material Adverse Effect"), whether or not
arising in the ordinary course of business, (B) there have been no transactions
entered into by the Company or MCN or any of their respective subsidiaries,
other than those arising in the ordinary course of business, which are material
with respect to the Company or MCN and their respective subsidiaries, considered
as one enterprise, (C) except for regular quarterly dividends on the common
stock of MCN in amounts per share that are consistent with past practice or the
applicable charter document or supplement thereto, respectively, there has been
no dividend or distribution of any kind declared, paid or made by the Company or
MCN on any class of its capital stock.
(vii) Each of the Company and MCN has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Michigan, with corporate power and authority to own, lease and operate
its properties and to conduct its business as presently conducted and as
described in the Prospectus and to enter into and perform its obligations under,
or as contemplated under, this Agreement. Each of the Company and MCN is
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duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to be so qualified or be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect.
(viii) Each subsidiary of the Company and MCN has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted and as described in the Prospectus, and is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to be so qualified or be in good standing would not, individually or in
the aggregate, have a Material Adverse Effect. Except as otherwise stated in the
Registration Statement and the Prospectus, all of the issued and outstanding
shares of capital stock of each subsidiary of the Company and MCN have been duly
authorized and validly issued, are fully paid and non-assessable and all such
shares are owned by the Company or MCN, as the case may be, directly or through
its subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity. None of the outstanding shares of capital
stock of the subsidiaries was issued in violation of preemptive or other similar
rights arising by operation of law, under the charter or by-laws of any
subsidiary or under any agreement to which the Company, MCN or any subsidiary is
a party or otherwise.
(ix) All of the issued and outstanding shares of capital stock
of the Company and MCN have been duly authorized and validly issued and are
fully paid and non-assessable; none of the outstanding shares of capital stock
of the Company or MCN was issued in violation of the preemptive or other similar
rights arising by operation of law, under the charter or by-laws of the Company
or MCN, as the case may be, under any agreement to which the Company, MCN or any
of its subsidiaries is a party or otherwise.
(x) This Agreement has been duly authorized, executed and
delivered by each of the Company and MCN.
(xi) The Securities have been duly authorized for issuance and
sale pursuant to this Agreement and on the Closing Date, will have been duly
executed by the Company and, when authenticated in the manner provided for in
the Indenture and delivered by the Company against payment of the purchase price
therefor, will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity) (the
"Bankruptcy Exceptions"). The Securities will be in the form contemplated by,
and entitled to the benefits of, the Indenture and conform in all material
respects to the description thereof contained in the Prospectus and will be in
substantially the
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form filed or incorporated by reference, as the case may be, as an exhibit to
the Registration Statement. The Securities will be entitled to the benefit of
the Support Agreement.
(xii) The Indenture has been duly and validly authorized,
executed and delivered by the Company and qualified under the 1939 Act and
constitutes a valid and legally binding instrument, enforceable against the
Company in accordance with its terms except to the extent that the enforcement
thereof may be limited by the Bankruptcy Exceptions; the Indenture conforms in
all material respects to the description thereof contained in the Prospectus and
will be in substantially the form filed or incorporated by reference, as the
case may be, as an exhibit to the Registration Statement.
(xiii) The Support Agreement has been duly and validly
authorized, executed and delivered by each of the Company and MCN, and
constitutes a valid and legally binding instrument, enforceable against the
Company and MCN in accordance with its terms except to the extent that the
enforcement thereof may be limited by the Bankruptcy Exceptions; the Support
Agreement conforms in all material respects to the description thereof contained
in the Prospectus.
(xiv) None of the Company, MCN or any of their respective
subsidiaries is in violation of its charter or by-laws or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, note,
lease, loan or credit agreement or any other agreement or instrument to which
the Company, MCN or any of their respective subsidiaries is a party or by which
any of them may be bound, or to which any of the property or assets of the
Company or MCN or any of their respective subsidiaries is subject, or in
violation of any applicable law, rule or regulation or any judgment, order, writ
or decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or MCN or any of their respective
subsidiaries or any of their respective properties or assets, which violation or
default would, individually or in the aggregate, have a Material Adverse Effect.
(xv) The execution and delivery by each of the Company and MCN
of, and the performance by each of the Company and MCN of its obligations under,
this Agreement, the Support Agreement, the Calculation Agency Agreement, to be
dated as of the Closing Date, between the Company and Morgan Stanley, as
calculation agent with respect to the Securities (the "Calculation Agency
Agreement") and the Securities Purchase Option Agreement, to be dated as of the
Closing Date, by and among the Company, Morgan Stanley and Morgan Stanley & Co.
International Limited (the "Side Letter"); the execution and delivery by the
Company of, and the performance by the Company of its obligations under, the
Indenture and the Securities and any other agreement or instrument entered into
or issued or to be entered into or issued by the Company in connection with the
transactions contemplated hereby or thereby; and the consummation of the
transactions contemplated herein and therein and in the Registration Statement
and the Prospectus (including the issuance and sale of the Securities and the
use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds"); and compliance by the Company
and MCN with their obligations hereunder and
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thereunder have been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or MCN or any of their respective subsidiaries
pursuant to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
MCN or any of their respective subsidiaries is a party or by which any of them
may be bound, or to which any property or assets of the Company or MCN or any
subsidiary thereof is subject (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not, individually or in the
aggregate, result in a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter of by-laws of the Company or MCN
or any of their respective subsidiaries or any applicable law, statute, rule or
regulation, judgment, order, writ or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or MCN or any of their respective subsidiaries or any of their
respective property, assets or operations.
(xvi) On the Closing Date, the Calculation Agency Agreement
and the Side Letter will have been validly authorized, executed and delivered by
each of the Company and MCN and will constitute a valid and legally binding
instrument, enforceable against the Company and MCN in accordance with its terms
except to the extent that the enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xvii) No labor dispute with the employees of the Company or
MCN or any of their respective subsidiaries exists or, to the knowledge of the
Company or MCN, is imminent, and neither the Company nor MCN is aware of any
existing or imminent labor disturbance by the employees of any of its or any of
its subsidiary's principal suppliers, manufacturers, customers or contractors
which, in either case, may reasonably be expected to, individually or in the
aggregate, result in a Material Adverse Effect.
(xviii) There is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company or MCN, threatened
against or affecting the Company or MCN or any of their respective subsidiaries
which is required to be disclosed in the Registration Statement and the
Prospectus (other than as disclosed therein), or which might reasonably be
expected to, individually or in the aggregate, result in a Material Adverse
Effect, or which might be reasonably expected to materially and adversely affect
the assets, properties or operations thereof or the consummation of the
transactions contemplated by this Agreement, the Support Agreement, the
Calculation Agency Agreement or the Side Letter, or the performance by the
Company and MCN of their respective obligations hereunder and thereunder; and
the aggregate of all pending legal or governmental proceedings to which the
Company, MCN or any subsidiary thereof is a party or of which any of their
respective properties or operations is the subject, which are not described in
the Registration Statement and the Prospectus, including ordinary routine
litigation incidental to the business, could not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect.
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(xix) There are no contracts or documents which are required
to be described in the Registration Statement, the Prospectus or the documents
incorporated by reference therein or to be filed as exhibits thereto which have
not been so described and/or filed as required.
(xx) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or required
for the performance by the Company and MCN of their obligations hereunder, in
connection with the offering, issuance or sale of the Securities under this
Agreement or the consummation of the transactions contemplated by this
Agreement, the Support Agreement, the Indenture, the Calculation Agency
Agreement or the Side Letter, except such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations or foreign or
state securities or blue sky laws.
(xxi) Each of the Company, MCN and their respective
subsidiaries has good and marketable title to all real property owned by each of
them and good title to all other properties owned by them, in each case, free
and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described in the
Registration Statement and the Prospectus or (b) do not, individually or in the
aggregate, materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company and
MCN or any of their respective subsidiaries; and all of the leases and subleases
material to the business of the Company, MCN and their respective subsidiaries,
as the case may be, considered as one enterprise, and under which the Company or
MCN or any of their respective subsidiaries holds properties are in full force
and effect, and none of the Company, MCN or any of their respective subsidiaries
has any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or MCN or any of their respective
subsidiaries under any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company or MCN or such subsidiary to the
continued possession of the leased or subleased premises under any such lease or
sublease; the pipeline, distribution main and underground gas storage easements
enjoyed by the Company or MCN or their respective subsidiaries are valid,
subsisting and enforceable easements with such exceptions as are not material
and do not materially interfere with the conduct of the business of the Company,
MCN and their respective subsidiaries.
