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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) September 22, 1999
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 Energy Enterprises Inc. of up to $620,000,000 of its unsecured
notes, designated as Medium-Term Notes, Series C ("Offered Notes") pursuant to
the registration statement of the registrant and MCN Energy Enterprise Inc. on
Form S-3 (No. 333-47137) filed with the Securities and Exchange Commission under
the Securities Act of 1933.
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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.
Date: September 27, 1999 By: /s/ Richard G. Kennedy
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Richard G. Kennedy
Vice President
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INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
1-1 Distribution Agreement dated September 22, 1999 with
respect to the Offered Notes.
4-1 Form of Note with respect to the Offered Notes.
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EXHIBIT 1-1
MCN ENERGY ENTERPRISES INC.
MEDIUM-TERM NOTES, SERIES C
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
ENTITLED TO THE BENEFIT OF A SUPPORT AGREEMENT BY
MCN ENERGY GROUP INC.
DISTRIBUTION AGREEMENT
September 22, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower, 10th Floor
World Financial Center
New York, New York 10281-1310
Banc One Capital Markets, Inc.
1 Bank One Plaza
Suite IL1-0595
Chicago, Illinois 60670
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
MCN Energy Enterprises Inc., formerly 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
Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated; Banc One
Capital Markets, Inc. and Salomon Smith Barney Inc. (each, an "Agent" and
collectively, the "Agents") with respect to the issue and sale by the Company of
its Medium-Term Notes, Series C, Due Nine Months or More from Date of Issue (the
"Notes"). The Notes will be issued from time to time by the Company under an
Indenture dated as of September 1, 1995 (the "Indenture") between the Company
and Bank One Trust Company, NA, as trustee (the "Trustee"). As of the date
hereof, the Company has
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authorized the issuance and sale of up to $620,000,000 aggregate initial
offering price of the Notes to or through the Agents pursuant to the terms of
this Agreement. It is understood, however, that the Company may from time to
time authorize the issuance of additional Notes and that such additional Notes
may be sold to or through the Agents pursuant to the terms of this Agreement,
all as though the issuance of such Notes were authorized as of the date hereof.
The Notes will have the benefit of a Support Agreement dated as of September 1,
1995 (the "Support Agreement") between the Company and MCN.
This Agreement provides for both the sale of the Notes by the
Company to one or more Agents as principal for resale to investors and other
purchasers and for the sale of Notes by the Company directly to investors (as
may from time to time be agreed to by the Company and the applicable Agent), in
which case the applicable Agent will act as an agent of the Company in
soliciting offers for the purchase of the Notes.
Section 1. Solicitations as Agent; Purchases as Principal.
(a) Appointment. Subject to the terms and conditions stated herein
and subject to the reservation by the Company of the right to sell Notes
directly on its own behalf, the Company hereby agrees that the Notes will be
sold exclusively to or through the Agents. In addition, the Company may from
time to time offer Notes for sale otherwise than through an Agent; provided,
however, that so long as this Agreement shall be in effect the Company shall not
solicit offers to purchase Notes through any agent without amending this
Agreement to appoint such agent as an additional Agent hereunder on the same
terms and conditions as provided herein for the Agents and without giving the
Agents prior notice of such appointment. The Company may accept offers to
purchase Notes through an agent other than an Agent, provided that (i) the
Company shall not have solicited such offers, (ii) the Company and such agent
shall have executed an agreement with respect to such purchases having terms and
conditions (including, without limitation, commission rates) with respect to
such purchases substantially the same as the terms and conditions that would
apply to such purchases under this Agreement if such agent was an Agent (which
may be accomplished by incorporating by reference in such agreement the terms
and conditions of this Agreement) and (iii) the Company shall provide the Agents
with a copy of such agreement promptly following the execution thereof. On the
basis of the representations and warranties herein contained, but subject to the
terms and conditions herein set forth, each Agent agrees, as an agent of the
Company, to use its reasonable efforts to solicit offers to purchase the Notes
during each Offering Period (defined below) upon the terms and conditions set
forth in the Prospectus Supplement (defined below) as then amended and
supplemented. Each Agent may also purchase Notes from the Company as principal
for purposes of resale, as more fully described in subsection (g) of this
Section.
(b) Solicitation Period. Following the Commencement Date (defined
below), the Company shall notify each Agent from time to time as to the
commencement of a period during which the Notes may be offered and sold by such
Agent (each period, commencing with such a notification and ending at such time
as the authorization for offers and sales through such Agent
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shall have been suspended by the Company or such Agent as provided hereunder,
being herein referred to as an "Offering Period").
(c) Agent's Commission. The Company agrees to pay each Agent, as
consideration for soliciting the sale of the Notes, a commission in the form of
a discount, equal to the percentage of the principal amount of each Note sold by
the Company as a result of a solicitation made by an Agent as set forth on
Schedule I hereto.
(d) Solicitation of Offers. Each Agent is authorized to solicit
orders for the Notes only in denominations of $1,000 or any larger amount that
is an integral multiple of $1,000, at a purchase price equal to 100% of their
principal amount (unless otherwise specified in the applicable pricing
supplement). Each Agent shall communicate to the Company, orally, each
reasonable offer or indication of interest received by it to purchase Notes. The
Company shall have the sole right to accept offers to purchase the Notes and may
reject any such offer in whole or in part. Each Agent shall have the right to
reject, in its discretion reasonably exercised, any offer received by it to
purchase the Notes, without advising the Company, in whole or in part, and any
such rejection shall not be deemed a breach of its agreements contained herein.
In soliciting offers to purchase the Notes hereunder, each Agent is acting
solely as agent for the Company, and not as principal. Each Agent shall make
reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Notes has been solicited by such Agent and
accepted by the Company, but such Agent shall not have any liability to the
Company in the event any such purchase is not consummated for any reason. Under
no circumstances will an Agent be obligated to purchase any Notes for its own
account. If the Company shall default in its obligations to deliver Notes to a
purchaser whose offer it has accepted, the Company shall (a) hold the Agents
harmless against any loss, claim or damage arising from or as a result of such
default by the Company and (b) notwithstanding such default, pay to the Agents
any commission to which they would be entitled in connection with such sale.
(e) Administrative Procedures. The purchase price, interest rate
or formula, maturity date and other terms of the Notes (as applicable) shall be
agreed upon by the Company and the Agent and set forth in a pricing supplement
to be prepared in connection with each sale of the Notes. Each Agent and the
Company agree to perform the respective duties and obligations specifically
provided to be performed by it in the Administrative Procedures attached hereto
as Exhibit A (the "Procedures"). The Procedures may be amended only by written
agreement from time to time of the Company and the Agents.
(f) Delivery of Documents. The documents required to be delivered
by Section 4 of this Agreement shall be delivered at the offices of LeBoeuf,
Lamb, Greene & MacRae, L.L.P., counsel for the Agents, 125 West 55th Street, New
York, N.Y. 10019-5389, on such date as may be mutually agreed to by the Company
and the Agents, which in no event shall be later than the time at which the
Agents commence solicitation of offers to purchase Notes hereunder (the
"Commencement Date").
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(g) Purchases as Principal. Subject to the terms and conditions
stated herein, the Company agrees that, whenever the Company determines to sell
Notes directly to any of the Agents as principal for resale to others and such
Agent agrees to purchase Notes as principal, it will enter into a Terms
Agreement (defined below) relating to such sale in accordance with the
provisions of this Section 1(g). Each sale of Notes to any of the Agents as
principal shall be made in accordance with the terms of this Agreement and a
supplemental agreement which will provide for the sale of such Notes to, and the
purchase and reoffering thereof by, such Agent. Each such supplemental
agreement, whether oral (and confirmed in writing by such Agent to the Company,
which may be by facsimile transmission) or in writing is herein referred to as a
"Terms Agreement". Each such Terms Agreement, whether oral or in writing, shall
be with respect to such information (as applicable) as is specified in Exhibit B
hereto. Each Agent's commitment to purchase Notes pursuant to any Terms
Agreement shall be deemed to have been made on the basis of the representations
and warranties of the Company herein contained and shall be subject to the terms
and conditions herein set forth. Each Terms Agreement shall describe the Notes
to be purchased by any of the Agents pursuant thereto, specify the principal
amount of such Notes, the price to be paid to the Company for such Notes, the
rate at which interest will be paid on the Notes, the date, time and place of
delivery of the Notes and payment therefor (the "Purchase Date"), the method of
payment and any modification of the requirements for the delivery of the
opinions of counsel, the certificates from the Company, and the comfort letter
from Deloitte & Touche LLP, pursuant to Section 4. Such Terms Agreement shall
also specify the period of time referred to in Section 3(k).
Delivery of the certificates for Notes sold to any of the Agents
pursuant to any Terms Agreement shall be made as agreed to between the Company
and such Agent as set forth in the Terms Agreement, no later than the Purchase
Date set forth in such Terms Agreement, against payment of funds to the Company
in the net amount due to the Company for such Notes by the method and in the
form set forth in the Terms Agreement.
Unless otherwise indicated in the applicable pricing supplement,
any Note sold to an Agent as principal shall be at a discount from the principal
amount of each such Note equivalent to the applicable commission set forth in
Schedule I hereto, and may be resold by such Agent to investors and other
purchasers from time to time in one or more transactions at varying prices
determined at the time of sale, or at a fixed public offering price, if so
agreed. In addition, such Agent may engage the services of any other broker or
dealer in connection with the resale of the Notes purchased by it as principal
and may allow any portion of the discount received in connection with such
purchases from the Company to such brokers or dealers.
(h) Other Activities of Agents. The Company acknowledges that
nothing in this Agreement shall prohibit any Agent from (i) acting as broker for
the sale of Notes by customers other than the Company, (ii) soliciting the sale
of Notes through the Agent as broker for the seller, soliciting the sale of
Notes to the Agent as principal and soliciting offers to buy Notes, (iii)
purchasing Notes, and (iv) offering and selling as principal for its own account
Notes which the Agent has purchased.
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(i) Reliance. The Company and each Agent agree that any Notes
purchased by the Agents shall be purchased, and any Notes the placement of which
an Agent arranges shall be placed by such Agent, in reliance on the
representations, warranties, covenants and agreements of the Company contained
herein and on the terms and conditions and in the manner provided herein.
2. Representations and Warranties of the Company and MCN. Each of
the Company and MCN jointly and severally represents and warrants to, and agrees
with, each of the Agents that:
(a) Each of the Company and MCN have filed with the Securities and
Exchange Commission (the "Commission"), as co-registrants, a registration
statement on Form S-3 (File No. 333-47137) for the registration under the
Securities Act of 1933, as amended (the "Act") of the Company's debt securities,
including the Notes, and the obligations pursuant to the Support Agreement which
registration statement was declared effective on March 18, 1998. The Company may
from time to time file with the Commission additional registration statements
for the registration of additional amounts of debt securities. At the time of
the offer and sale of any Note pursuant to this Agreement, such Note shall be
properly registered on Form S-3 pursuant to an effective registration statement
under the Act. Each registration statement under which Notes are offered or sold
pursuant to this Agreement at the date hereof and at the date of such offer and
sale meets and will meet the requirements set forth in Rule 415(a)(1)(x) under
the Act and complies and will comply in all other material respects with said
Rule. "Registration Statement" shall mean, as of any date, each effective
registration statement relating to debt securities pursuant to which Notes are
or may then be offered or sold, including incorporated documents, exhibits and
financial statements, as amended at such date. "Prospectus" shall mean the form
of prospectus relating to debt securities contained in the Registration
Statement. The term "Preliminary Prospectus" as used herein means a prospectus
filed as part of any post-effective amendment to the Registration Statement
prior to the effective date of such post-effective amendment, as contemplated in
Rule 430 under the Act. The Company has included and will include in each such
Registration Statement, or has filed or will file with the Commission pursuant
to the applicable paragraph of Rule 424(b) under the Act, a supplement to the
form of Prospectus included in each such Registration Statement relating to the
Notes and prior to any such filing will advise each Agent of all further
information (financial and other) with respect to the Company to be set forth
therein. The Prospectus so supplemented from time to time is hereinafter called
the "Prospectus Supplement". Any reference herein to the Registration Statement,
any Preliminary Prospectus, the Prospectus, or the Prospectus Supplement, as
amended and supplemented, shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 that were
filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
on or before the effective date of the Registration Statement, or the issue date
of such Preliminary Prospectus, the Prospectus, or the Prospectus Supplement, as
the case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, any Preliminary
Prospectus, the Prospectus, or the Prospectus Supplement shall be deemed to
refer to and include (i) the filing of any document under the Exchange Act after
the effective date of the Registration Statement or the issue date of any
Preliminary Prospectus, the Prospectus, or the Prospectus
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Supplement, as the case may be, deemed to be incorporated therein by reference
and (ii) with respect to the Registration Statement, the filing of any
additional registration statement relating to debt securities if Notes are to be
offered or sold under such additional registration statement.
(b) When the Registration Statement became effective, when any
amendment to the Registration Statement becomes effective (including the filing
of any document incorporated by reference in the Registration Statement), when
any supplement to the Prospectus (other than a supplement specifying the terms
of the debt securities other than the Notes) or the Prospectus Supplement is
filed with the Commission pursuant to Rule 424(b) under the Act, on each day
during an Offering Period, and at the time of each delivery of Notes to (i) any
purchaser or his Agent whose offer to purchase such Notes was delivered to the
Company during an Offering Period and (ii) any Agent purchasing such Notes as
principal pursuant to a Terms Agreement (each such time referenced above being
referred to herein as a "Representation Date"):
(i) No stop order suspending the effectiveness of the Registration
Statement or any Rule 464(b) Registration Statement has been issued under the
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 Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 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, and any amendments thereto, 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 Act and rules and regulations thereunder (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 Supplement nor any
amendments or supplements thereto, at the time that the Prospectus Supplement or
any such amendment or supplement was issued and at the Representation 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 Supplement made in reliance upon and in conformity
with information furnished to the Company in writing by any Agent expressly for
use in the Registration Statement or the Prospectus Supplement.
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
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under the Act, complied when so filed in all material respects with the 1933
Act Regulations and each preliminary prospectus and the Prospectus Supplement
delivered to the Agents for use in connection with the offering of the Notes
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 Supplement, 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 Exchange Act, and
the rules and regulations of Commission thereunder (the "Exchange Act
Regulations"), and, when read together with the other information in the
Prospectus Supplement, at the time the Registration Statement became effective,
at the time the Prospectus Supplement was issued and on the Representation 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 Supplement are independent public accountants as
required by the Act and the 1933 Act Regulations.
(v) The financial statements of MCN included or incorporated by
reference in the Registration Statement and the Prospectus Supplement, 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 Supplement present fairly in accordance with GAAP
the information required to be stated therein. The ratio of earnings to fixed
charges included in the Prospectus Supplement 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 Supplement
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 Supplement, 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
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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 Supplement and to enter into and perform its
obligations under, or as contemplated under, this Agreement. 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 to so qualify or be in good standing would
not, singly 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 Supplement, 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, singly
or in the aggregate, have a Material Adverse Effect. Except as otherwise stated
in the Registration Statement and the Prospectus Supplement, 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) 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; 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 and validly authorized, executed
and delivered by each of the Company and MCN and, upon execution and delivery by
the Agents, will constitute a valid and legally binding obligation of the
Company and MCN enforceable against the Company and MCN in accordance with its
terms.
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(xi) The Notes have been duly authorized for issuance and sale
pursuant to this Agreement and 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 Notes 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 Supplement and will be in substantially the form filed or
incorporated by reference, as the case may be, as an exhibit to the Registration
Statement. The Notes 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 Supplement 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
Supplement.
(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, singly or in the aggregate, have a Material Adverse Effect.
(xv) The execution, delivery and performance by the Company and
MCN of this Agreement, the Support Agreement, the Calculation Agent Agreement,
to be dated as of the Commencement Date, between the Company and Bank One Trust
Company, N.A., as calculation agent, (the "Calculation Agent Agreement"); the
execution, delivery and performance by the Company of the Indenture and the
Notes 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
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contemplated hereby or thereby; and the consummation of the transactions
contemplated herein and therein and in the Registration Statement and the
Prospectus Supplement (including the issuance and sale of the Notes and the use
of the proceeds from the sale of the Notes as described in the Prospectus
Supplement under the caption "Use of Proceeds"); and compliance by the Company
and MCN with their obligations hereunder and 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, singly 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 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 Commencement Date, the Calculation Agent Agreement
will have been validly authorized, executed and delivered by the Company and
will constitute 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.
(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 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 Supplement (other than as disclosed therein), or which might
reasonably be expected to, singly 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 or the Calculation Agent Agreement 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 Supplement, including ordinary
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<PAGE> 11
routine litigation incidental to the business, could not reasonably be expected
to, singly or in the aggregate, result in a Material Adverse Effect.
(xix) There are no contracts or documents which are required to be
described in the Registration Statement, the Prospectus Supplement 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 Notes under this Agreement or the
consummation of the transactions contemplated by this Agreement, the Support
Agreement, the Indenture and the Calculation Agent Agreement, except such as
have been already obtained or as may be required under the 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 Supplement or (b) do not, singly 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, singly 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
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<PAGE> 12
the failure of such Governmental Licenses to be in full force and effect would
not, singly or in the aggregate, have a Material Adverse Effect; and none of the
Company, 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, singly 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, singly 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) Immediately after the sale of the Notes by the Company
hereunder, the aggregate amount of the Notes which shall have been issued and
sold by the Company hereunder and of any debt securities of the Company (other
than the Notes) that shall have been issued and sold pursuant to the
Registration Statement will not exceed the amount of debt securities registered
under the Registration Statement.
(xxv) 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.
(xxvi) Neither the Company nor MCN is, and upon the issuance and
sale of the Notes as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus Supplement, 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").
(xxvii) 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.
(xxviii) 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
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<PAGE> 13
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.
(xxix) 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 resulting in a violation of Regulation M
under the Exchange 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 Notes.
(xxx) No "forward looking statement" (as defined in Rule 175 under
the Act) contained in the Registration Statement, any preliminary prospectus or
the Prospectus Supplement was made or reaffirmed without a reasonable basis or
was disclosed other than in good faith.
(c) Any certificate signed by any director or officer of the
Company or MCN and delivered to any Agent or to counsel for the Agents in
connection with an offering of Notes through such Agent as agent, or the sale of
Notes to such Agent as principal shall be deemed a representation and warranty
by the Company or MCN, as the case may be, to such Agent as to the matters
covered thereby on the date of such certificate and at each Representation Date
subsequent thereto.
3. Covenants of the Company and MCN. Each of the Company and MCN
agrees with each Agent that:
(a) The Company or MCN will give each Agent advance notice of its
intention to file or prepare any additional registration statement with respect
to the registration of additional Notes, any amendment to the Registration
Statement, any amendment or supplement to the Prospectus which would create a
Prospectus Supplement, or any amendment or supplement to the Prospectus
Supplement (other than an amendment or supplement providing solely for a change
in the interest rate of the Notes and other than a pricing supplement except
with respect to the Agent which made or presented the offer to purchase the
applicable Note), whether by filing of documents pursuant to the Act, the
Exchange Act or otherwise, and will furnish each Agent with copies thereof for
its review a reasonable time in advance of such proposed filing or preparation,
as the case may be, and will not file any such proposed amendment or supplement
or other documents in a form to which any Agent or counsel for the Agents shall
reasonably object. Subject to the foregoing sentence, the Company and MCN will
promptly cause the Prospectus together with each supplement thereto which would
create a Prospectus Supplement, and each Prospectus Supplement together with
each supplement thereto, to be filed with the Commission pursuant to Rule 424(b)
under the Act.
(b) The Company and MCN will promptly advise the Agents (i) when
any amendment to the Registration Statement shall have become effective, (ii) of
the filing of any amendment or supplement to the Prospectus which creates a
Prospectus Supplement, including the filing of documents incorporated therein
by reference, (iii) of the filing of any amendment or supplement to the
Prospectus Supplement, including the filing of documents incorporated therein
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<PAGE> 14
by reference, (iv) of any request by the Commission for any amendment of the
Registration Statement or amendment or supplement to the Prospectus which would
create a Prospectus Supplement, or any amendment of or supplement to the
Prospectus Supplement, or for any additional information or any comments with
respect thereto, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for such purpose and (vi) of the receipt by the
Company or MCN of any notification with respect to the suspension of the
qualification of the Notes for sale in any state or jurisdiction or the
initiation or threatening of any proceeding for such purpose. The Company and
MCN will use their best efforts to prevent the issuance of any such stop order
and, if issued, to obtain as soon as possible the withdrawal thereof. The
Company will inform you promptly, upon your request, of the aggregate offering
price or purchase price of debt securities registered under the Registration
Statement that remain unissued, and will promptly advise you to suspend
solicitations of orders to purchase Notes at any time when all securities
registered under the Registration Statement have been issued.
(c) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of which
the Registration Statement or the Prospectus Supplement as then amended or
supplemented would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it shall be
necessary to amend or supplement the Registration Statement or the Prospectus
Supplement to comply with the Act or the Exchange Act or the rules and
regulations of the Commission thereunder, the Company or MCN will immediately
notify each Agent, such notice to be confirmed in writing, and, if so notified
by the Company or MCN, each Agent shall forthwith suspend solicitation of offers
to purchase Notes in the Agents' capacities as agent and cease sales of any
Notes any Agent may then own as principal; the Company and MCN promptly will
prepare and file with the Commission, subject to subsections (a) and (b) of this
Section 3, an amendment or supplement to the Registration Statement or
Prospectus Supplement which will correct such statement or omission or an
amendment which will effect such compliance and will supply such amended or
supplemented Prospectus Supplement to each Agent in such quantities as such
Agent may reasonably request. If such amendment or supplement, and any
documents, certificates and opinions furnished to each Agent pursuant to Section
3(i) below in connection with the preparation or filing of such amendment or
supplement, are satisfactory in all respects to each Agent, each Agent will,
upon the filing of such amendment or supplement with the Commission or
effectiveness of an amendment to the Registration Statement, resume its
obligations to solicit offers to purchase Notes hereunder.
(d) MCN will make generally available to its security holders and
deliver to each of the Agents as soon as practicable, but not later than 15
months after the end of a fiscal quarter of MCN during which any Notes are sold
through or purchased by any of the Agents, a consolidated earnings statement
(which need not be audited) of MCN and its subsidiaries for the 12-month period
within such 15 months, which earnings statements shall satisfy the provisions of
Section 11(a) of the Act and the rules and regulations of the Commission
thereunder (including Rule 158 under the Act).
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<PAGE> 15
(e) The Company and MCN will deliver to (i) each Agent and counsel
for the Agents as many signed and conformed copies of the Registration Statement
as originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) as the Agents may reasonably
request and (ii) as many copies of the Prospectus Supplement (as amended or
supplemented) as the Agents may reasonably request so long as the Agents are
required to deliver a Prospectus Supplement in connection with sales or
solicitations of offers to purchase the Notes.
(f) The Company and MCN will prepare, with respect to any Notes to
be sold through or to the Agent pursuant to this Agreement, a pricing supplement
with respect to such Notes in a form previously approved by the Agent and will
file such pricing supplement pursuant to Rule 424(b) under the Act not later
than the close of business of the Commission on the fifth business day after the
date on which such pricing supplement is first used or such earlier time as such
pricing supplement may be required to be filed with the Commission.
(g) The Company and MCN will use their best efforts to arrange for
the qualification of the Notes for sale under the laws of such jurisdictions as
the Agents may designate (provided, however, that neither the Company nor MCN
shall be obligated to qualify as a foreign corporation in, or to execute or file
any general consent to service of process under the laws of any jurisdiction),
will maintain such qualifications in effect so long as required for the
distribution of the Notes and will arrange for the determination of the legality
of the Notes for purchase by institutional investors.
(h) In the event that the Company exercises its right to sell
Notes directly on its own behalf, such sales shall be made in compliance with
Federal and state securities laws, including those relating to broker-dealer and
salesperson registration.
(i) The Company and MCN shall furnish to each Agent such
documents, certificates of officers of the Company or MCN, and opinions of
counsel for the Company or MCN, relating to the business, operations and affairs
of the Company or MCN, the Registration Statement and the Prospectus Supplement,
any amendments or supplements thereto, the Indenture, the Notes, this Agreement,
the Support Agreement, the Procedures and the performance by the Company, MCN
and the Agents of their respective obligations hereunder and thereunder as any
of the Agents may from time to time prior to the termination of this Agreement
reasonably request.
(j) The Company and MCN, during the period when the Prospectus
Supplement is required to be delivered under the Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations of the Commission thereunder.
(k) During the period, if any, specified in the Terms Agreement,
the Company will not offer, sell, contract to sell or otherwise dispose of any
debt securities of the Company, other than the Notes, without the prior written
consent of the Agents.
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<PAGE> 16
(l) On or prior to the date on which there shall be released to
the general public interim financial statement information related to MCN with
respect to each of the first three quarters of any fiscal year or preliminary
financial statement information with respect to any fiscal year, the Company and
MCN shall furnish such information to the Agents, confirmed in writing, and
shall cause the Prospectus Supplement to be amended or supplemented to include
or incorporate by reference financial information with respect thereto and
corresponding information for the comparable period of the preceding fiscal
year, as well as such other information and explanations as shall be necessary
for an understanding thereof or as shall be required by the Act or the Exchange
Act and the rules and regulations of the Commission thereunder.
(m) On or prior to the date on which there shall be released to
the general public financial information included in or derived from the audited
financial statements of MCN for the preceding fiscal year, the Company and MCN
shall cause the Registration Statement and the Prospectus Supplement to be
amended, whether by the filing of documents pursuant to the Exchange Act, the
Act or otherwise, to include or incorporate by reference such audited financial
statements and the report or reports, and consent or consents to such inclusion
or incorporation by reference, of the independent accountants with respect
thereto, as well as such other information and explanations as shall be
necessary for an understanding of such financial statements or as shall be
required by the Act or the Exchange Act and the rules and regulations of the
Commission thereunder.
(n) The Company will use the net proceeds received by it from the
sale of the Notes in the manner specified in the Prospectus Supplement under the
caption "Use of Proceeds".
4 Conditions to the Obligations of the Agents. The obligations of
each Agent to solicit offers to purchase the Notes as agent of the Company and
to purchase Notes as principal shall be subject to the accuracy of the
representations and warranties on the part of the Company and MCN contained
herein and to the accuracy of the statements of the Company and MCN made in any
certificates pursuant to the provisions hereof, to the performance by the
Company and MCN of their respective obligations hereunder and to the following
additional conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for that purpose shall then be
pending before or, threatened by the Commission.