(xxii) The Company, MCN and their respective subsidiaries
possess all licenses, franchises, permits, certificates, approvals, consents,
orders and other authorizations (collectively, the "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory agencies
or bodies necessary for the ownership or lease of the material properties owned
or leased by each of them and to conduct the business now operated by each of
them; the Company, MCN and their respective subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except where the
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and effect would
not, individually or in the aggregate, have a Material Adverse Effect; and none
of the Company,
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MCN or any of their respective subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Governmental
Licenses which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xxiii) Except as described in the Registration Statement and
except as would not, individually or in the aggregate, result in a Material
Adverse Effect, (A) none of the Company, MCN or any of their respective
subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance or code, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, the "Environmental Laws"), (B) the Company,
MCN and their respective subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are in compliance
with their requirements or (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company, MCN or any of
their respective subsidiaries.
(xxiv) MCN's obligations under the Support Agreement will rank
prior to the equity securities and subordinated indebtedness of MCN and equal
with all other unsecured and unsubordinated indebtedness of MCN, whether now or
hereafter outstanding.
(xxv) Neither the Company nor MCN is, and upon the issuance
and sale of the Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus, will be, an "investment
company" or an entity under the "control" of an "investment company" as such
terms are defined under the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxvi) MCN is presently exempt from the provisions of the
Public Utility Holding Company Act of 1935 (except Section 9 thereof) which
would otherwise require it to register thereunder.
(xxvii) The Company and MCN have complied with, and are and
will be in compliance with, the provisions of that certain Florida act relating
to disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively, the
"Cuba Act") or is exempt therefrom.
(xxviii) None of the Company, MCN, their respective
subsidiaries or any of their respective directors, officers or controlling
persons, has taken, directly or indirectly, any action
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resulting in a violation of Regulation M under the 1934 Act, or designed to
cause or result in, or that has constituted or that reasonably might be expected
to constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(xxix) No "forward looking statement" (as defined in Rule 175
under the 1933 Act) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable basis
or was disclosed other than in good faith.
(b) Any certificate signed by any officer of the Company or MCN and
delivered to the Underwriters or to counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company or MCN, as the case may be, to each Underwriter as to
the matters covered thereby.
SECTION 2. Sale and Delivery to the Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, at the price per Security set forth in
Schedule I hereto, the respective principal amounts of the Securities set forth
opposite the name of the such Underwriter, plus any additional principal amount
of the Securities which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof.
(b) Delivery of and payment for the Securities shall be made at the
offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P, 125 West 55th Street, New
York, New York 10019, or at such other place as shall be agreed upon by the
Representatives and the Company, at 9:00 a.m., New York City time, on the third
(fourth, if pricing of the Securities occurs after 4:30 p.m., New York City
time, on any given day) business day after the date of execution of this
Agreement (unless postponed in accordance with the provisions of Section 10), or
such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being referred to herein as the "Closing Date").
(c) On the Closing Date, the Company shall deliver the Securities to
The Depository Trust Company, on behalf of the Representatives, for the account
of each Underwriter against payment to the Company by wire transfer of
immediately available funds to a bank account designated by the Company. It is
understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Securities which it has agreed to purchase. Morgan Stanley,
individually and not as a representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Securities to be
purchased by any Underwriter whose funds have not been received by the Closing
Date, but such payment shall not relieve such Underwriter from its obligations
hereunder.
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<PAGE> 11
(d) Upon delivery, the Securities shall be in registered form and in
such denominations as set forth on Schedule I hereto. The certificate or
certificates representing the Securities shall be registered in the name of Cede
& Co., and shall be made available for inspection by the Representatives in New
York, New York not later than 10:00 a.m., New York City time, on the business
day prior to the Closing Date.
SECTION 3. Covenants of the Company and MCN. Each of the Company and
MCN covenants with each Underwriter as follows:
(a) Promptly following the execution of this Agreement, the Company
will cause the Prospectus, including as a part thereof a prospectus supplement
relating to the Securities, to be filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations and will take steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for filing under
Rule 424(b) was received for filing by the Commission and, in the event that it
was not, it will promptly file such prospectus.
(b) The Company and MCN, subject to Section 3(c), will comply with the
requirements of Rule 430A or Rule 434 of the 1933 Act Regulations, as
applicable, and will notify the Representatives immediately, and confirm the
notice in writing, (i) of the effectiveness of any post-effective amendment to
the Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or Prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company and MCN will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible time.
(c) The Company and MCN will give the Representatives notice of their
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment and any filing under Rule 462(b) of the
1933 Act Regulations), any Term Sheet or any amendment, supplement or revision
to either the prospectus included in the Registration Statement at the time it
became effective or to the Prospectus, whether pursuant to the 1933 Act, the
1934 Act or otherwise; will furnish the Representatives with copies of any such
Rule 462(b) Registration Statement, Term Sheet, amendment, supplement or
revision a reasonable amount of time prior to such proposed filing or use, as
the case may be; and will not file any such Rule 462(b) Registration Statement,
Term Sheet, amendment, supplement or revision to which the Representatives or
counsel for the Underwriters shall object.
(d) The Company has furnished or will deliver to the Representatives
and counsel for the Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference
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<PAGE> 12
therein and documents incorporated or deemed to be incorporated by reference
therein) and signed copies of all consents and certificates of experts, and will
also deliver to the Representatives, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) The Company will deliver to each Underwriter, without charge, as
many copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each Underwriter, without
charge, during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(f) The Company and MCN will comply with the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act or the 1934 Act to be delivered in connection with any sale of the
Securities by a Callholder, any Dealer or any of their affiliates following the
exercise of the Call Option, any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the Callholder or
any such Dealer or for the Company, to amend any Registration Statement or amend
or supplement any Prospectus in order that such Prospectus will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any time to amend the
Registration Statement or file a new registration statement or amend or
supplement any Prospectus or issue a new Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations or the Commission's
interpretations of the 1933 Act or the 1933 Act Regulations, the Company and MCN
will promptly prepare and file with the Commission, subject to Section 3(c),
such amendment or supplement as may be necessary to correct such statement or
omission or to make any such Registration Statement or any such Prospectus
comply with such requirements, or prepare and file any such new registration
statement and prospectus as may be necessary for such purpose and the Company
will furnish to such Callholder or any such Dealer, without charge, such number
of copies of such amendment, supplement, Prospectus or other document as such
Callholder or any such Dealer may reasonably request. In addition, the Company
shall, if at any time when a prospectus is required by the 1933 Act or the 1934
Act to be delivered in connection with any sale of the applicable principal
amount of the Securities by a Callholder or any Dealer or any of their
affiliates following the exercise by such Callholder of its Call Option, (i)
execute and deliver or cause to be executed and delivered legal documentation
(including a purchase agreement or
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<PAGE> 13
underwriting agreement with customary indemnities, covenants, representations
and warranties, comfort letters and legal opinions and (ii) provide promptly
upon request updated consolidated financial statements to the date of its latest
report filed with the Commission. Capitalized terms used in this paragraph and
not otherwise defined shall have the meaning ascribed to them in the Calculation
Agency Agreement.
(g) The Company and MCN will use their best efforts, in cooperation
with the Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as the Representatives may designate; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Securities have been so qualified,
the Company and MCN will file such statements and reports as may be required by
the laws of such jurisdiction to continue such qualification in effect for so
long as may be required in connection with distribution of the Securities.
(h) MCN will timely file such reports pursuant to the 1934 Act as are
necessary in order to make generally available to its securityholders and to
deliver to the Representatives as soon as practicable an earnings statement for
the purposes of, and to provide the benefits contemplated by, the last paragraph
of Section 11(a) of the 1933 Act.