(b) Each Agent shall have received the opinion of Daniel L.
Schiffer, Esq., Senior Vice President, General Counsel and Secretary for MCN,
and Senior Vice President, General Counsel and Secretary of the Company, dated
the Commencement Date, in form and substance satisfactory to the Agents and
their counsel, 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.
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<PAGE> 17
(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 Supplement 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 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 Notes 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 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 the Bankruptcy Exceptions. Each holder of the
Notes will be entitled to the benefits provided by the Support
Agreement and the Indenture; the form of certificate used to evidence
the Notes is in due and proper form and complies with the requirements
of the Indenture; and the Notes, the Indenture and the Support
Agreement conform in all material respects to the descriptions thereof
contained in the Prospectus Supplement.
(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 Supplement, 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 Supplement, 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.
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<PAGE> 18
(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 Act; any
required filing of the Prospectus Supplement 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) Registration Statement has been issued under the 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 Supplement, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus Supplement,
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 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
Supplement (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 Exchange Act and the
Exchange Act Regulations.
(xi) The 1933 Act Regulations relating to use of Form S-3 by the
Company and MCN will not adversely affect the offering of the Notes.
(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.
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<PAGE> 19
(xiv) On the Commencement Date, the Calculation Agent Agreement
will have been validly authorized, executed and delivered by the
Company and will constitute 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.
(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 Notes have
been paid.
(xvi) The execution, delivery and performance by the Company and
MCN of this Agreement, the Support Agreement and the Calculation Agent
Agreement; the execution, delivery and performance by the Company of
the Indenture and the Notes 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 Supplement (including the
issuance and sale of the Notes and the use of the proceeds from the
sale of the Notes as described in the Prospectus Supplement 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, singly 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 any
action, suit, proceeding, inquiry or investigation pending or
threatened 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 Supplement
(other than as disclosed therein), or which might reasonably be
expected to, singly 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 or the Calculation Agent Agreement, or the
performance by the Company and MCN of their
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<PAGE> 20
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 Supplement, including
ordinary routine litigation incidental to the business of the Company
or MCN or any of their respective subsidiaries, could not reasonably be
expected to, singly or in the aggregate, result in a Material Adverse
Effect.
(xviii) The information in the Prospectus Supplement under the
captions "MCN Energy Enterprises Inc.," "MCN Energy Group Inc.,"
"Description of the Notes," "Use of Proceeds," 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 Supplement 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, singly or in the aggregate, result
in a Material Adverse Effect.
(xxi) All descriptions in the Prospectus Supplement of contracts and
other documents to which the Company or MCN or their respective subsidiaries are
a party are accurate in all material respects. To the best of such counsel's
knowledge and information, 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 Notes and the sale of the Notes in
accordance with this Agreement (other than the filing of post-issuance reports,
the non-filing of which would not render the Notes 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 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 authorization, execution and
delivery of this Agreement, the Support Agreement or for the offering, issuance
and sale of
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<PAGE> 21
the Notes or the performance by the Company or MCN of their respective
obligations in this Agreement, the Support Agreement, the Indenture, the
Calculation Agent Agreement and the Notes.
(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 Supplement 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 Supplement, 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, 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 Supplement or (b) do not,
singly 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.
(c) Each Agent shall have received from LeBoeuf, Lamb, Greene &
MacRae, L.L.P., counsel for the Agents, an opinion, dated the Commencement Date,
with respect to the issuance and sale of the Notes, the Indenture, the
Registration Statement, the Prospectus Supplement and other related matters as
any of the Agents may reasonably require, and the Company and MCN shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
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(d) In giving their opinions required by subsections (b) and (c),
respectively, of this Section, Daniel L. Schiffer, Esq. and LeBoeuf, Lamb,
Greene & MacRae, L.L.P. shall each additionally state that nothing has come to
their attention that would lead them to believe that the Registration Statement,
including any Rule 430A Information and Rule 424 Information (if applicable)
(other than the financial statements and the notes thereto, related schedules
and other financial or statistical data included or incorporated by reference
therein, as to which counsel need express no opinion), at the time it became
effective or at the Commencement Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus Supplement or any amendment or supplement thereto (other than the
financial statements and related schedules and other financial or statistical
data included or incorporated by reference therein, as to which counsel need
express no opinion), at the Commencement Date, or if such opinion is being
delivered in connection with the purchase of Notes by the Agent as principal
pursuant to Section 1(g) hereof at the date of any Terms Agreement and at the
Purchase Date with respect thereto, as the case may be, 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. In giving their
opinion, LeBoeuf, Lamb, Greene & MacRae, L.L.P. may rely as to matters of
Michigan law upon the opinion of Daniel L. Schiffer, Esq. which opinion shall be
in form and substance satisfactory to counsel for the Agents.
(e) At the Commencement Date, there shall not have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus Supplement, as amended and supplemented, or since the date of
any agreement by any Agent to purchase Notes as principal, any 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, and the Company and MCN shall have each furnished
to you a certificate of its Chairman of the Board, President or a Vice
President, and by its chief financial or accounting officer, dated the
Commencement Date, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties contained in this
Agreement are true and correct with the same force and effect as though
expressly made at and as of the Commencement Date, (iii) the Company and MCN,
respectively, have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to the Commencement 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, to
his or her knowledge, threatened by the Commission.
(f) At the Commencement Date, each Agent shall have received from
Deloitte & Touche LLP a letter dated the Commencement Date in form and substance
satisfactory to each Agent, to the effect set forth below and as to such other
matters as the Agents may reasonably request, that:
(i) They are independent certified public accountants with respect
to MCN and its subsidiaries within the meaning of the Act and the 1933 Act
Regulations;
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(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
Act and the 1933 Act Regulations and the Exchange Act and the Exchange
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, and any amendments thereto, 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, and any
amendments thereto, 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,
and any amendments thereto, 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
Exchange Act and the Exchange Act Regulations as they apply
to Form 10-Q, and any amendments thereto, or 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, and any amendments thereto, 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 Act and the 1933 Act
Regulations and the Exchange Act and the Exchange Act
Regulations or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation
of those statements;
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<PAGE> 24
(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 incorporated by reference in
MCN's Annual Report on Form 10-K, and any amendments thereto, 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, and any
amendments thereto, for such fiscal years;
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<PAGE> 25
(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, and any amendments thereto, for the latest
year ended and in MCN's Quarterly Reports on Form 10-Q, and any
amendments thereto, since the latest Annual Report on Form 10-K, and
any amendments thereto, 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.
(g) Subsequent to the date of this Agreement (1) no downgrading
shall have occurred in the rating accorded the debt securities of the Company or
MCN by any "nationally recognized securities rating organization" as that term
is defined by the Commission for the purposes of Rule 436(g) of Regulation C, or
(2) no review of the rating assigned to any debt securities of the Company or
MCN with a view to possible downgrading or with negative implications for the
Company or MCN, as the case may be, shall have been announced.
(h) The Company and MCN shall have furnished to the Agents and
counsel for the Agents, such further information, certificates and documents as
the Agents may reasonably request from time to time; and all proceedings taken
by the Company in connection with the issuance and sale of Notes as herein
contemplated shall be satisfactory in form and substance to the Agents and
counsel for the Agents.
If any of the conditions specified in this Section 4 shall not
have been fulfilled when and as provided in this Agreement (or, at the option of
the Agent, any applicable Terms Agreement by the Agent to purchase Notes as
principal), or if any of the opinions or certificates mentioned above or
elsewhere in this Agreement (or any applicable Terms Agreement) shall not be in
all material respects reasonably satisfactory in form and substance to an Agent
and its counsel, this Agreement (or any applicable Terms Agreement) with respect
to such Agent, and all obligations of such Agent hereunder or thereunder, as the
case may be, may be terminated by such Agent by notice to the Company and MCN at
any time and any such termination shall be without liability of any party to any
other party, except that the covenant regarding provision of an earnings
statement set forth in Section 3(d) hereof, the provisions concerning payment of
expenses under Section 10 hereof, the indemnity and contribution agreement set
forth in Sections
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<PAGE> 26
8 and 9 hereof, the provisions concerning the representations and indemnities
to survive set forth in Section 12 hereof, the provisions relating to governing
law set forth in Section 16 and the provisions relating to successors set forth
in Section 14 hereof shall remain in full force and effect.
5 Delivery of and Payment for Notes Sold through the Agents.
Delivery of Notes sold through the Agent as agent shall be made by the Company
to the Agent for the account of any purchaser only against payment therefor in
immediately available funds. In the event that a purchaser shall fail either to
accept delivery of or to make payment for a Note on the date fixed for
settlement, the Agent shall promptly notify the Company and deliver the Note to
the Company, and, if the Agent has theretofore paid the Company for such Note,
the Company will promptly return such funds to the Agent. If such failure
occurred for any reason other than default by the Agent in the performance of
its obligations hereunder, the Company will reimburse the Agent for its loss of
the use of the funds for the period such funds were credited to the Company's
account.
6 Additional Covenants of the Company and MCN. Each of the
Company and MCN covenants and agrees with each Agent that:
(a) Each acceptance by it of an offer for the purchase of Notes
(whether to the Agent as principal or through the Agent as agent), and each
delivery of Notes to the Agent (whether to the Agent as principal or through the
Agent as agent), shall be deemed to be an affirmation that the representations
and warranties of the Company and MCN contained in this Agreement and in any
certificate theretofore delivered to the Agent pursuant hereto are true and
correct at the time of such acceptance or sale, as the case may be, and an
undertaking that such representations and warranties will be true and correct at
the time of delivery to the purchaser or its agent, or to the Agent, of the Note
or Notes relating to such acceptance or sale, as the case may be, as though made
at and as of each such time (and it is understood that such representations and
warranties shall relate to the Registration Statement and Prospectus Supplement
as amended and supplemented to each such time).
(b) Each time that (i) the Registration Statement or the
Prospectus Supplement is amended (which for the purposes of this Section 6 shall
include the filing by the Company or MCN of materials incorporated by reference
in the Registration Statement or the Prospectus Supplement) or supplemented
(other than by an amendment or supplement relating to any offering of securities
other than the Notes or providing solely for the terms of any Notes or for a
change deemed immaterial in the reasonable opinion of the Agents), (ii) the
Prospectus is supplemented to create a Prospectus Supplement, (iii) (if required
in connection with the purchase of the Notes by the Agent as principal) the
Company sells Notes to an Agent as principal or (iv) if the Company issues and
sells Notes in a form not previously certified to the Agents by the Company, the
Company and MCN will each deliver or cause to be delivered forthwith to each
Agent a certificate signed by its Chairman of the Board, President or a Vice
President, and by its chief financial or accounting officer, dated the date of
the effectiveness of such amendment, the date of filing of such supplement or
materials, or the date of such sale, as the case may be, in form and substance
satisfactory to each Agent, to the effect that the statements contained in the
certificate referred to in Section 4(e) that was last furnished to each
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<PAGE> 27
Agent (either pursuant to Section 4(e) or pursuant to this Section 6(b)) are
true and correct at the time of the effectiveness of such amendment (which for
the purposes of this Agreement in the case of the filing of materials
incorporated by reference shall be the date of the filing of such materials),
the filing of such supplement or the date of sale, as the case may be, as though
made at and as of such time (except that such statements shall be deemed to
relate to the Registration Statement, as amended at the time of effectiveness of
such amendment, and to the Prospectus or the Prospectus Supplement (as the case
may be), as amended and supplemented at the date of such certificate) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in Section 4(e) but modified, as necessary, to relate to the
Registration Statement, as amended at the time of the effectiveness of such
amendment, and to the Prospectus or the Prospectus Supplement (as the case may
be), as amended and supplemented at the date of delivery of such certificate.
(c) Each time that (i) the Registration Statement or the
Prospectus Supplement is amended or supplemented (which for the purposes of this
Section 6 shall include the filing by the Company or MCN of materials
incorporated by reference in the Registration Statement or the Prospectus
Supplement) or supplemented (other than by an amendment or supplement relating
to any offering of securities other than the Notes or providing solely for the
terms of any Notes or for a change deemed immaterial in the reasonable opinion
of the Agents), (ii) the Prospectus is supplemented to create a Prospectus
Supplement, (iii) (if required in connection with the purchase of the Notes by
the Agent as principal) the Company sells Notes to an Agent as principal, or
(iv) if the Company issues and sells Notes in a form not previously certified to
the Agents by the Company, the Company and MCN shall furnish to or cause to be
furnished forthwith to each Agent a written opinion of Daniel L. Schiffer, Esq.,
Senior Vice President, General Counsel and Secretary of MCN, and Vice President,
General Counsel and Secretary of the Company to the effect set forth in Sections
4(b) but modified as necessary to relate to the Registration Statement and the
Prospectus Supplement as amended and supplemented to the time of delivery of
such opinion. Any such opinion shall be dated the date of the effectiveness of
such amendment, the date of filing of such supplement or materials or the date
of such sale, as the case may be, in form and substance satisfactory to each
Agent. In lieu of such opinion, such counsel may furnish to each Agent a letter
to the effect that each Agent may rely on such counsel's last opinion to the
same extent as though it were dated the date of such letter authorizing reliance
on such last opinion (except that statements in such last opinion will be deemed
to relate to the Registration Statement, as amended at the time of the
effectiveness of such amendment, and to the Prospectus or the Prospectus
Supplement (as the case may be), as amended and supplemented at the date of
delivery of such letter).