(i) The Company will use the net proceeds received by it from the sale
of the Securities in the manner specified in the Prospectus under the caption
"Use of Proceeds".
(j) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the 1933
Act Regulations, then immediately following the execution of this Agreement, the
Company and MCN will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A or Rule 434 and Rule 424(b) of the
1933 Act Regulations, copies of an amended Prospectus, or Term Sheet, or, if
required by such Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted.
(k) If the Company and MCN elect to rely upon Rule 462(b), the Company
and MCN shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 of the 1933 Act Regulations by the earlier of (i) 10:00 p.m., New York City
time, on the date of this Agreement and (ii) the time confirmations are sent or
given, as specified by Rule 462(b)(2).
(l) The Company and MCN, during the period when the Prospectus are
required to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the 1934 Act within the time periods required by the 1934 Act and the 1934
Act Regulations.
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<PAGE> 14
(m) So long as any of the Securities are outstanding, to furnish the
Representatives copies of all reports and financial statements furnished by the
Company and MCN to each securities exchange on which securities issued by the
Company and MCN may be listed pursuant to requirements of or agreements with
such exchange or to the Commission pursuant to the 1934 Act or the 1934 Act
Regulations.
(n) During a period of fifteen days from the date of the Prospectus,
the Company will not, without the prior written consent of Morgan Stanley,
directly or indirectly, issue, pledge, sell, offer to sell, grant any option for
the sale of or otherwise transfer or dispose of, any debt securities of the
Company which mature more than one year after the Closing Date and which are
substantially similar to the Securities, without the prior written consent of
Morgan Stanley.
(o) None of the Company, its subsidiaries or any of their respective
directors, officers or controlling persons, will take, directly or indirectly,
any action resulting in a violation of Regulation M under the 1934 Act, or
designed to cause or result in, or that reasonably might be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
SECTION 4. Payment of Expenses. The Company and MCN will pay all
expenses incident to the performance of their obligations under this Agreement,
including, without limitation, expenses related to the following, if incurred:
(i) the preparation, delivery, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto; (ii) the printing and delivery to the Underwriters of this
Agreement, the Support Agreement, the Indenture, any and such other documents as
may be required in connection with the offering, purchase, sale and delivery of
the Securities; (iii) the preparation, issuance and delivery of the certificate
or certificates for the Securities to the Underwriters, including any costs,
taxes and expenses incident to the issuance and delivery of the Securities; (iv)
the fees and disbursements of the Company's counsel, accountants and other
advisors or agents; (v) the qualification of the Securities under securities
laws in accordance with the provisions of Section 3(g), including filing fees
and the fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and any
supplement thereto; (vi) the printing and delivery to the Underwriters of copies
of each preliminary prospectus, any Term Sheet and of the Prospectus and any
amendments or supplements thereto; (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto;
(viii) the fees and disbursements of the Trustee, including the fees and
disbursements of counsel to the Trustee; (ix) any fees payable to the
Commission; and (x) any fees payable in connection with the rating of the
Securities by rating agencies.
If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., counsel for the Underwriters.
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<PAGE> 15
SECTION 5. Conditions to Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and MCN herein contained or in
certificates of any officer of the Company or MCN delivered pursuant to the
provisions hereof, to the performance by the Company and MCN of its covenants
and other obligations hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act and on the date hereof and on
the Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of counsel to the Underwriters. A prospectus containing information
relating to the description of the Securities, the specific method of
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b) (or any required post-effective amendment providing
such information shall have been filed and declared effective in accordance with
the requirements of Rule 430A), or, if the Company and MCN have elected to rely
upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the Rule 434
Information shall have been filed with the Commission in accordance with Rule
424(b).
(b) On the Closing Date the Representatives shall have received:
(1) The favorable opinion, dated as of the Closing Date, of
Daniel L. Schiffer, Esq., Senior Vice President, General Counsel and Secretary
of MCN, and Vice President, General Counsel and Secretary of the Company in form
and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letter for each of the other Underwriters, to the
effect that:
(i) Each of the Company and MCN has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Michigan.
(ii) Each of the Company and MCN has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into
and perform its obligations under this Agreement.
(iii) Each of the Company and MCN is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not, individually or in the aggregate, result in a
Material Adverse Effect.
(iv) The shares of issued and outstanding
capital stock of the Company and MCN have been duly authorized and
validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock were issued in
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<PAGE> 16
violation of preemptive or other similar rights arising by operation of
law, under the charter or by-laws of any subsidiary or under any
agreement to which the Company, MCN or any subsidiary is a party or
otherwise.
(v) The Securities are in the form
contemplated by the Indenture, have been duly and validly authorized by
the Company and, when executed by the Company and authenticated by the
Trustee in the manner provided for in the Indentureand delivered by the
Company against payment of the purchase price therefor, will constitute
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by the Bankruptcy
Exceptions. Each holder of the Securities will be entitled to the
benefits provided by the Support Agreement and the Indenture; the form
of certificate used to evidence the Securities is in due and proper
form and complies with the requirements of the Indenture; and the
Securities, the Indenture and the Support Agreement conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(vi) Each subsidiary of the Company and MCN
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Prospectus, and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would
not, individually or in the aggregate, have a Material Adverse Effect.
Except as otherwise disclosed in the Registration Statement and the
Prospectus, all of the issued and outstanding capital stock of each
such subsidiary of the Company and MCN has been duly authorized and
validly issued, is fully paid and non-assessable and all such shares
are owned by the Company or MCN, as the case may be, directly or
through its subsidiaries and, to the best of such counsel's knowledge,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of capital
stock of any subsidiary of the Company or MCN was issued in violation
of preemptive or other similar rights of any securityholder of such
subsidiary.
(vii) The Agreement has been duly authorized,
executed and delivered by the Company.
(viii) The Registration Statement, including
any Rule 462(b) Registration Statement, has been declared effective
under the 1933 Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and, to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
or any Rule 462(b)
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<PAGE> 17
Registration Statement has been issued under the 1933 Act and no
proceedings therefor have been initiated or threatened by the
Commission.
(ix) The Registration Statement, including any
Rule 462(b) Registration Statement, the Rule 430A Information and the
Rule 434 Information, as applicable, the Prospectus, excluding the
documents incorporated by reference therein,and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations; the
Indenture and the Statements of Eligibility on Form T-1 with respect to
the Trustee filed with the Commission as part of the Registration
Statement complied as to form in all material respects with the
requirements of the 1939 Act and the 1939 Act Regulations.
(x) The documents incorporated by reference in
the Prospectus (other than the financial statements and supporting
schedules therein, as to which such counsel need express no opinion),
when they were filed with the Commission complied as to form in all
material respects with the requirements of the 1934 Act and the 1934
Act Regulations.
(xi) The Company and MCN meet the registrant
requirements for use of Form S-3 under the 1933 Act Regulations.
(xii) The Indenture has been duly and validly
authorized, executed and delivered by the Company and qualified under
the 1939 Act and constitutes a valid and legally binding instrument,
enforceable in accordance with its terms, except as the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xiii) The Support Agreement has been duly and
validly authorized, executed and delivered by each of the Company and
MCN, and constitutes a valid and legally binding instrument,
enforceable against the Company and MCN in accordance with its terms
except to the extent that the enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xiv) On the Closing Date, the Calculation
Agency Agreement and the Side Letter will have been validly authorized,
executed and delivered by each of the Company and MCN and each will
constitute a valid and legally binding instrument, enforceable against
the Company and MCN in accordance with its terms except to the extent
that the enforcement thereof may be limited by the Bankruptcy
Exceptions.
(xv) All taxes and fees required to be paid by
the laws of the State of Michigan and jurisdictional subdivisions
thereof with respect to the execution of the Indenture and the issuance
of the Securities have been paid.