(d) Each time that (i) the Registration Statement or the
Prospectus Supplement is amended or supplemented to set forth additional
financial information or there is filed with the Commission any document
incorporated by reference into the Prospectus Supplement which contains
additional financial information or (ii) (if required in connection with the
purchase of the Notes by the Agent as principal) the Company sells Notes to an
Agent as principal, the Company and MCN shall cause Deloitte & Touche LLP, its
independent auditors, forthwith to furnish each Agent with a letter, dated the
date of the effectiveness of such amendment, the date of filing of such
supplement or document or the date of such sale, as the case may be, in form and
substance satisfactory to each Agent, of the same tenor as the portions of the
letter referred to in subsections (i), (ii) and (iii) of Section 4(f), but
modified to relate to the Registration Statement
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and Prospectus Supplement, as amended and supplemented to the date of such
letter, and of the same tenor as the portions of the letter referred to in
subsections (iv) and (v) of Section 4(f), with such changes as may be necessary
to reflect changes in the financial statements and other information derived
from the accounting records of the Company.
7 Right of Agent Who Agreed to Purchase as Principal to Refuse to
Purchase. The Company and MCN agree that any Agent who has agreed to purchase
and pay for any Note as principal, shall have the right to refuse to purchase
such Note if, at the date of delivery of such Note, either (a) any condition set
forth in Section 4 shall not be satisfied or (b) subsequent to the agreement to
purchase such Note, any change, or any development involving a prospective
change, in or affecting the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company or MCN and their
respective subsidiaries, in each case, considered as one enterprise, shall have
occurred the effect of which is, in the judgment of such Agent, so material and
adverse as to make it impractical or inadvisable to proceed with the delivery of
such Note. Notwithstanding the foregoing, under no circumstances shall any such
Agent have any duty or obligation to exercise the judgment permitted to be
exercised under this Section 7.
8 Indemnification and Contribution. (a) The Company and MCN will
indemnify and hold harmless the Agents against any losses, claims, damages or
liabilities to which the Agents may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), the Prospectus (or any amendment or supplement thereto) or
any other prospectus relating to the Notes, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Agents for any
legal or other expenses reasonably incurred, as incurred, by the Agents in
connection with investigating or defending any such action or claim; provided,
however, that the Company and MCN shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or any other prospectus
relating to the Notes, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company and MCN by
the Agents expressly for use therein.
(b) The Agents will indemnify and hold harmless the Company and
MCN against any losses, claims, damages or liabilities to which the Company and
MCN may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or any other prospectus
relating to the Notes, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the
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<PAGE> 29
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any other prospectus relating to the Notes,
or any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company and MCN by the Agents expressly for
use therein; and will reimburse the Company and MCN for any legal or other
expenses reasonably incurred, as incurred, by the Company and MCN in connection
with investigating or defending any such action or claim.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof but the omission so to notify the
indemnifying party shall not relieve it from any liability except to the extent
that it has been prejudiced in any material respect by such failure or from any
liability that it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and MCN on the one hand and the Agents
on the other from the offering of the Notes to which such loss, claim, damage or
liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above and such indemnifying party was prejudiced in a material
respect by such failure, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and MCN on the one hand and the Agents on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and MCN on the one hand and the Agents on the other shall be deemed to
be in the same proportion as the total net proceeds from such offering (before
deducting expenses) received by the Company and MCN bear to the total
commissions or discounts received by the Agents in respect thereof. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
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<PAGE> 30
omission or alleged omission to state a material fact relates to information
supplied by the Company and MCN or the Agents and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, MCN and the Agents agree that it would not
be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include 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 subsection (d), the Agents shall not be required to
contribute any amount in excess of the amount by which the total public offering
price at which the Notes purchased by or through it were sold exceeds the amount
of any damages that the Agents have 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 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9 Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated, the
Company and MCN will pay all costs and expenses incident to the performance of
its obligations under this Agreement, including, without limiting the generality
of the foregoing:
(a The preparation, printing and filing of the Registration
Statement (including all exhibits thereto) and any amendments and supplements
thereto, and any Preliminary Prospectus, Prospectus or Prospectus Supplement,
and any amendments or supplements thereto;
(b The preparation, filing and reproduction of this Agreement;
(c The preparation, printing, issuance and delivery of the
Notes, including fees and expenses relating to the use of book-entry notes;
(d The fees and disbursements of the Company's and MCN's
accountants and counsel, of the Trustee and its counsel, and of any Calculation
Agent;
(e The reasonable fees and disbursements of counsel to the Agents
incurred heretofore or hereafter in connection with the offering, purchase and
sale of the Notes;
(f The qualification of the Notes under state securities laws,
including filing fees and the reasonable fees and disbursements of counsel for
the Agents in connection therewith and in connection with the preparation of any
Blue Sky Survey and any Legal Investment Survey;
(g The printing and delivery to the Agents in quantities as
hereinabove stated of copies of the Registration Statement and any amendments
thereto, and of the Prospectus Supplement and any amendments or supplements
thereto, and the delivery by the Agents of the
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Prospectus Supplement and any amendments or supplements thereto in connection
with solicitation or confirmations of sales of the Notes;
(h The preparation, printing, reproducing and delivery to the
Agents of copies of the Indenture relating to the Notes;
(i Any fees charged by rating agencies for the rating of the
Notes;
(j The fees and expenses incurred in connection with the listing
of the Notes on any securities exchange;
(k The fees and expenses, if any, incurred with respect to any
filing with the National Association of Securities Dealers, Inc.;
(l Any advertising and other out-of-pocket expenses of the
Agents incurred with the approval of the Company;
(m The cost of providing any CUSIP or other identification
numbers for the Notes; and
(n The fees and expenses of any Depositary and any nominees
thereof in connection with the Notes.
10. Termination. (a) This Agreement (excluding any Terms Agreement
hereunder by an Agent to purchase Notes as principal) may be terminated for any
reason, at any time either by the Company or by such Agent upon the giving of
thirty days' written notice of such termination to such Agent or the Company, as
the case may be.
(b Each Terms Agreement shall be subject to termination in the
absolute discretion of the Agent purchasing thereunder, immediately upon notice
given to the Company and MCN prior to the close of business on the Purchase Date
relating thereto (i) if there has been, since the date of the Terms Agreement or
since the respective dates as of which information is given in the Registration
Statement, any 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) if there shall have occurred
any material adverse change in the financial markets in the United States or any
outbreak or escalation of hostilities or other national or international
calamity or crisis the effect of which is such as to make it, in the judgment of
such Agent, impracticable to market the Notes or to enforce contracts for the
sale of the Notes, or (iii) if trading in the Common Stock of MCN has been
suspended by the Commission, or if trading generally on either the American
Stock Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either Federal, New York or Michigan authorities or (iv) if the
rating assigned by any nationally recognized securities rating agency to any
debt securities of the Company or MCN as
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<PAGE> 32
of the date of any applicable principal purchase shall have been lowered since
that date or if any such rating agency shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
any debt securities of the Company or MCN, or (v) if there shall have come to
the Agent's attention any facts that would cause the Agent to believe that the
Prospectus Supplement, at the time it was required to be delivered to a
purchaser of Notes, included an untrue statement or a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
light of the circumstances existing at the time of such delivery, not
misleading.
(c If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
that (i) each Agent shall be entitled to any commission earned in accordance
with Section 1(c) hereof, (ii) if at the time of termination (A) any Agent shall
own any Notes purchased by it as principal with the intention of reselling them
or (B) an offer to purchase any of the Notes has been accepted by the Company
but the time of delivery to the purchaser or his agent of the Note or Notes
relating thereto has not occurred, the covenants set forth in Sections 3 and 6
hereof shall remain in effect until such Notes are so resold or delivered, as
the case may be, and (iii) the covenant set forth in Section 3(d) hereof, the
provisions of Sections 8, 9, 10, 12, 13 and 15 hereof shall remain in full force
and effect.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other certificates of
officers of the Company and MCN set forth in or made pursuant hereto or thereto
will remain in full force and effect, regardless of any investigation made by or
on behalf of any Agent or the Company or MCN or any of the officers, directors
or controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for any of the Notes.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Agents, will be mailed,
delivered, telecopied or telegraphed and confirmed to it at the address
specified in Schedule II hereto, or, if sent to the Company or MCN, will be
mailed, delivered or telegraphed and confirmed to it, at 500 Griswold Street,
Detroit, Michigan 48226, attention of the Treasurer with a copy to the
Secretary.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns and
the officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder. The
term "successors and assigns" as used in this Agreement shall not include any
purchaser, as such purchaser, of any of the Notes from the Agents.
14. Counterparts. This Agreement may be executed in counterparts
all of which, taken together, shall constitute a single agreement among the
parties to such counterparts.
15. Governing Law; Forum. This Agreement will be governed by and
construed in accordance with the laws of the State of New York. Any suit, action
or proceeding brought by the Company against any Agent in connection with or
arising under this Agreement shall be brought solely in the state or federal
court of appropriate jurisdiction located in the Borough of Manhattan, The City
of New York.
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<PAGE> 33
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and each Agent.
Very truly yours,
MCN ENERGY ENTERPRISES INC.
By: /s/ Richard G. Kennedy
------------------------
Name: Richard G. Kennedy
Title: Vice President
MCN ENERGY GROUP INC.
By: /s/ Richard G. Kennedy
------------------------
Name: Richard G. Kennedy
Title: Vice President
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Scott Primrose
----------------------------
Name: Scott Primrose
Title: Authorized Signatory
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<PAGE> 34
BANC ONE CAPITAL MARKETS, INC.
By: /s/ Katherine Kokic
----------------------
Name: Katherine Kokic
Title: Vice President
SALOMON SMITH BARNEY INC.
By: /s/ Paul Murphy
-------------------------
Name: Paul Murphy
Title: Managing Director
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<PAGE> 35
SCHEDULE I
MCN INVESTMENT CORPORATION
Medium-Term Notes, Series C
Commission Schedule
<TABLE>
<CAPTION>
Maturity Ranges Commission Rate
- -------------------------------------- ---------------
<S> <C>
More than 9 months to less than 1 year .125%
1 year to less than 18 months .150
18 months to less than 2 years .200
2 years to less than 3 years .250
3 years to less than 4 years .350
4 years to less than 5 years .450
5 years to less than 6 years .500
6 years to less than 7 years .550
7 years to less than 8 years .600
8 years to less than 9 years .600
9 years to less than 10 years .600
10 years to less than 15 years .625
15 years to less than 20 years .700
20 years to 30 years .750
Beyond 30 years To be negotiated
</TABLE>
<PAGE> 36
SCHEDULE II
ADDRESS FOR NOTICES TO AGENTS
Notices to Merrill Lynch & Co. shall be directed to it at:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Attn: MTN Product Management - Scott Primrose
Telephone: (212) 449-7476
Telecopy: (212) 449-1012
Notices to Banc One Capital Markets, Inc. shall be directed to it at:
Banc One Capital Markets, Inc.
1 Bank One Plaza
Suite IL1-0595
Chicago, Illinois 60670
Attn: Corporate Securities Structuring
Telephone: (312) 732-8270
Telecopy: (312) 732-4172
Notices to Salomon Smith Barney Inc. shall be directed to it at:
Salomon Smith Barney Inc.
7 World Trade Center
New York, New York 10048
Attn: Medium-Term Note Department
Telephone: (212) 783-5897
Telecopy: (212) 783-2274
<PAGE> 37
EXHIBIT A
MCN ENERGY ENTERPRISES INC.
ADMINISTRATIVE PROCEDURES
MEDIUM-TERM NOTES, SERIES C
SEPTEMBER 22, 1999
Medium-Term Notes, Series C, Due Nine Months or More from Date of Issue
(the "Notes") are to be offered on a continuing basis by MCN Energy Enterprises
Inc, a Michigan corporation (the "Company"), to or through Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc One Capital Markets,
Inc. and Salomon Smith Barney Inc. (each an "Agent" and, collectively, the
"Agents"), pursuant to a Distribution Agreement dated September 22, 1999 (the
"Distribution Agreement") between the Company, MCN Energy Group Inc. ("MCN") and
the Agents. The Distribution Agreement provides both for the sale of Notes by
the Company to one or more of the Agents as principal for resale to investors
and other purchasers and for the sale of Notes by the Company directly to
investors (as may from time to time be agreed to by the Company and the related
Agent or Agents) in which case the Agents will act as agents of the Company in
soliciting Note purchases. The Notes will have the benefit of a Support
Agreement dated as of September 1, 1995 between the Company and MCN.
Unless otherwise agreed by the related Agent or Agents and the Company,
Notes will be purchased by the related Agent or Agents as principal. Such
purchases will be made in accordance with terms agreed upon by the related Agent
or Agents and the Company (which terms shall be agreed upon orally, with written
confirmation prepared by the related Agent or Agents and mailed to the Company).
If agreed upon by any Agent or Agents and the Company, such Agent or Agents,
acting solely as agent or agents for the Company and not as principal, will use
reasonable efforts to solicit offers to purchase the Notes. Only those
provisions in these Administrative Procedures that are applicable to the
particular role that an Agent will perform shall apply.