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<PAGE> 18
(xvi) The execution and delivery by the
Company and MCN of, and the performance by the Company and MCN of their
obligations under, this Agreement, the Support Agreement, the
Calculation Agency Agreement and the Side Letter; the execution and
delivery by the Company of, and the performance by the Company of its
obligations under, the Indenture and the Securities and any other
agreement or instrument entered into or issued or to be entered into or
issued by the Company in connection with the transactions contemplated
hereby or thereby; the consummation of the transactions contemplated
herein and therein and in the Registration Statement and Prospectus
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use of Proceeds"); and compliance by the Company and
MCN with their obligations hereunder and thereunder do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default under or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or MCN or any subsidiary
thereof pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or
instrument, known to such counsel, to which the Company or MCN or any
of their respective subsidiaries is a party or by which it or any of
them may be bound, or to which any of the properties, assets or
operations of the Company or MCN or any of their respective
subsidiaries is subject, except for such conflicts, breaches, defaults,
liens, charges or encumbrances that would not, individually or in the
aggregate, result in a Material Adverse Effect, nor will such action
result in any violation of the provisions of the charter or by-laws of
the Company or MCN or any subsidiary thereof, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to
such counsel, of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or MCN or any
of their respective subsidiaries or any of their respective properties,
assets or operations.
(xvii) To the best of such counsel's
knowledge, there is not pending or threatened any action, suit,
proceeding, inquiry or investigation before or by any court or
governmental agency or body, domestic or foreign, pending or
threatened, against or affecting the Company or MCN or any subsidiary
thereof which is required to be disclosed in the Registration Statement
and the Prospectus (other than as disclosed therein), or which might
reasonably be expected to, individually or in the aggregate, result in
a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the assets, properties or operations
thereof or the consummation of the transactions contemplated in this
Agreement, the Support Agreement, the Calculation Agency Agreement or
the Side Letter, or the performance by the Company and MCN of their
obligations hereunder and thereunder; and the aggregate of all pending
legal or governmental proceedings to which the Company or MCN or any of
their respective subsidiaries is a party or to which any of
their respective property or assets is the subject which are not
described in the Registration Statement or the Prospectus, including
ordinary routine litigation incidental to the business of the Company
or MCN or any of
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<PAGE> 19
their respective subsidiaries, could not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect.
(xviii) The information in the Prospectus under
the captions "MCN," "MCNIC," "Use of Proceeds," "Description of the
REPS," "MCN Energy Group Inc.," "MCN Investment Corporation,"
"Description of Debt Securities" and "Support Agreement" and in the
Registration Statement under Item 14, to the extent that they involve
matters of law, summaries of legal matters, the Company's charter and
by-laws or legal proceedings, or legal conclusions, has been reviewed
by such counsel and is correct in all material respects.
(xix) To the best of such counsel's knowledge,
there are no statutes or regulations that are required to be described
in the Prospectus that are not described as required.
(xx) To the best of such counsel's knowledge
and information, none of the Company, MCN or any subsidiary thereof is
in violation of its charter or by-laws and no default by the Company or
MCN or any subsidiary thereof exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan or credit
agreement, note, lease, or other agreement or instrument to which the
Company or MCN or any of their respective subsidiaries is a party or by
which it or any of them or any of their respective properties or assets
are bound, except for violations and defaults that would not,
individually or in the aggregate, result in a Material Adverse Effect.
(xxi) All descriptions in the Prospectus of
contracts and other documents to which the Company, MCN or their
respective subsidiaries are a party are accurate in all material
respects. To the best of such counsel's knowledge and infor mation,
there are no franchises, contracts, indentures, mortgages, loan or
credit agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or incorporated
by reference as exhibits thereto other than those described or referred
to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all
material respects.
(xxii) All legally required proceedings in
connection with the authorization, issuance and validity of the
Securities and the sale of the Securities in accordance with this
Agreement (other than the filing of post-issuance reports, the
non-filing of which would not render the Securities invalid) have been
taken; and no filing with, authorization, approval, consent, license,
order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than under
the 1933 Act and the 1933 Act Regulations, which have been obtained, or
as may be required under the securities or blue sky laws of the various
states, as to which such counsel need express no opinion) is necessary
or required in connection with the due
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<PAGE> 20
authorization, execution and delivery of this Agreement, the Support
Agreement or for the offering, issuance and sale of the Securities or
the performance by the Company or MCN of their respective obligations
in this Agreement, the Support Agreement, the Indenture, the
Calculation Agency Agreement, the Side Letter and the Securities.
(xxiii) The Company, MCN and their respective
subsidiaries possess all licenses, franchises, permits, certificates,
authorizations, approvals, consents and orders of all governmental
authorities or agencies necessary for the ownership or lease of the
material properties owned or leased by each of them and for the
operation of the business carried on by each of them as described in
the Registration Statement and the Prospectus with such exceptions as
are not material and do not materially interfere with the conduct of
the business of the Company or MCN and their respective subsidiaries,
considered as one enterprise; all such licenses, franchises, permits,
certificates, authorizations, approvals, consents and orders are in
full force and effect and contain no unduly burdensome provisions that
would interfere with the conduct of the business of the Company or MCN
and their respective subsidiaries, considered as one enterprise and,
except as otherwise set forth in the Registration Statement or the
Prospectus, there are no legal or governmental proceedings pending or
threatened that would result in a material modification, suspension or
revocation thereof.
(xxiv) Each of the Company, MCN and their
respective subsidiaries has good and marketable title to all material
real and personal property owned by each of them and good title to all
other properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Registration Statement and the Prospectus or (b) do not, individually
or in the aggregate, materially affect the value of such property and
do not materially interfere with the use made and proposed to be made
of such property by the Company, MCN or any of their respective
subsidiaries; and any real property and buildings held under lease by
the Company, MCN and their respective subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the conduct of the business
of the Company, MCN and their respective subsidiaries.
(xxv) Neither the Company nor MCN is an
"investment company" or an entity under the "control" of an "investment
company" as such terms are defined in the 1940 Act.
(xxvi) MCN is presently exempt from the
provisions of the Public Utility Holding Company Act of 1935 (except
Section 9 thereof) which would otherwise require it to register
thereunder.
Moreover, such counsel shall confirm that
nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement, including any
Rule 430A Information and Rule 434 Information (if applicable)
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<PAGE> 21
(except for financial statements and the notes thereto, the financial
schedules and any other financial data included or incorporated by
reference therein, as to which such counsel need express no opinion),
at the time such Registration Statement became effective or at the date
of this Agreement, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and the notes thereto, the financial schedules, and any
other financial data included or incorporated by reference therein, as
to which such counsel need express no opinion), at the time the
Prospectus were issued, at the time of any such amended or supplemented
Prospectus were issued or on the Closing Date, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing Date, of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Company and
MCN, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, to the effect that:
(i) The Registration Statement, including any
Rule 462(b) Registration Statement, is effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued
under the 1933 Act and no proceedings therefor have been initiated or,
to the best of such counsel's knowledge, threatened by the Commission.
(ii) The Registration Statement, including any
Rule 462(b) Registration Statement, the Rule 430A Information and the
Rule 434 Information, as applicable, the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations.
(iii) The statements in the Prospectus under
the captions "Description of the REPS" and "Description of the Debt
Securities" to the extent that they involve matters of law, summaries
of legal matters, documents or proceedings, or legal conclusions, have
been reviewed by such counsel and is correct in all material respects.
(iv) Assuming that the Calculation Agency
Agreement and the Side Letter being delivered on the Closing Date have
been duly authorized, executed and delivered by the Company and MCN
under Michigan law, each is a valid and legally
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<PAGE> 22
binding agreement of the Company and MCN, enforceable against the
Company and MCN in accordance with its terms except to the extent that
the enforcement thereof may be limited by the Bankruptcy Exceptions.
(v) Assuming the Indenture has been duly and validly
authorized, executed and delivered by the Company under Michigan law
and, assuming due authorization, execution and delivery thereof by the
Trustee, it is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except
as the enforcement thereof may be limited by the Bankruptcy
Exceptions; and the Indenture has been duly qualified under the 1939
Act.
(vi) The Securities are in the form contemplated by
the Indenture, and assuming the Securities have been duly authorized,
executed and delivered by the Company under Michigan law and when
executed by the Company and authenticated by the Trustee in the manner
provided for in the Indenture and delivered by the Company against
payment of the purchase price therefor, the Securities will constitute
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by the Bankruptcy
Exceptions; each holder of the Securities will be entitled to the
benefits provided by the Indenture; and the form of certificate used
to evidence the Securities is in due and proper form and complies with
the requirements of the Indenture.
(vii) The Securities, the Indenture, the Calculation
Agency Agreement and the Side Letter conform in all material respects
to the descriptions thereof contained in the Prospectus.
(viii) No authorization, approval, consent, order,
registration, qualification of or with any court or federal or
New York state governmental authority or agency is required for the
issuance and sale of the Securities by the Company to the Underwriters,
or the performance by the Company and MCN of their respective
obligations under this Agreement, the Indenture, the Calculation Agency
Agreement, the Side Letter and the Securities, except such as has been
obtained and made under the federal securities laws or such as may be
required under the securities or blue sky laws of the various states,
as to which such counsel need express no opinion.
Moreover, such counsel shall confirm that nothing has
come to such counsel's attention that would lead such counsel to
believe that the Registration Statement, including any Rule 430A
Information and Rule 434 Information (if applicable) (except for
financial statements and the notes thereto, the financial schedules and
any other financial data included or incorporated by reference therein,
as to which such counsel need express no opinion), at the time such
Registration Statement became effective or at the date of this
Agreement, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or
any amendment or supplement
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<PAGE> 23
thereto (except for financial statements and the notes thereto, the
financial schedules, and any other financial data included or
incorporated by reference therein, as to which such counsel need
express no opinion), at the time the Prospectus were issued, at the
time of any such amended or supplemented Prospectus were issued or on
the Closing Date, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(3) The favorable opinion, dated as of the Closing Date, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (v), (vii)
and (viii) and the last paragraph of Section 5(b)(1). In giving such opinion,
LeBoeuf, Lamb, Greene & MacRae, L.L.P., may rely as to certain matters of
Michigan law upon the opinion of Daniel L. Schiffer, Esq., counsel for the
Company, which shall be delivered in accordance with Section 5(b)(1) hereof.
(4) The opinion, dated as of the Closing Date, of LeBoeuf,
Lamb, Greene & MacRae, L.L.P., addressed to the Underwriters, generally to the
effect that, subject to the qualifications and limitations stated therein and in
the Prospectus, the statements set forth in the Prospectus under the caption
"Certain United States Federal Income Tax Considerations," insofar as they
purport to constitute summaries of matters of United States federal tax law and
regulations or legal conclusions with respect thereto, constitute accurate
summaries of the matters discussed therein in all material respects.
(c) On the Closing Date, the Representatives shall have received a
certificate of (i) the President or a Vice President of the Company and of the
Chief Financial Officer or Chief Accounting Officer of the Company, dated as of
the Closing Date and (ii) the President or a Vice President of MCN and of the
Chief Financial Officer or Chief Accounting Officer of MCN, dated as of the
Closing Date, to the effect that (i) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company or MCN and their respective subsidiaries
considered as one enterprise, as the case may be, whether or not in the ordinary
course of business, (ii) the representations and warranties in Section 1 hereof
are true and correct with the same force and effect as though expressly made at
and as of the Closing Date, (iii) the Company and MCN, respectively, have
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied on or prior to the Closing Date, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission.
(d) At the time of the execution of this Agreement, the Representatives
shall have received from Deloitte & Touche LLP a letter dated such date in form
and substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect set forth below and as to such other matters as the Representatives may
reasonably request, that:
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<PAGE> 24
(i) They are independent certified public accountants with
respect to MCN and its subsidiaries within the meaning of the 1933 Act
and the 1933 Act Regulations;
(ii) In their opinion, the consolidated financial statements
and any financial statement schedules audited by them and included or
incorporated by reference in the Registration Statement and the
Prospectus, as amended or supplemented, comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations;
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
including a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
condensed consolidated financial statements included in MCN's Quarterly
Reports on Form 10-Q incorporated by reference in the Registration
Statement and the Prospectus, as amended or supplemented, for the
periods specified in such letter, a reading of the latest available
unaudited interim consolidated financial statements of MCN and its
subsidiaries, a reading of the minutes of MCN and its subsidiaries
since the audited consolidated financial statements set forth in MCN's
Annual Report on Form 10-K for the most recent year, inquiries of
officials of MCN and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) the unaudited condensed consolidated financial
statements set forth in MCN's Quarterly Reports on Form 10-Q
incorporated by reference in the Registration Statement and
the Prospectus, as amended or supplemented, do not comply as
to form in all material respects with the applicable
accounting requirements of the 1934 Act and the 1934 Act
Regulations as they apply to Form 10-Q or that any material
modifications should be made for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements set forth in MCN's Annual Report on Form
10-K for the most recent year ended incorporated by reference
in the Registration Statement and the Prospectus as amended or
supplemented;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus, as amended or
supplemented, do not agree with the corresponding items in the
unaudited consolidated financial statements from which such
data and items were derived;
(C) any unaudited pro forma consolidated condensed
financial statements or any unaudited pro forma consolidating
financial statements included or incorporated by reference in
the Prospectus, as amended or supplemented, do not comply as
to form in all material respects with the applicable
accounting requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the
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<PAGE> 25
1934 Act Regulations or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of those statements;
(D) as of a specified date not more than five days
prior to the date of this Agreement, there has been any
decrease or increase in the common stock (except for any
increases in connection with any employee benefit, dividend
reinvestment or stock purchase plan of MCN) or any increase or
decrease in redeemable cumulative preferred securities or
long-term debt including capital lease obligations and current
maturities (except for sinking fund and installment
requirements under their long-term debt agreements, terms of
the preferred securities of subsidiaries and purchases in the
open market in anticipation thereof) or any increase in
short-term debt, or any decrease in consolidated common
shareholders' equity of MCN and its consolidated subsidiaries
(other than periodic dividends declared to shareholders and
any decreases pursuant to the terms of the preferred
redeemable increased dividend equity securities of MCN), in
each case as compared with the corresponding amounts shown in
the latest consolidated statement of financial position of MCN
and its subsidiaries incorporated by reference in the
Registration Statement and the Prospectus as amended or
supplemented, except in each case for increases or decreases
which the Prospectus as amended or supplemented, including
financial information incorporated by reference, discloses
have occurred or may occur or which are described in such
letter; and
(E) for the period from the date of the latest
consolidated financial statements included or incorporated by
reference in the Prospectus, as amended or supplemented, to
the end of the latest period for which unaudited condensed
consolidated financial statements or financial information are
available there were any decreases in consolidated operating
revenues, operating income, net income or earnings available
for Common Stock of MCN and its consolidated subsidiaries, or
any increases in any items specified by the Representatives,
in each case as compared with the corresponding period in the
preceding year and with any other period of corresponding
length specified by the Representatives, except in each case
for increases or decreases which the Prospectus, as amended or
supplemented, including financial information incorporated by
reference, discloses have occurred or may occur or which are
described in such letter; and
(F) the unaudited condensed consolidated financial
statements referred to in Clause (E) are not stated on a basis
substantially consistent with the audited consolidated
financial statements incorporated by reference in the
Registration Statement and the Prospectus, as amended or
supplemented.
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of MCN
for the five most recent fiscal years included in the Prospectus, as
amended or supplemented, and included or
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<PAGE> 26
incorporated by reference in MCN's Annual Report on Form 10-K for the
most recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial
statements for such five fiscal years which were included or
incorporated by reference in MCN's Annual Reports on Form 10-K for such
fiscal years;
(v) In addition to the limited procedures, reading of minutes,
inquiries and other procedures referred to in clause (iii) and (iv)
above, they have carried out certain other specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information which are derived from the general accounting and financial
records of MCN and its subsidiaries, which appear in the Prospectus, as
amended or supplemented, and the Registration Statement, in MCN's
Annual Report on Form 10-K for the latest year ended and in MCN's
Quarterly Reports on Form 10-Q since the latest Annual Report on Form
10-K and which are specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting and financial records of MCN and its subsidiaries and have
found them to be in agreement; and
(vi) If applicable and agreed to by the parties to this
Agreement, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the selected financial data, pro forma financial information,
prospective financial statements, consolidating financial statements
and/or condensed financial statements derived from audited financial
statements of MCN for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the Representatives.