The Notes will be issued as a series of securities pursuant to an
Indenture, dated as of September 1, 1995 (the "Indenture"), between the Company
and Bank One Trust Company, NA, as trustee, with respect to the Notes (the
"Trustee"). In accordance with the provisions of the Indenture, Bank One Trust
Company, NA has been duly appointed by the Company as Transfer Agent and Paying
Agent, in each case with respect to the Notes.
A Registration Statement (the "Registration Statement", which term shall
include any additional registration statements or amendments thereto filed in
connection with the Notes as provided in the Distribution Agreement) with
respect to the Notes has been filed with the Securities and Exchange Commission
(the "Commission"). The most recent base Prospectus included in the Registration
Statement, as supplemented with respect to the Notes, is herein
<PAGE> 38
referred to as the "Prospectus". The most recent supplement to the Prospectus
setting forth the purchase price, interest rate, maturity date and other terms
of the Notes (as applicable) is herein referred to as the "Pricing Supplement".
The Notes will either be issued (a) in book-entry form and represented
by one or more fully registered Notes (each, a "Book-Entry Note") delivered to
the Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in
the book-entry system maintained by DTC, or (b) in certificated form (each, a
"Certificated Note") delivered to the investor or other purchaser thereof or a
person designated by such investor or other purchaser. Owners of beneficial
interests in Notes issued in book-entry form will be entitled to physical
delivery of Notes in certificated form equal in principal amount to their
respective beneficial interests only upon certain limited circumstances
described in the Prospectus.
General procedures relating to the issuance of all Notes are
set forth in Part I hereof. Additionally, Notes issued in book-entry form will
be issued in accordance with the procedures set forth in Part II hereof and
Notes issued in certificated form will be issued in accordance with the
procedures set forth in Part III hereof. Capitalized terms used herein that are
not otherwise defined shall have the meanings ascribed thereto in the Indenture
or the Notes, as the case may be.
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<PAGE> 39
PART I: PROCEDURES OF GENERAL
APPLICABILITY
<TABLE>
<S> <C>
Date of Issuance/Authentication: Each Note will be dated as of the date of its authentication
by the Trustee. Each Note shall also bear an original issue
date (the "Original Issue Date"). The Original Issue Date
shall remain the same for all Notes subsequently issued upon
transfer, exchange or substitution of an original Note
regardless of their dates of authentication.
Maturities: Each Note will mature on a date selected by the investor or
other purchaser and agreed to by the Company, or selected by
the Company and agreed to by the investor or other purchaser
from nine months or more from its Original Issue Date.
Registration: Unless otherwise provided in the applicable Pricing
Supplement, Notes will be issued only in fully registered
form.
Denominations: Unless otherwise provided in the applicable Pricing
Supplement, Notes will be issued in denominations of $1,000
or any integral multiple of $1,000 in excess thereof.
Base Rates applicable Unless otherwise provided in the applicable Pricing
to Floating Rate Supplement, Floating Rate Notes (except for certain Original
Notes: Issue Discount Notes) will bear interest at a rate or rates
determined by reference to the CD Rate ("CD Rate Notes"), the
CMT Rate ("CMT Rate Notes"), the Commercial Paper Rate
("Commercial Paper Rate Notes"), the Eleventh District Cost
of Funds Rate ("Cost of Funds Rate Notes"), LIBOR ("LIBOR
Notes"), the Prime Rate ("Prime Rate Notes"), the Federal
Funds Rate ("Federal Funds Rate Notes"), the Treasury Rate
("Treasury Rate Notes"), or such other interest rate basis or
formula as may be set forth in applicable Pricing Supplement,
or by reference to two or more such rates, as adjusted by the
Spread and/or Spread Multiplier, if any, applicable to such
Floating Rate
</TABLE>
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<PAGE> 40
<TABLE>
<S> <C>
Notes.
Redemption/Repayment: The Notes will be subject to repayment at the option of the
Holders thereof in accordance with the terms of the Notes on
their respective Repayment Dates, if any. Repayment Dates,
if any, will be fixed at the time of sale and set forth in
the applicable Pricing Supplement and in the applicable
Note. If no Repayment Dates are indicated with respect to a
Note, such Note will not be repayable at the option of the
Holder prior to its Stated Maturity.
The Notes will be subject to redemption by the Company on and
after their respective Redemption Dates, if any. Redemption
Dates, if any, will be fixed at the time of sale and set
forth in the applicable Pricing Supplement and in the
applicable Note. If no Redemption Dates are indicated with
respect to a Note, such Note will not be redeemable prior to
its Stated Maturity.
Calculation of In case of Fixed Rate Notes, interest (including payments for
Interest: partial periods) will be calculated and paid on the basis of
a 360-day year of twelve 30-day months.
The interest rate on each Floating Rate Note will be
calculated by reference to the specified Base Rate or Rates
in either case plus or minus the applicable Spread, if any,
and/or multiplied by the applicable Spread Multiplier, if
any.
Unless otherwise provided in the applicable Pricing
Supplement, interest on each Floating Rate Note will be
calculated by multiplying its face amount by an accrued
interest factor. Such accrued interest factor is computed by
adding the interest factor calculated for each day in the
period for which accrued interest is being calculated.
Unless otherwise specified in the applicable Pricing
Supplement, the interest factor for each such day is computed
by dividing the interest rate applicable to such day by 360
in the case of CD Rate Notes,
</TABLE>
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<PAGE> 41
<TABLE>
<S> <C>
Commercial Paper Rate Notes, Cost of Funds Rate Notes,
Federal Funds Rate Notes, LIBOR Notes or Prime Rate Notes, or
by the actual number of days in the year in the case of CMT
Rate Notes and Treasury Rate Notes. Unless otherwise
specified in an applicable Pricing Supplement, the interest
factor for Notes for which the interest rate is calculated
with reference to two or more Base Rates will be calculated
in each period in the same manner as if only the lowest of
the applicable Base Rates applied.
Interest: General. Each Note will bear interest in accordance with its
terms. Unless otherwise provided in an applicable Pricing
Supplement, interest on each Note will accrue from the
Original Issue Date of such Note for the first interest
period and from the most recent Interest Payment Date to
which interest has been paid for all subsequent interest
periods. Each payment of interest will include interest
accrued through the day preceding, as the case may be, the
Interest Payment Date (provided that in the case of Floating
Rate Notes which reset daily or weekly, unless otherwise
specified on the applicable Note, interest payments will
include interest accrued from and including the date of issue
or from but excluding the last Record Date to which interest
has been paid, as the case may be, through and including the
Record Date next preceding the related Interest Payment
Date), the Stated Maturity, any Redemption Date or any
Repayment Date (each Stated Maturity, Redemption Date or
Repayment Date is referred to herein as "Maturity").
Interest payable at Maturity will be payable to the Person to
whom the principal of such Note is payable. If an Interest
Payment Date with respect to any Fixed Rate Note falls on a
day that is not a Business Day, the payment of interest
required to be made on such Interest Payment Date need not be
made on such day, but may be made on the next succeeding
Business Day with the same force and effect as if made on
such Interest Payment Date and no interest shall accrue on
such payment for the period from
</TABLE>
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<PAGE> 42
<TABLE>
<S> <C>
and after such Interest Payment Date. If an Interest Payment
Date (other than at Maturity) with respect to any Floating
Rate Note would otherwise fall on a day that is not a
Business Day, such Interest Payment Date will be the
following day that is a Business Day, except that in the case
of a LIBOR Note (or a Note for which LIBOR is an applicable
Base Rate), if such day falls in the next succeeding calendar
month, such Interest Payment Date will be the preceding day
that is a Business Day. If the date of Maturity of a Note is
not a Business Day, the payment of principal and interest due
on such day shall be made on the next succeeding Business Day
and no interest shall accrue on such payment for the period
from and after such Maturity. For additional special
provisions relating to Floating Rate Notes, see the
Prospectus and the applicable Pricing Supplement.
Record Dates. Unless otherwise indicated in an applicable
Pricing Supplement, the Record Date with respect to any
Interest Payment Date for a Floating Rate Note shall be the
date 15 calendar days (whether or not a Business Day)
preceding such Interest Payment Date. Unless otherwise
indicated in an applicable Pricing Supplement, the Record
Date with respect to any Interest Payment Date for a Fixed
Rate Note will be the date that is the 15th day (whether or
not a business day) of the calendar month immediately
preceding the month in which the related Interest Payment
Date occurs.
Interest Payment Dates. Interest payments will be made on
each Interest Payment Date commencing with the first Interest
Payment Date following the Original Issue Date; provided,
however, the first payment of interest on any Note originally
issued between a Record Date and an Interest Payment Date
will occur on the Interest Payment Date following the next
Record Date.
Fixed Rate Notes. Unless otherwise provided in an applicable
Fixed Rate Note, interest payments on Fixed Rate Notes will
be made semiannually on
</TABLE>
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<PAGE> 43
<TABLE>
<S> <C>
March 1 and September 1 of each year and at Maturity.
Floating Rate Notes. Interest payments on Floating Rate
Notes will be made as specified in the related Floating Rate
Note and Pricing Supplement.
Acceptance and If agreed upon by any Agent and the Company, such Agent
Rejection of Offers acting solely as agent for the Company and not as principal
from Solicitation will solicit purchases of the Notes. Each Agent will
as Agents: communicate to the Company, orally or in writing, each
reasonable offer to purchase Notes solicited by such Agent on
an agency basis, other than those offers rejected by such
Agent. Each Agent has the right, in its discretion reasonably
exercised, to reject any proposed purchase of Notes, as a
whole or in part, and any such rejection is not deemed a
breach of the Agent's agreement contained in the Distribution
Agreement. The Company has the sole right to accept or reject
any proposed purchase of the Notes, in whole or in part, and
any such rejection is not deemed a breach of the Company's
agreement contained in the Distribution Agreement. Each Agent
has agreed to make reasonable efforts to assist the Company
in obtaining performance by each purchaser whose offer to
purchase Notes has been solicited by such Agent and accepted
by the Company.
Preparation of If any offer to purchase a Note is accepted by the Company,
Pricing Supplement: the Company will promptly prepare a Pricing Supplement
reflecting the terms of such Note and will arrange to file it
with the Commission in accordance with Rule 424 under the
Securities Act of 1933, as amended. Information to be
included in the Pricing Supplement shall include:
1. the name of the Company;
2. the title of the securities, including series designation,
if any;
3. the date of the Pricing Supplement and the dates of
the Prospectus and Prospectus
</TABLE>
-7-
<PAGE> 44
<TABLE>
<S> <C>
Supplement to which the Pricing Supplement relates;
4. the name of the Offering Agent (as hereinafter defined);
5. whether such Notes are being sold to the Offering Agent as
principal or to an investor or other purchaser through the
Offering Agent acting as agent for the Company;
6. with respect to Notes sold to the Offering Agent as
principal, whether such Notes will be resold by the
Offering Agent to investors and other purchasers (i) at a
fixed public offering price of a specified percentage of
their Principal Amount, (ii) at varying prices related to
prevailing market prices at the time of resale to be
determined by the Offering Agent or (iii) at 100% of their
Principal Amount;
7. with respect to Notes sold to an investor or other purchaser
through the Offering Agent acting as agent for the Company,
whether such Notes will be sold at (i) 100% of their
Principal Amount or (ii) at a specified percentage of their
Principal Amount;
8. the Offering Agent's commission or underwriting discount;
9. net proceeds to the Company;
10. the Principal Amount, Original Issue Date, Stated Maturity,
Initial Redemption Date, if any, Initial Redemption
Percentage, if any, Annual Redemption Percentage Reduction,
if any, and Optional Repayment Date or Dates, if any, and,
in the case of Fixed Rate Notes, the Interest Rate, the
Interest Payment Date or Dates (if other than March 1 and
September 1 of each year) and the Record Date or Dates (if
other than February
</TABLE>
-8-
<PAGE> 45
<TABLE>
<S> <C>
15 and August 15 of each year), and, in the case of Floating
Rate Notes, the Base Rate or Rates, the Index Maturity (if
applicable), the Initial Interest Rate, the Maximum Interest
Rate, if any, the Minimum Interest Rate, if any, the Interest
Payment Date or Dates, the Record Date or Dates, the Interest
Reset Date or Dates, the Spread and/or Spread Multiplier, if
any, and the Calculation Agent;
11. the information with respect to the terms of the Notes set
forth below (whether or not the applicable Note is a
Book-Entry Note or a Certificated Note) under "Procedures
for Notes Issued in Book-Entry Form -- Settlement
Procedures", Part A, items 1, 2, 6, 7 and 8; and
12. any other provisions of the Notes material to investors or
other purchasers of the Notes not otherwise specified in
the Prospectus or Pricing Supplement.