(e) On the Closing Date, the Representatives shall have received from
Deloitte & Touche LLP a letter, dated as of the Closing Date, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(d) of this Section, except that the specified date referred to shall be a date
not more than three business days prior to the Closing Date.
(f) On the Closing Date, the Securities shall be rated in one of the
four highest rating categories for long term debt securities ("Investment
Grade") by any nationally recognized statistical rating agency, and the Company
shall have delivered to the Representatives a letter, dated the Closing Date,
from such nationally recognized statistical rating agency, or other evidence
satisfactory to the Representatives, confirming that the Securities have
Investment Grade ratings; and there shall not have occurred any decrease in the
ratings of any of the securities of the Company or of the Securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the 1933 Act Regulations) and such organization shall not
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the securities of the Company or of
the Securities.
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<PAGE> 27
(g) On the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
the Securities as herein contemplated shall be satisfactory in form and
substance to the Representatives and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement, may be
terminated by the Representatives by notice to the Company at any time on or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
SECTION 6. Indemnification.
(a) The Company and MCN, jointly and severally, agree to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the 1933 Act or Section
20 of the 1934 Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Underwriter or any such controlling person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company or MCN in
writing by such Underwriter through the Representatives expressly for use
therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, MCN, their directors, their officers who sign the
Registration Statement and each person, if any, who controls the Company or MCN
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act to the same extent as the foregoing indemnity from the Company and MCN
to such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company or MCN in writing by such Underwriter
through the Representatives expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) of this Section 6, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
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indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley, in the case of parties indemnified
pursuant to paragraph (a) above and by the Company and/or MCN, in the case of
parties indemnified pursuant to paragraph (b) above. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
SECTION 7. Contribution.
(a) To the extent the indemnification provided for in paragraph Section
6(a) or (b) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and MCN on the one hand and the Underwriters on
the other hand from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the
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<PAGE> 29
relative fault of the Company and MCN on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company and MCN
on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Securities (before
deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate public offering
price of the Securities. The relative fault of the Company and MCN on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and MCN, or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the respective principal amounts of the Securities they have purchased
hereunder, and not joint.
(b) The Company, MCN and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (a) of this Section 7. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The remedies provided for in this Section 7
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
(c) The indemnity and contribution provisions contained in Section 6
and this Section 7 and the representations, warranties and other statements of
the Company and MCN contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Company, MCN, their
officers or directors or any person controlling the Company or MCN, and (iii)
acceptance of and payment for any of the Securities.
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<PAGE> 30
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company and MCN or
any of its subsidiaries submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company or MCN, and shall survive
delivery of and payment for the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Company at any time on or prior to the Closing Date, if (i) there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change or any
development which could reasonably be expected to, individually or in the
aggregate, result in a prospective material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company or MCN and their respective subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) there has occurred any material adverse change in the financial markets in
the United States or any outbreak of hostilities or escalation of hostilities or
other calamity or crisis, or any change or development involving a prospective
change in national or international political, financial or economic conditions
the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of MCN or
the Company has been suspended or limited by the Commission, National
Association of Securities Dealers, Inc. ("NASD") or the New York Stock Exchange,
or if trading generally on either the American Stock Exchange, the New York
Stock Exchange or in the over-the-counter market has been suspended or limited,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges or by such
system or by order of the Commission, NASD or any other governmental authority,
or (iv) if a banking moratorium has been declared by either Federal, New York or
Michigan authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided, further, that Sections 1, 6, 7 and 8 shall
survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail on the Closing Date to purchase the Securities
which it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
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(a) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone the Closing Date for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
the Prospectus or in any other documents or arrangements. As used herein, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at 1585 Broadway, New
York, New York 10036, attention of Debt Syndicate Department, with a copy to
LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York
10019-5389, attention of William S. Lamb, Esq.; notices to the Company and MCN
shall be directed to MCN Energy Group Inc., 500 Griswold Street, Detroit,
Michigan 48226, attention of Daniel L. Schiffer, Esq., Senior Vice President,
General Counsel and Secretary.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Company, MCN and the Underwriters and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Company and MCN and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein or
therein contained. This Agreement and all conditions and provisions hereof and
thereof are intended to be for the sole and exclusive benefit of the parties
hereto and thereto and their respective successors and legal representatives,
and said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of the Securities from any Underwriter shall be deemed
to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
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STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID
STATE. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME UNLESS OTHERWISE
INDICATED.
SECTION 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Underwriters, the Company and MCN in accordance with its
terms.
Very truly yours,
MCN INVESTMENT CORPORATION
By: /s/ Sebastian Coppola
-----------------------------------
Name: Sebastian Coppola
Title: Vice President and Treasurer
MCN ENERGY GROUP INC.
By: /s/ Sebastian Coppola
------------------------------------
Name: Sebastian Coppola
Title: Senior Vice President and
Treasurer
CONFIRMED AND ACCEPTED, as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
FIRST CHICAGO CAPITAL MARKETS, INC.
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Harold J. Hendershot III
---------------------------------
Authorized Signatory
For themselves and as Representatives of
the other Underwriters named in Schedule II hereto.
-33-
<PAGE> 34
SCHEDULE I
REPRESENTATIVES: Morgan Stanley & Co. Incorporated
First Chicago Capital Markets, Inc.
PURCHASE PRICE AND DESCRIPTION OF THE SECURITIES:
TITLE: 6 3/8% REset Put Securities(sm) ("Securities(sm)") due 2008.
PRINCIPAL AMOUNT: $100,000,000.
PURCHASE PRICE: 101.10% of the principal amount thereof.
INDENTURE: Indenture, dated as of September 1, 1995, between MCN
Investment Corporation and NBD Bank, as trustee.
DATE OF MATURITY: April 1, 2008 (subject to "Call Option/Mandatory
Put" below).
INTEREST RATE: 6 3/8%.
INTEREST PAYMENT DATES: Semi-annually on April 1 and October 1 of
each year, commencing April 1, 1998.
Interest will be calculated based on a 360-
day year consisting of twelve 30-day months.
CALL OPTION/MANDATORY PUT: As set forth in the Prospectus under the
caption headed "Description of the
Securities - Call Option: Mandatory Put."
AUTHORIZED DENOMINATIONS: $1,000 minimum denomination and integral
multiples thereof.
OTHER PROVISIONS:
TIME AND DATE OF DELIVERY AND PAYMENT:
TIME: 9:00 A.M. (New York City time)
DATE: April 6, 1998
LOCATION: LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019-5389
PLACE OF DELIVERY AND PAYMENT:
DELIVERY: Morgan Stanley & Co. Incorporated
c/o The Depository Trust Company
55 Water Street
New York, New York 10041
PAYMENT: Wire transfer of same day funds.
<PAGE> 35
SCHEDULE II
Principal Amount
of Securities to
Underwriter be Purchased
----------- ----------------
Morgan Stanley & Co. Incorporated.................... $ 50,000,000
First Chicago Capital Markets, Inc................... $ 50,000,000
------------
Total....................................... $100,000,000
============
<PAGE> 1
Exhibit 4-1
CUSIP No.: 552 69A AC1
No. R-3 $100,000,000
THIS SECURITY IS IN GLOBAL FORM WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR A SECURITY IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY.
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Company or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
MCN INVESTMENT CORPORATION
6 3/8% REset Put Securities (REPS(SM)) due 2008
MCN INVESTMENT CORPORATION, a corporation duly organized and existing
under the laws of the State of Michigan (the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ONE HUNDRED MILLION DOLLARS ($100,000,000) on April 1, 2008, in
the coin or currency of the United States of America, and to pay interest
thereon from April 6, 1998 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for at the rate determined as set
forth on the reverse hereof, semi-annually on April 1 and October 1 of each year
(each an "Interest Payment Date"), commencing October 1, 1998, on said principal
sum in like coin or currency. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the fifteenth calendar day
(whether or not a Business Day) immediately preceding such Interest Payment
Date. Any such interest which is payable, but is not punctually paid or duly
provided for on any Interest Payment Date ("Defaulted Interest") will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in
<PAGE> 2
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities of this
series may be then listed, and upon such notice as may be required by such
exchange, all as more fully provided in such Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security shall be made at the Corporate Trust Office of the Trustee in The City
of New York, New York, or at such other office or agency of the Company as it
may designate for such purpose pursuant to the Indenture hereinafter referred
to, in such immediately available funds of the United States of America as at
the time of payment are legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the person entitled thereto as such
address shall appear in the Security Register of the Company as provided in the
Indenture.
Reference is made to the further provisions of this Security set forth
on the reverse hereof, including those describing the Call Option, the Mandatory
Put and the Coupon Reset Process, which further provisions shall for all
purposes have the same effect as if set forth in this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to below by manual signature of an authorized officer, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
2
<PAGE> 3
IN WITNESS WHEREOF, MCN INVESTMENT CORPORATION has caused this
instrument to be duly executed under its corporate seal.
Dated: 4/6/1998
MCN INVESTMENT CORPORATION
By: /s/ Sebastian Coppola
---------------------------------
Title: Vice President and
Treasurer
ATTEST:
By: /s/ Daniel L. Schiffer [SEAL]
--------------------------------
Title: Vice President, General
Counsel and Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated: 4/6/1998
NBD BANK, as Trustee
By: /s/ Ernest Peck
--------------------------------
Authorized Signatory
3
<PAGE> 4
MCN INVESTMENT CORPORATION
6 3/8% REset Put Securities (REPS (SM) due 2008
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities" or the "REPS"), issued and to be issued
in one or more series under an Indenture, dated as of September 1, 1995 (the
"Indenture"), between the Company and NBD Bank, as Trustee (the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitation of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered.
Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Indenture. This Security is one of the series designated
as the "6 3/8% REset Put Securities (REPS(SM)) due 2008", such series limited in
aggregate principal amount to $100,000,000. Subject to the Call Option and the
Mandatory Put described below, the REPS are not redeemable prior to maturity.
The terms of the REPS include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act as in effect from time
to time. The REPS are subject to all such terms and Holders thereof are referred
to the Indenture and the Trust Indenture Act for a statement of those terms.
Interest Payments
The REPS will bear interest, payable on each Interest Payment Date to
Holders of record on the Regular Record Date preceding such Interest Payment
Date, at 6 3/8% per annum from April 6, 1998 or from the most recent Interest
Payment Date to which interest have been paid or duly provided for to but
excluding April 1, 2003 (the "Coupon Reset Date"), whereupon (x) if all of the
REPS are purchased on such date by the Callholder pursuant to its Call Option,
the REPS shall bear interest from and including the Coupon Reset Date to but
excluding April 1, 2008 (the "Final Maturity Date") at the Coupon Reset Rate
determined in accordance with the Coupon Reset Process described below, or (y)
the REPS shall be purchased by the Company pursuant to the exercise of the
Mandatory Put by the Trustee on behalf of the Holders of the REPS. Interest on
this Security shall be computed on the basis of a 360-day year comprised of
twelve 30-day months.
If the Callholder elects to purchase the REPS pursuant to the Call
Option (as defined below), the Calculation Agent (as defined below) will reset
the interest rate for the REPS effective on the Coupon Reset Date, pursuant to
the Coupon Reset Process described below. In such circumstances, (i) this
Security will be purchased by the Callholder, in whole but not in part, at 100%
of the principal amount hereof on the Coupon Reset Date, on the terms and
subject to the conditions described herein (interest accrued to but excluding
the Coupon Reset Date will be paid by the Company on such date to the Holder
hereof on the most recent Regular Record Date), and (ii) from and including the
Coupon Reset Date, the Notes will bear interest at the rate
4
<PAGE> 5
determined by the Calculation Agent in accordance with the procedures set forth
under "Coupon Reset Process" below.
Maturity Date
The REPS will mature on the Final Maturity Date. On the Coupon Reset
Date, the Holder hereof will be entitled to receive 100% of the principal amount
hereof from either (i) the Callholder, if the Callholder purchases this Security
pursuant to the Call Option, or (ii) the Company, by exercise of the Mandatory
Put (as defined below) by the Trustee for and on behalf of the Holder hereof, if
the Callholder does not purchase this Security pursuant to the Call Option.
Call Option; Mandatory Put
(i) Call Option. The Callholder, by giving notice to the Trustee (the
"Call Notice"), has the right to purchase the aggregate principal amount of this
Security, in whole but not in part (the "Call Option"), on the Coupon Reset
Date, at a price equal to 100% of the principal amount hereof (the "Call Price")
(interest accrued to but excluding the Coupon Reset Date will be paid by the
Company on such date to the Holder hereof on the most recent Regular Record
Date). The Call Notice is required to be given to the Trustee, in writing, prior
to 4:00 p.m., New York City time, no later than fifteen calendar days prior to
the Coupon Reset Date. The Call Notice must contain the requisite delivery
details, including the identity of the Callholder's DTC account. The Call Notice
may be revoked by the Callholder at any time prior to 2:00 p.m., New York City
time, on the Business Day prior to the Coupon Reset Date.
If the Callholder exercises the Call Option, unless terminated in
accordance with its terms, (i) not later than 2:00 p.m., New York City time, on
the Business Day prior to the Coupon Reset Date, the Callholder will deliver the
Call Price in immediately available funds to the Trustee for payment thereof to
the Holders of the REPS (including, if applicable, the Holder hereof) on the
Coupon Reset Date and (ii) the Holder hereof will be required to deliver and
will be deemed to have delivered this Security to the Callholder against payment
therefor on the Coupon Reset Date through the facilities of DTC. The Callholder
is not required to exercise the Call Option, and no Holder of the REPS or any
interest therein shall have any right or claim against the Callholder as a
result of the Callholder's decision whether or not to exercise the Call Option
or performance or non-performance of its obligations with respect thereto.
The Callholder may at any time assign its rights and obligations under
its Call Option; provided, however, that (i) such rights and obligations are
assigned in whole and not in part and (ii) it provides the Trustee and the
Company with notice of such assignment contemporaneously with such assignment.
Upon receipt of notice of assignment, the Trustee will treat the assignee as
Callholder for all purposes hereunder. The Callholder may assign its rights
under the Call Option without notice to, or consent of, the Holders of the REPS
(including, if applicable, the Holder hereof).
5
<PAGE> 6
The Call Option sets forth certain circumstances in which the Call
Option will automatically be terminated.
(ii) Mandatory Put. If the Call Option is not exercised or if the Call
Option otherwise terminates, the Trustee will exercise the right of the Holders
of the REPS (including, if applicable, the Holder hereof) to require the Company
to purchase the aggregate principal amount of REPS, in whole but not in part
(the "Mandatory Put"), on the Coupon Reset Date at a price equal to 100% of the
principal amount thereof (the "Put Price"), plus accrued but unpaid interest to
but excluding the Coupon Reset Date, in each case, to be paid by the Company to
the Holders of the REPS (including, if applicable, the Holder hereof) in
immediately available funds on the Coupon Reset Date. If the Trustee exercises
the Mandatory Put then the Company will deliver the Put Price in immediately
available funds to the Trustee by no later than 12:00 noon, New York City time,
on the Coupon Reset Date and the Holders of the REPS will be required to deliver
and will be deemed to have delivered the REPS to the Company against payment
therefor on the Coupon Reset Date through the facilities of DTC. By its purchase
of the REPS, each Holder irrevocably agrees that the Trustee shall exercise the
Mandatory Put relating to such REPS for or on behalf of the Holders of the REPS
as provided herein. No Holder of any REPS or any interest therein has the right
to consent or object to the exercise of the Trustee's duties under the Mandatory
Put.