One copy of such filed document will be sent by telecopy, or
overnight, express or special delivery (for delivery as soon
as practicable following the sale, but in no event later than
11:00 a.m. on the Business Day following the applicable sale
date) to the Agent which made or presented the offer to
purchase the applicable Note (in such capacity, the "Offering
Agent") and the Trustee at the following applicable address:
if to Merrill Lynch & Co. via overnight, express or special
delivery packages only, to: Tritech Services, # 4 Corporate
Place, Corporate Park 287, Piscataway, New Jersey 08854,
Attention: Prospectus Operations, telephone: (908) 885-6526,
telecopier: (908) 878-9815; if to Merrill Lynch & Co. via all
other types of deliveries, to: Tritech Services, # 4
Corporate Place, Corporate Park 287, Piscataway, New Jersey
08854, Attention: Prospectus Operations, telephone: (908)
885-6526, telecopier: (908) 878-9815; if to Banc One Capital
Markets, Inc. to: Banc One Capital
</TABLE>
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<PAGE> 46
<TABLE>
<S> <C>
Markets, Inc., 1 Bank One Plaza, Suite IL1-0595, Chicago,
Illinois 60670, Attention: Corporate Securities Structuring,
telephone: (312) 732-8270, telecopier: (312) 732-4172; if to
Salomon Smith Barney Inc. to: Salomon Smith Barney Inc.,
Brooklyn Army Terminal, 140 58th Street, 5th Floor, Brooklyn,
New York 11220, Attention: Diane Graham, telephone: (718)
765-6736, telecopier: (718) 765-6734; and if to the Trustee,
to: Bank One Trust Company, NA, 611 Woodward Avenue, Detroit,
Michigan 48226, Attention: Ernest Peck, telephone: (313)
225-2025, telecopier: (313) 225-3420. For record keeping
purposes, one copy of each Pricing Supplement, as so filed,
shall also be mailed or telecopied to Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, World
Financial Center, North Tower, 10th Floor, New York, New York
10281-1310, Attention: MTN Product Management - Scott
Primrose, telephone: (212) 449-7476, telecopier: (212)
449-1012; Banc One Capital Markets, Inc., 1 Bank One Plaza,
Suite IL1-0595, Chicago, Illinois 60670, Attention: Corporate
Securities Structuring, telephone: (312) 732-8270,
telecopier: (312) 732-4172; and Salomon Smith Barney Inc., 7
World Trade Center, New York, New York 10048, Attention:
Medium-Term Note Department, telephone: (212) 783-5897,
telecopier: (212) 783-2274. One copy of each such Pricing
Supplement shall also be mailed or telecopied to the Agents'
counsel at LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West
55th Street, New York, New York 10019-5389, Attention:
William S. Lamb, Esq., telephone: (212) 424-8170, telecopier:
(212) 424-8500.
Outdated Pricing Supplements, and the supplemented
Prospectuses to which they are attached (other than those
retained for files) will be destroyed.
Settlement: The receipt of immediately available funds by the Company in
payment for a Note and the authentication and delivery of
such Note shall, with
</TABLE>
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<PAGE> 47
<TABLE>
<S> <C>
respect to such Note, constitute "settlement". Offers
accepted by the Company will be settled in three Business
Days, unless the purchaser and the Company agree to
settlement on another day to the extent permitted by Rule
15c6-1 under the Securities Exchange Act of 1934 (the
"Exchange Act"), pursuant to the timetable for settlement set
forth in Parts II and III hereof under "Settlement
Procedures" with respect to Book-Entry Notes and Certificated
Notes, respectively (each such date fixed for settlement is
hereinafter referred to as a "Settlement Date"). If
procedures A and B of the applicable Settlement Procedures
with respect to a particular offer are not completed on or
before the time set forth under the applicable "Settlement
Procedures Timetable", such offer shall not be settled until
the Business Day following the completion of settlement
procedures A and B or such later date as the purchaser and
the Company shall agree to the extent permitted by Rule
15c6-1 the Exchange Act.
The foregoing settlement procedures may be modified, with
respect to any purchase of Notes by an Agent as principal, if
so agreed by the Company and such Agent.
Procedure for Changing When a decision has been reached to change the interest rate
Rates or Other or any other variable term on any Notes being sold by the
Variable Terms: Company, the Company will promptly advise the Agents and the
Trustee by facsimile transmission and the Agents will
forthwith suspend solicitation of offers to purchase such
Notes. The Agents will telephone the Company with
recommendations as to the changed interest rates or other
variable terms. At such time as the Company advises the
Agents and the Trustee by facsimile transmission of the new
interest rates or other variable terms, the Agents may resume
solicitation of offers to purchase such Notes. Until such
time only "indications of interest" may be
</TABLE>
-11-
<PAGE> 48
<TABLE>
<S> <C>
recorded. Immediately after acceptance by the Company of an
offer to purchase Notes at a new interest rate or new
variable term, the Company, the Offering Agent and the
Trustee shall follow the procedures set forth under the
applicable "Settlement Procedures".
Suspension of The Company may instruct the Agents to suspend solicitation
Solicitation; of offers to purchase Notes at any time. Upon receipt of
Amendment or such instructions, the Agents will forthwith suspend
Supplement: solicitation of offers to purchase from the Company until
such time as the Company has advised them that solicitation
of offers to purchase may be resumed. If the Company decides
to amend or supplement the Registration Statement or the
Prospectus (other than to establish or change interest rates,
maturities, prices or other similar variable terms with
respect to the Notes), it will promptly advise the Agents and
will furnish the Agents and their counsel with copies of the
proposed amendment or supplement. One copy of such filed
document, along with a copy of the cover letter sent to the
Commission, will be delivered or mailed to the Agents, their
counsel and the Trustee at the following respective
addresses: to Merrill Lynch & Co. at MTN Product Management,
Merrill Lynch & Co., Merrill Lynch World Headquarters, North
Tower, World Financial Center, 10th Floor, New York, New York
10281-1310, Attention: MTN Product Management - Scott
Primrose, telephone: (212) 449-7476, telecopier: (212)
449-1012; to Banc One Capital Markets, Inc. at 1 Bank One
Plaza, Suite IL1-0595, Chicago, Illinois 60670, Attention:
Corporate Securities Structuring, telephone: (312) 732-8270,
telecopier: (312) 732-4172; to Salomon Smith Barney Inc. at
Brooklyn Army Terminal, 140 58th Street, 5th Floor, Brooklyn,
New York 11220, Attention: Diane Graham, telephone: (718)
765-6736, telecopier: (718) 765-6734; and the Trustee at Bank
One Trust Company, NA, 611 Woodward Avenue, Detroit, Michigan
48226, Attention: Ernest Peck, telephone: (313) 225-2025,
telecopier: (313) 225-3420. For record keeping purposes, one
copy of each such
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document, as so filed, shall also be mailed or telecopied to
the Agents' counsel at LeBoeuf, Lamb, Greene & MacRae,
L.L.P., 125 West 55th Street, New York, New York 10019-5389,
Attention: William S. Lamb, Esq., telephone: (212) 424-8170,
telecopier: (212) 424-8500.
In the event that at the time the solicitation of offers to
purchase from the Company is suspended (other than to
establish or change interest rates, maturities, prices or
other similar variable terms with respect to the Notes) there
shall be any offers to purchase Notes that have been accepted
by the Company which have not been settled, the Company will
promptly advise the Agents and the Trustee whether such
offers may be settled and whether copies of the Prospectus as
theretofore amended and/or supplemented as in effect at the
time of the suspension may be delivered in connection with
the settlement of such offers. The Company will have the sole
responsibility for such decision and for any arrangements
which may be made in the event that the Company determines
that such offers may not be settled or that copies of such
Prospectus may not be so delivered.
Delivery of Prospectus A copy of the most recent Prospectus and applicable Pricing
and applicable Supplement must accompany or precede the earlier of (a) the
Pricing Supplement: written confirmation of a sale sent to an investor or other
purchaser or its agent and (b) the delivery of Notes to an
investor or other purchaser or its agent.
Authenticity of The Agents will have no obligations or liability to the
Signatures: Company or the Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the Company or
the Trustee on any Note.
Documents Incorporated The Company shall supply the Agents with an adequate supply
by Reference: of all documents incorporated by reference in the
Registration Statement.
Business Day: As used herein, "Business Day" means, unless
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otherwise specified in the applicable Pricing Supplement, any
day other than a Saturday or Sunday which is not a day on
which banking institutions or trust companies in The City of
New York are authorized or required by law or regulation or
executive order to close and, with respect to Notes as to
which LIBOR is an applicable Interest Rate Basis, is also a
London Business Day. As used herein, "London Business Day"
means any day on which dealings in deposits in U.S. dollars
are transacted in the London interbank market.
</TABLE>
PART II: PROCEDURES FOR NOTES ISSUED
IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in
book-entry form for eligibility in the book-entry system maintained by DTC, the
Trustee will perform the custodial, document control and administrative
functions described below, in accordance with its respective obligations under a
Letter of Representations from the Company and the Trustee to DTC, dated
September 22, 1999, and a Certificate Agreement, dated May 26, 1989, as amended
on September 17, 1999, between the Trustee and DTC, as amended (the "Certificate
Agreement"), and its obligations as a participant in DTC, including DTC's
Same-Day Funds Settlement System ("SDFS").
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Issuance: All Fixed Rate Notes issued in book-entry form having the
same Original Issue Date, Interest Rate, Day Count
Convention, redemption and/or repayment terms, if any, and
Stated Maturity (collectively, the "Fixed Rate Terms") will
be represented initially by a single global security in fully
registered form without coupons (each, a "Book-Entry Note");
and all Floating Rate Notes issued in book-entry form having
the same Original Issue Date, formula for the calculation of
interest, and specifying the Base Rate, which may be the CD
Rate, the CMT Rate, the Commercial Paper Rate, the Eleventh
District Cost of Funds Rate, the Federal Funds Rate, LIBOR,
the Prime Rate or the Treasury Rate or any other interest
rate basis or formula set forth by the Company, Initial
Interest Rate, Index Maturity, Spread and/or Spread
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Multiplier, if any, Minimum Interest Rate, if any, Maximum
Interest Rate, if any, redemption and/or repayment terms, if
any, and Stated Maturity (collectively, "Floating Rate
Terms") will be represented initially by a single Book-Entry
Note.
Each Book-Entry Note will be dated and issued as of the date
of its authentication by the Trustee. The date from which
interest will begin to accrue with respect to each Book-Entry
Note will be (a) with respect to an original Book-Entry Note
(or any portion thereof), its Original Issue Date and (b)
with respect to any Book-Entry Note (or portion thereof)
issued subsequently upon exchange of a Book-Entry Note or in
lieu of a destroyed, lost or stolen Book-Entry Note, the most
recent Interest Payment Date to which interest has been paid
or duly provided for on the predecessor Book-Entry Note or
Notes (or if no such payment or provision has been made, the
Original Issue Date of the predecessor Book-Entry Note or
Notes), regardless of the date of authentication of such
subsequently issued Book-Entry Note. No Book-Entry Note shall
represent any Note issued in certificated form.
For other variable terms with respect to the Fixed Rate Notes
and Floating Rate Notes, see the Prospectus and the
applicable Pricing Supplement.
Except as provided in the Prospectus, no owner of a
beneficial interest in a Book-Entry Note shall be entitled to
receive any Note issued in certificated form with respect to
such beneficial interest.
Identification: The Company has arranged with the CUSIP Service Bureau of
Standard & Poor's Corporation (the "CUSIP Service Bureau")
for the reservation of one series of CUSIP numbers, which
series consists of approximately 900 CUSIP numbers which have
been reserved for and relating to Book-Entry Notes and the
Company has delivered to each of the Trustee and DTC such
list of such CUSIP numbers. The Company will assign CUSIP
numbers to Book-Entry Notes as described below under
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Settlement Procedure B. DTC will notify the CUSIP Service
Bureau periodically of the CUSIP numbers that the Company has
assigned to Book-Entry Notes. The Trustee will notify the
Company at any time when fewer than 100 of the reserved CUSIP
numbers remain unassigned to Book-Entry Notes, and, if it
deems necessary, the Company will reserve and obtain
additional CUSIP numbers for assignment to Book-Entry Notes.
Upon obtaining such additional CUSIP numbers, the Company
will deliver a list of such additional numbers to the Trustee
and DTC. Book-Entry Notes having an aggregate principal
amount in excess of $200,000,000 and otherwise required to be
represented by the same Global Certificate will instead be
represented by two or more Global Certificates which shall
all be assigned the same CUSIP number.
Registration: Unless otherwise specified by DTC, each Book-Entry Note will
be registered in the name of Cede & Co., as nominee for DTC,
on the register maintained by the Trustee under the
Indenture. The beneficial owner of a Note issued in
book-entry form (i.e., an owner of a beneficial interest in a
Book-Entry Note) (or one or more indirect participants in DTC
designated by such owner) will designate one or more
participants in DTC (with respect to such Note issued in
book-entry form, the "Participants") to act as agent for such
beneficial owner in connection with the book-entry system
maintained by DTC, and DTC will record in book-entry form, in
accordance with instructions provided by such Participants, a
credit balance with respect to such Note issued in book-entry
form in the account of such Participants. The ownership
interest of such beneficial owner in such Note issued in
book-entry form will be recorded through the records of such
Participants or through the separate records of such
Participants and one or more indirect participants in DTC.
Transfers:
Transfers of beneficial ownership interests in a Book-Entry
Note will be accomplished by book
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entries made by DTC and, in turn, by Participants (and in
certain cases, one or more indirect participants in DTC)
acting on behalf of beneficial transferors and transferees of
such Book-Entry Note.
Exchanges: The Trustee may deliver to DTC and the CUSIP Service Bureau
at any time a written notice specifying (a) the CUSIP numbers
of two or more Book-Entry Notes outstanding on such date that
represent Book-Entry Notes having the same Fixed Rate Terms
or Floating Rate Terms, as the case may be (other than
Original Issue Dates), and for which interest has been paid
to the same date; (b) a date, occurring at least 30 days
after such written notice is delivered and at least 30 days
before the next Interest Payment Date for the related Notes
issued in book-entry form, on which such Book-Entry Notes
shall be exchanged for a single replacement Book-Entry Note;
and (c) a new CUSIP number, obtained from the Company, to be
assigned to such replacement Book-Entry Note. Upon receipt
of such a notice, DTC will send to its Participants
(including the Trustee) a written reorganization notice to
the effect that such exchange will occur on such date. Prior
to the specified exchange date, the Trustee will deliver to
the CUSIP Service Bureau written notice setting forth such
exchange date and the new CUSIP number and stating that, as
of such exchange date, the CUSIP numbers of the Book-Entry
Notes to be exchanged will no longer be valid. On the
specified exchange date, the Trustee will exchange such
Book-Entry Notes for a single Book-Entry Note bearing the new
CUSIP number and the CUSIP numbers of the exchanged
Book-Entry Notes will, in accordance with CUSIP Service
Bureau procedures, be canceled and not immediately
reassigned. Notwithstanding the foregoing, if the Book-Entry
Notes to be exchanged exceed $200,000,000 in aggregate
principal amount, one replacement Book-Entry Note will be
authenticated and issued to represent each $200,000,000 of
principal amount of the exchanged Book-Entry Notes and an
additional Book-Entry
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Note or Notes will be authenticated and issued to represent
any remaining principal amount of such Book-Entry Notes (See
"Denominations" below).
Denominations: Notes issued in book-entry form will be issued in
denominations of $1,000 and integral multiples of $1,000 in
excess thereof. Book-Entry Notes will be denominated in
principal amounts not in excess of $200,000,000. If one or
more Notes issued in book-entry form having an aggregate
principal amount in excess of $200,000,000 would, but for the
preceding sentence, be represented by a single Book-Entry
Note, then one Book-Entry Note will be issued to represent
each $200,000,000 principal amount of such Note or Notes
issued in book-entry form and an additional Book-Entry Note
or Notes will be issued to represent any remaining principal
amount of such Note or Notes issued in book-entry form. In
such a case, each of the Book-Entry Notes representing such
Note or Notes issued in book-entry form shall be assigned the
same CUSIP number.
Payments of Principal Payments of Interest Only. Promptly after each Record Date,
and Interest: the Trustee will deliver to the Company and DTC a written
notice specifying by CUSIP number the amount of interest to
be paid on each Book-Entry Note on the following Interest
Payment Date (other than an Interest Payment Date coinciding
with Maturity) and the total of such amounts. DTC will
confirm the amount payable on each Book-Entry Note on such
Interest Payment Date by reference to the daily bond reports
published by Standard & Poor's Corporation. On such Interest
Payment Date, the Company will pay to the Trustee in
immediately available funds an amount sufficient to pay the
interest then due and owing, and upon receipt of such funds
from the Company, the Trustee in turn will pay to DTC, such
total amount of interest due (other than at Maturity), at the
times and in the manner set forth below under "Manner of
Payment".
Notice of Interest Payments and Record Dates.
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Promptly after each Interest Determination Date for Floating
Rate Notes issued in book-entry form, the Trustee will notify
each of Moody's Investors Services, Inc. and Standard &
Poor's Corporation of the interest rates determined on such
Interest Determination Date.
Payments at Maturity. On or about the first Business Day of
each month, the Trustee will deliver to the Company and DTC a
written list of principal, interest and premium, if any, to
be paid on each Book-Entry Note maturing either at Stated
Maturity, on a Redemption Date in, or for which an Option to
Elect Repayment has been received with respect to, the
following month. The Trustee, the Company and DTC will
confirm the amounts of such principal, premium, if any, and
interest payments with respect to a Book-Entry Note on or
about the fifth Business Day preceding the Maturity of such
Book-Entry Note. At such Maturity, the Company will pay to
the Trustee in immediately available funds an amount
sufficient to make such Maturity payment, and upon receipt of
such funds the Trustee in turn will pay to DTC, the principal
amount of such Note, together with interest and premium, if
any, due at such Maturity, at the times and in the manner set
forth below under "Manner of Payment". Promptly after payment
to DTC of the principal, interest and premium, if any, due at
the Maturity of such Book-Entry Note, the Trustee will cancel
such Book-Entry Note and deliver it to the Company with an
appropriate debit advice. On the first Business Day of each
month, the Trustee will deliver to the Company a written
statement indicating the total principal amount of
outstanding Book-Entry Notes as of the close of business on
the immediately preceding Business Day.
Manner of Payment. The total amount of any principal,
premium, if any, and interest due on Book-Entry Notes on any
Interest Payment Date or at Maturity shall be paid by the
Company to the Trustee in funds available for use by the
Trustee no later than 1:00 p.m., New York City time, on such
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date. The Company will make such payment on such Book-Entry
Notes to an account specified by the Trustee. Upon receipt of
such funds, the Trustee will pay by separate wire transfer
(using Fedwire message entry instructions in a form
previously specified by DTC) to an account at the Federal
Reserve Bank of New York previously specified by DTC, in
funds available for immediate use by DTC, each payment of
interest, principal and premium, if any, due on a Book-Entry
Note on such date. Thereafter on such date, DTC will pay, in
accordance with its SDFS operating procedures then in effect,
such amounts in funds available for immediate use to the
respective Participants in whose names such Notes are
recorded in the book-entry system maintained by DTC. Neither
the Company nor the Trustee shall have any responsibility or
liability for the payment by DTC of the principal of,
premium, if any, or interest on, the Book-Entry Notes to such
Participants.
Withholding Taxes. The amount of any taxes required under
applicable law to be withheld from any interest payment on a
Note will be determined and withheld by the Participant,
indirect participant in DTC or other Person responsible for
forwarding payments and materials directly to the beneficial
owner of such Note.
Settlement Settlement Procedures with regard to each Note in book-entry
Procedures: form purchased by each Agent, as principal, or sold by each
Agent, as agent of the Company, will be as follows:
A. The Offering Agent will advise the Company by telephone,
confirmed by facsimile, of the following Settlement
information:
1. Principal Amount of the Note.
2. (a) Fixed Rate Notes:
(i) Interest Rate; and
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(ii) Interest Payment Dates.
(b) Floating Rate Notes:
(i) Base Rate or Rates;
(ii) Initial Interest Rate;
(iii) Spread and/or Spread
Multiplier, if any;
(iv) Interest Reset Date or
Dates;
(v) Interest Reset Period;
(vi) Interest Payment Dates;
(vii) Record Dates;
(viii) Index Maturity;
(ix) Maximum and Minimum
Interest Rates, if any;
and
(x) Calculation Agent.
3. Price to public, if any, of the Note (or whether the Note
is being offered at varying prices relating to prevailing
market prices at time of resale as determined by the Offering
Agent).
4. Sale Date.
5. Settlement Date (Original Issue Date).
6. Stated Maturity.
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7. Redemption provisions, if any, including: Initial
Redemption Date, Initial Redemption Percentage and Annual
Redemption Percentage Reduction.
8. Optional Repayment Date(s), if any.
9. Net proceeds to the Company.
10. The Offering Agent's commission or underwriting discount.
11. Whether such Notes are being sold to the Offering Agent
as principal or to an investor or other purchaser through the
Offering Agent acting as agent for the Company.
12. Whether such Note is being issued with Original Issue
Discount and the terms thereof.
13. Such other information specified with respect to the
Notes (whether by Addendum or otherwise).
B. The Company will assign a CUSIP number to the Book-Entry
Note representing such Note and then advise the Trustee by
facsimile transmission or other electronic transmission of
the above settlement information received from the Offering
Agent, such CUSIP number and the name of the Offering Agent.
C. The Trustee will communicate to DTC and the Offering Agent
through DTC's Participant Terminal System, a pending deposit
message specifying the following settlement information:
1. The information set forth in the Settlement Procedure A.
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2. Identification numbers of the participant accounts
maintained by DTC on behalf of the Trustee and the Offering
Agent.
3. Identification of the Book-Entry Note as a Fixed Rate
Book-Entry Note or Floating Rate Book-Entry Note.
4. Initial Interest Payment Date for such Note, number of
days by which such date succeeds the related Record Date for
DTC purposes (or, in the case of Floating Rate Notes which
reset daily or weekly, the date five calendar days preceding
the Interest Payment Date) and, if then calculable, the
amount of interest payable on such Interest Payment Date
(which amount shall have been confirmed by the Trustee).
5. CUSIP number of the Book-Entry Note representing such
Note.
6. Whether such Book-Entry Note represents any other Notes
issued or to be issued in book-entry form.
DTC will arrange for each pending deposit message described
above to be transmitted to Standard & Poor's Corporation,
which will use the information in the message to include
certain terms of the related Book-Entry Note in the
appropriate daily bond report published by Standard & Poor's
Corporation.
D. The Trustee will complete and authenticate the Book-Entry
Note representing such Note.
E. DTC will credit such Note to the participant
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account of the Trustee maintained by DTC.
F. The Trustee will enter an SDFS deliver order through
DTC's Participant Terminal System instructing DTC
(i) to debit such Note to the Trustee's participant
account and credit such Note to the participant
account of the Offering Agent maintained by DTC and
(ii) to debit the settlement account of the Offering
Agent and credit the settlement account of the
Trustee maintained by DTC, in an amount equal to the
price of such Note less such Offering Agent's
discount or underwriting commission, as applicable.
Any entry of such a deliver order shall be deemed to
constitute a representation and warranty by the
Trustee to DTC that (i) the Book-Entry Note
representing such Note has been issued and
authenticated and (ii) the Trustee is holding such
Book-Entry Note pursuant to the Certificate
Agreement.
G. In the case of Notes sold through the Offering
Agent, as agent, the Offering Agent will enter an
SDFS deliver order through DTC's Participant
Terminal System instructing DTC (i) to debit such
Note to the Offering Agent's participant account and
credit such Note to the participant account of the
Participants maintained by DTC and (ii) to debit the
settlement accounts of such Participants and credit
the settlement account of the Offering Agent
maintained by DTC in an amount equal to the initial
public offering price of such Note.
H. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures F and G will be settled in
accordance with SDFS operating procedures in effect on the
Settlement Date.
I. Upon receipt, the Trustee will pay the Company, by wire
transfer of immediately
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available funds to an account specified by the Company to the
Trustee from time to time, in the amount transferred to the
Trustee in accordance with Settlement Procedure F.
J. The Trustee will send a copy of the Book-Entry Note by
first class mail to the Company together with a statement
setting forth the principal amount of Notes Outstanding as of
the related Settlement Date after giving effect to such
transaction and all other offers to purchase Notes of which
the Company has advised the Trustee but which have not yet
been settled.
K. If the Note was sold through the Offering Agent, as agent,
the Offering Agent will confirm the purchase of such Note to
the investor or other purchaser either by transmitting to the
Participant with respect to such Note a confirmation order
through DTC's Participant Terminal System or by mailing a
written confirmation to such investor or other purchaser.
Settlement Procedures For offers to purchase Notes accepted by the Company for
Timetable: settlement on the first Business Day after the sale date,
Settlement Procedures "A" through "K" set forth above shall
be completed as soon as possible but not later than the
respective times (New York City time) set forth below:
SETTLEMENT
PROCEDURE TIME
--------- ----
A 11:00 a.m. on the sale date
B As soon as practicable following the sale,
but in no event later than 12:00 noon on
the sale date
C As soon as practicable following the sale,
but in no event later than 2:00 p.m. on the
sale date
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D 9:00 a.m. on Settlement Date
E 10:00 a.m.on Settlement Date
F-G No later than 2:00 p.m. on
Settlement Date
H-I 4:45 p.m. on Settlement Date
J-K 5:00 p.m. on Settlement Date
If a sale is to be settled more than one Business Day after
the sale date, Settlement Procedures A, B, and C may, if
necessary, be completed at any time prior to the specified
times on the first Business Day after such sale date.
Settlement Procedure H is subject to extension in accordance
with any extension of Fedwire closing deadlines and in the
other events specified in the SDFS operating procedures in
effect on the Settlement Date.
If settlement of a Note issued in book-entry form is
rescheduled or canceled, the Trustee will deliver to DTC,
through DTC's Participant Terminal System, a cancellation
message to such effect by no later than 2:00 p.m., New York
City time, on the Business Day immediately preceding the
scheduled Settlement Date.
Failure to Settle: If the Trustee fails to enter an SDFS deliver order with
respect to a Book-Entry Note issued in book-entry form
pursuant to Settlement Procedure F, the Trustee may deliver
to DTC, through DTC's Participant Terminal System, as soon as
practicable a withdrawal message instructing DTC to debit
such Note to the participant account of the Trustee
maintained at DTC. DTC will process the withdrawal message,
provided that such participant account contains a principal
amount of the Book-Entry Note representing such Note that is
at least equal to the principal amount to be debited. If
withdrawal messages are processed with respect to all the
Notes represented by a Book-Entry Note, the Trustee will mark
such Book-Entry Note "canceled", make appropriate entries in
its records and send certification of destruction of such
canceled Book-Entry Note to the Company. The
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CUSIP number assigned to such Book-Entry Note shall, in
accordance with CUSIP Service Bureau procedures, be canceled
and not immediately reassigned. If withdrawal messages are
processed with respect to a portion of the Notes represented
by a Book-Entry Note, the Trustee will exchange such
Book-Entry Note for two Book-Entry Notes, one of which shall
represent the Book-Entry Notes for which withdrawal messages
are processed and shall be canceled immediately after
issuance, and the other of which shall represent the other
Notes previously represented by the surrendered Book-Entry
Note and shall bear the CUSIP number of the surrendered
Book-Entry Note.