Notice to Holders by Trustee
In anticipation of the exercise of the Call Option or the Mandatory Put
on the Coupon Reset Date, the Trustee will notify the Holder hereof, not less
than 30 days nor more than 60 days prior to the Coupon Reset Date, that all REPS
will be delivered on the Coupon Reset Date through the facilities of DTC against
payment of the Call Price by the Callholder under the Call Option or payment of
the Put Price by the Company under the Mandatory Put. The Trustee will notify
the Holder hereof once it is determined whether the Call Price or the Put Price
will be delivered in accordance with the provisions hereof.
Coupon Reset Process
Pursuant to and subject to the terms of a Calculation Agency Agreement,
dated as of April 6, 1998, between the Company and Morgan Stanley & Co.
Incorporated, Morgan Stanley & Co. Incorporated (or its successors or assigns)
will be the Calculation Agent. If the Callholder timely exercises its Call
Option and the Call Option does not otherwise terminate in accordance with its
terms, then the Company and the Calculation Agent shall complete the following
steps (the "Coupon Reset Process") in order to determine the interest rate
("Coupon Reset Rate") to be paid on the REPS from and including the Coupon Reset
Date to but excluding the Final Maturity Date:
(i) The Company shall provide the Calculation Agent with
(a) a list (a "Dealer List"), no later than five
Business Days prior to the Coupon Reset Date,
6
<PAGE> 7
containing the names and addresses of five dealers
(one of which shall be Morgan Stanley & Co.
Incorporated) from which it desires the Calculation
Agent to obtain the Bids (as defined below) for the
purchase of the REPS and (b) such other material as
may reasonably be requested by the Calculation Agent
to facilitate a successful Coupon Reset Process.
(ii) Within one Business Day following receipt by the
Calculation Agent of the Dealer List, the Calculation
Agent shall provide to each dealer ("Dealer") on the
Dealer List (a) a copy of the Prospectus Supplement
and accompanying Prospectus relating to the REPS, (b)
a copy of the form of the REPS and (c) a written
request that each such Dealer submit a Bid to the
Calculation Agent by 12:00 noon, New York City time,
on the third Business Day prior to the Coupon Reset
Date (the "Bid Date"). As used herein, "Business Day"
means any day other than a Saturday, Sunday or a day
on which banking institutions in The City of New York
are authorized or obligated by law, executive order
or governmental decree to be closed. "Bid" shall mean
an irrevocable written offer given by a Dealer for
the purchase of the REPS, settling on the Coupon
Reset Date, and shall be quoted by such Dealer as a
stated yield to maturity on the REPS ("Yield to
Maturity"). Each Dealer shall be provided with (a)
the name of the Company, (b) an estimate of the
Purchase Price (which shall be stated as a U.S.
dollar amount and be calculated by the Calculation
Agent in accordance with clause (iii) below), (c) the
principal amount and maturity of the REPS and (d) the
method by which interest will be calculated on the
REPS.
(iii) The purchase price to be paid by any Dealer for the
REPS (the "Purchase Price") shall be equal to (a) the
principal amount of the REPS plus (b) a premium (the
"Notes Premium") which shall be equal to the excess,
if any, of (x) the discounted present value to the
Coupon Reset Date of a bond with a maturity of April
1, 2008 which has an interest rate equal to 5.61%,
semi-annual interest payments on each April 1 and
October 1, commencing October 1, 2003, and a
principal amount of $100,000,000, and assuming a
discount rate equal to the Treasury Rate over (y)
$100,000,000. "Treasury Rate" means the per annum
rate equal to the offer side yield to maturity of the
current on-the-run five-year United States Treasury
Security per Telerate page 500 (or any successor or
substitute page as may replace such page on such
service) at 11:00 a.m., New York City time, on the
Bid Date (or such other date or time that may be
agreed upon by the Company and the Calculation
Agent) or, if such rate does not appear on Telerate
page 500 (or any successor or substitute page as may
replace such page on such service) at such time, the
rates on GovPx End-of-Day Pricing at 3:00 p.m., New
York City time, on the Bid Date (or
7
<PAGE> 8
such other date or time that may be agreed upon by
the Company and the Calculation Agent).
(iv) The Calculation Agent shall provide written notice to
the Company by 12:30 p.m., New York City time on the
Bid Date of (a) the names of each of the Dealers from
whom the Calculation Agent received Bids on the Bid
Date, (b) the Bid submitted by each such Dealer and
(c) the Purchase Price as determined pursuant to
clause (iii) hereof. Unless the Call Option has
terminated in accordance with its terms, the
Calculation Agent shall thereafter select from the
Bids received the Bid with the lowest Yield to
Maturity (the "Selected Bid") and set the Coupon
Reset Rate equal to the interest rate which would
amortize the Notes Premium fully over the term of the
REPS at the Yield to Maturity indicated by the
Selected Bid, provided, however, that if the
Calculation Agent has not received a timely Bid from
a Dealer on or before the Bid Date, the Selected Bid
shall be the lowest of all Bids received by such time
and provided, further that if any two or more of the
lowest Bids submitted are equivalent, the Company
shall in its sole discretion select any of such
equivalent Bids (and such selected Bid shall be the
Selected Bid). The Calculation Agent shall promptly
notify the Trustee and the Company in writing of the
Coupon Reset Rate.
No Sinking Fund
The Securities of this series shall not be subject to a sinking fund
requirement.
Effects of Event of Default
In the case of an Event of Default with respect to the Securities of
this series shall occur and be continuing, the unpaid principal of the
Securities of this series may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
Amendments and Waivers
The Indenture may be modified by the Company and the Trustee without
consent of any Holder with respect to certain matters as described in the
Indenture. In addition, the Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Company and MCN Energy Group Inc. ("MCN") and the rights of
the Holders of the Securities of each series to be affected under the
Indenture at any time by the Company, MCN and the Trustee with the consent of
the Holders of a majority in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of a majority in principal amount of the
8
<PAGE> 9
Securities of each series at the time Outstanding, on behalf of the Holders of
all Securities of such series, to waive compliance by the Company or MCN with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall bind such Holder and all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
Obligation of Company
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Security at the times, place and rate, and in the coin or
currency herein prescribed.
Denominations, Transfer and Exchange
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. This Security shall
be exchangeable for Securities of this series registered in the names of Persons
other than the Depositary with respect to such series or its nominee only as
provided in this paragraph. This Security shall be so exchangeable if (x) such
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for this Security or if at any time such Depositary ceases to be a
clearing agency registered as such under the Securities Exchange Act of 1934, as
amended, (y) the Company executes and delivers to the Trustee a written order
providing that this Security shall be so exchangeable or (z) there shall have
occurred and be continuing an Event of Default with respect to the Securities of
this series. Securities so issued in exchange for this Security shall be of the
same series and of like tenor, in authorized denominations and in the aggregate
having the same unpaid principal amount as this Security and registered in such
names as such Depositary shall direct.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or its
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, and of like tenor, of authorized denominations and for the same
maturity and aggregate unpaid principal amount, shall be issued to the
designated transferee or transferees.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Prior to
due presentment of this Security for registration of
9
<PAGE> 10
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No Liability of Certain Persons
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under this
Security of the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder, by accepting a Security,
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Security.
Governing Law
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10
<PAGE> 11
THE FOLLOWING ABBREVIATIONS SHALL BE CONSTRUED AS THOUGH THE WORDS SET FORTH
BELOW OPPOSITE EACH ABBREVIATION WERE WRITTEN OUT IN FULL WHERE SUCH
ABBREVIATION APPEARS:
<TABLE>
<S> <C>
TEN COM--as tenants in common (Name) CUST (Name) UNIF--(Name) as Custodian
TEN ENT--as tenants by the entirety GIFT MIN ACT (state) for (Name) Under the (State)
JT TEN--as joint tenants with Uniform Gifts to
right of survivorship Minors Act
and not as tenants
in common
</TABLE>
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE
LIST.
----------------------------------------------
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Your Signature:
------------ --------------------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
-----------------------------------------------------------
(Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Transfer
Agent, which requirements will include membership or
participation in STAMP or such other "signature guarantee
program" as may be determined by the Transfer Agent in
addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act.)
Social Security Number or Taxpayer Identification
Number:
------------------------------------------
11