In the case of any Note sold through the Offering Agent, as
agent, if the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such Note by
the beneficial investor or other purchaser thereof (or a
person, including an indirect participant in DTC, acting on
behalf of such investor or other purchaser), such
Participants and, in turn, the related Offering Agent may
enter SDFS deliver orders through DTC's Participant Terminal
System reversing the orders entered pursuant to Settlement
Procedures F and G, respectively. Thereafter, the Trustee
will deliver the withdrawal message and take the related
actions described in the preceding paragraph. If such failure
shall have occurred for any reason other than default by the
applicable Offering Agent to perform its obligations
hereunder or under the Distribution Agreement, the Company
will reimburse such Offering Agent for its loss of the use of
funds during the period when the funds were credited to the
account of the Company.
Notwithstanding the foregoing, upon any failure to settle
with respect to a Book-Entry Note, DTC may take any actions
in accordance with its SDFS operating procedures then in
effect. In the event of a failure to settle with respect to a
Note that was to have been represented by a Book-Entry Note
also representing other Notes, the Trustee will provide,
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in accordance with Settlement Procedure D, for the
authentication and issuance of a Book-Entry Note representing
such remaining Notes and will make appropriate entries in its
records.
PART III: PROCEDURES FOR NOTES ISSUED
IN CERTIFICATED FORM
Denominations: The Certificated Notes will be issued in denominations of
$1,000 and integral multiples of $1,000 in excess thereof.
Payments of Principal Upon presentment and delivery of the Certificated Note, the
and Interest: Trustee upon receipt of immediately available funds from the
Company will pay the principal amount of each Certificated
Note at Maturity and the final installment of interest in
immediately available funds. All interest payments on a
Certificated Note, other than interest due at Maturity, will
be made at the Corporate Trust Office of the Trustee or, at
the option of the Company, may be made by check mailed to the
address of the person entitled thereto as such address shall
appear in the Security Register or by wire transfer of
immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee not
less than 15 days prior to the applicable Interest Payment
Date.
The Trustee will provide monthly to the Company a list of the
principal, premium, if any, and interest to be paid on
Certificated Notes maturing in the next succeeding month. The
Trustee will be responsible for withholding taxes on interest
paid as required by applicable law, but shall be relieved
from any such responsibility if it acts in good faith and in
reliance upon an opinion of counsel.
Certificated Notes presented to the Trustee at Maturity for
payment will be canceled by the Trustee. All canceled
Certificated Notes held by the Trustee shall be destroyed,
and the Trustee shall
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furnish to the Company a certificate with respect to such
destruction.
Settlement Settlement Procedures with regard to each Certificated Note
Procedures: purchased by any Agent, as principal, or through any Agent,
as agent, shall be as follows:
A. The Offering Agent will advise the Company by
telephone of the following Settlement information
with regard to each Note:
1 Exact name in which the Certificated
Note(s) is to be registered (the
"Registered Owner").
2 Exact address or addresses of the
Registered Owner for delivery, notices and
payments of principal and interest.
3 Taxpayer identification number of the
Registered Owner.
4 Principal Amount of the Certificated Note.
5 Denomination of the Certificated Note.
6 (a) Fixed Rate Notes:
(i) Interest Rate; and
(ii) Interest Payment Dates.
(b) Floating Rate Notes:
(i) Base Rate or Rates;
(ii) Initial Interest Rate;
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(iii) Spread and/or Spread
Multiplier, if any;
(iv) Interest Reset Date or
Dates;
(v) Interest Reset Period;
(vi) Interest Payment Dates;
(vii) Record Dates;
(viii) Index Maturity;
(ix) Maximum and Minimum
Interest Rates, if any;
and
(x) Calculation Agent.
7 Price to public of the Certificated Note
(or whether the Note is being offered at
varying prices relating to prevailing
market prices at time of resale as
determined by the Offering Agent).
8 Sale Date.
9 Settlement Date (Original Issue Date).
10 Stated Maturity.
11 Net proceeds to the Company.
12 The Offering Agent's commission or
underwriting discount.
13 Whether such Notes are being sold to the
Offering Agent as principal or to an
investor or other purchaser through the
Offering Agent acting as
</TABLE>
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<PAGE> 67
<TABLE>
<S> <C>
agent for the Company.
14 Redemption provisions, if any, including:
Initial Redemption Date, Initial Redemption
Percentage and Annual Redemption Percentage
Reduction.
15 Optional Repayment Date(s), if any.
16 Whether such Note is being issued with
Original Issue Discount and the terms
thereof.
17 Such other information specified with
respect to the Notes (whether by Addendum
or otherwise).
B. After receiving such settlement information
from the Offering Agent, the Company will advise the
Trustee of the above settlement information by
facsimile transmission confirmed by telephone. The
Company will prepare a Pricing Supplement to the
Prospectus and deliver copies to the Agent and will
cause the Trustee to issue, authenticate and deliver
Notes.
C. The Trustee will complete the Certificated Note in
the form approved by the Company, the Offering Agent
and the Trustee, and will make three copies thereof
(herein called "Stub 1", "Stub 2" and "Stub 3"):
1 Certificated Note with the Offering Agent's
confirmation, if traded on a principal
basis, or the Offering Agent's customer
confirmation, if traded on an agency basis.
2 Stub 1 for Trustee.
3 Stub 2 for Offering Agent.
</TABLE>
-31-
<PAGE> 68
<TABLE>
<S> <C>
4 Stub 3 for the Company.
D. With respect to each sale, the Trustee will
deliver the Certificated Notes and Stub 2 thereof to
the Offering Agent at the following applicable
address: if to Merrill Lynch & Co., to Merrill Lynch
Money Market Clearance, 55 Water Street, Concourse
Level, N.S.C.C. Window, New York, New York 10041,
Attention: Syndicate Operations, telephone: (212)
558-2405, telecopier: (212) 558-2457; if to Banc One
Capital Markets, Inc., to Banc One Capital Markets,
Inc., 1 Bank One Plaza, Suite IL1-0595, Chicago,
Illinois 60670, Attention: Corporate Securities
Structuring, telephone: (312) 732-8270, telecopier:
(312) 732-4172 and if to Salomon Smith Barney Inc.,
to, DTC/New York Window, The Depository Trust
Company, Mezzanine Level, 3rd Floor, For the Account
of SSB/Salomon Brothers, 55 Water Street, New York,
New York 10001. The Trustee will keep Stub 1. The
Offering Agent will acknowledge receipt of the
Certificated Note through a broker's receipt and
will keep Stub 2. Delivery of the Certificated Note
will be made only against such acknowledgment of
receipt. Upon determination that the Certificated
Note has been authorized, delivered and completed as
aforementioned, the Offering Agent will wire the net
proceeds of the Certificated Note after deduction of
its applicable commission to the Company pursuant to
standard wire instructions given by the Company.
E. In the case of Notes sold through the Offering Agent,
as agent, the Offering Agent will deliver the
Certificated Note (with confirmations), as well as a
copy of the Prospectus and any applicable Pricing
Supplement or Supplements received from the Trustee
to the purchaser against payment
</TABLE>
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<PAGE> 69
<TABLE>
<S> <C>
in immediately available funds.
F. The Trustee will send Stub 3 to the
Company.
Settlement For offers to purchase Certificated Notes accepted by the
Procedures Company, Settlement Procedures "A" through "F" set forth
Timetable: above shall be completed as soon as possible but not later
than the respective times (New York City time) set forth
below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the sale dateB
C-D 2:15 p.m. on Settlement Date
E 3:00 p.m. on Settlement Date
F 5:00 p.m. on Settlement Date
Failure to Settle: In the case of Notes sold through the Offering Agent, as
agent, if an investor or other purchaser of a Certificated
Note from the Company shall either fail to accept delivery of
or make payment for a Certificated Note on the date fixed for
settlement, the Offering Agent will forthwith notify the
Trustee and the Company by telephone, confirmed in writing,
and return the Certificated Note to the Trustee.
The Trustee, upon receipt of the Certificated Note from the
Offering Agent, will immediately advise the Company and the
Company will promptly arrange to credit the account of the
Offering Agent in an amount of immediately available funds
equal to the amount previously paid to the Company by such
Offering Agent in settlement for the Certificated Note. Such
credits will be made on the Settlement Date if possible, and
in any event not later than the Business Day following the
Settlement Date; provided that the Company has received
notice on the same day. If such failure shall have occurred
for any reason other than failure by such Offering Agent to
perform its obligations hereunder or under the Distribution
Agreement, the Company will reimburse such Offering Agent for
its loss of the use of funds during the period when the funds
were credited to the account of the Company. Immediately upon
receipt of the Certificated Note in respect of which the
failure occurred, the Trustee will cancel and destroy the
Certificated Note, make appropriate entries in its records to
reflect the fact that the Note was never issued, and
accordingly notify in writing the Company.
</TABLE>
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<PAGE> 70
EXHIBIT B
MCN ENERGY ENTERPRISES INC.
Medium-Term Notes, Series C
Due Nine Months or more from Date of Issue
TERMS AGREEMENT
September __, 1999
MCN Energy Enterprises Inc.
500 Griswold Street
Detroit, Michigan 48226
Attention:
Subject in all respects to the terms and conditions of the
Distribution Agreement dated September 22, 1999 (the "Agreement"), among you and
MCN Energy Enterprises Inc. (the "Company") and MCN Energy Group Inc., the
undersigned agrees to purchase the following Medium-Term Notes, Series C of the
Company:
Aggregate Principal Amount:
<TABLE>
<CAPTION>
Principal Amount
Name of Notes
---- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................ $
Banc One Capital Markets, Inc................................ $
Salomon Smith Barney Inc..................................... $
Total........ $
===========
</TABLE>
Interest Rate:
Interest Reset Period:
Maximum or Minimum Interest Rates:
Spread and/or Spread Multiplier:
Date of Maturity:
Interest Payment Dates:
Record Dates:
<PAGE> 71
Redemption/Repayment:
Price to Public:
Purchase Price: _____% of Principal Amount [plus accrued interest from
September __, 1999.]
Purchase Date and Time:
Other Provisions:
Place for Delivery of Notes and Payment Therefor:
Form:
Method of Payment:
Modification, if any, in the requirements to deliver the documents specified in
Section 6 of the Agreement:
Period during which additional debt securities of the Company may not be sold
pursuant to Section 3(k) of the Agreement:
During the period beginning from the date of this Terms Agreement and
continuing to and including September __, 1999.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _________________________________
Name:
Title:
BANC ONE CAPITAL MARKETS INC.
By: _________________________________
Name:
Title:
-2-
<PAGE> 72
SALOMON SMITH BARNEY INC.
By: ___________________________________
Name:
Title:
Accepted:
MCN ENERGY ENTERPRISES INC.
By: ______________________________
Name:
Title:
-3-
<PAGE> 1
EXHIBIT 4-1
[FORM OF NOTE]
Registered
No. ______
CUSIP 55268K____
If Indicated on the face hereof that this note is a global
security, unless and until it is exchanged in whole or in part for the
individual securities represented hereby, it 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 or a nominee of such
successor depositary, unless this certificate is presented by an authorized
representative of the Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of the depository
Trust Company and any payment is made to Cede & Co. ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
MCN ENERGY ENTERPRISES INC.
MEDIUM-TERM NOTES, SERIES C
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
.........................
If applicable, the "Total Amount of OID", "Yield to Maturity"
and "Initial Accrual Period OID" (computed under the
designated method) below will be completed solely for the
purposes of applying the Federal income tax original issue
discount ("OID") rules.
Floating Rate Note [ ] ______% Fixed Rate Note [ ]
Global Security: [ ] Yes [ ] No
Original Issue Date: Principal Amount:
Interest Accrual Date: Issue Price:
Interest Payment Dates:
Stated Maturity:
Optional Repayment
Date(s): Repayment Price(s):
Total Amount of OID:
Yield to Maturity:
Initial Accrual
Period OID:
1
<PAGE> 2
Initial Redemption Date:
Initial Redemption Percentage:____%
Annual Redemption Percentage Reduction:____%
Other Provisions:
Only Applicable if this is a Floating Rate Note:
Initial Interest Rate: Spread (plus or minus):
Index Maturity: Spread Multiplier:
Base Rate: Maximum Interest Rate:
Interest Reset Period: Minimum Interest Rate:
Interest Reset Dates:
Interest Determination Dates:
Interest Payment Period:
Calculation Dates:
2
<PAGE> 3
MCN ENERGY ENTERPRISES INC.(f/k/a MCN Investment Corporation),
a corporation duly organized and existing under the laws of Michigan (herein
called the "Company," which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to or registered assigns, the principal sum of Dollars at
Stated Maturity as set forth above and to pay interest thereon as described
below.
The principal of (and premium, if any) and interest on this
Note are payable by the Company in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
NOTE SET FORTH BELOW, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been
executed by the Trustee under the Indenture by manual signature, this Note shall
not be entitled to any benefit under the Indenture, or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated:
MCN ENERGY ENTERPRISES INC.
By_________________________________
Attest:
__________________________________ [SEAL]
Secretary
Trustee's Certificate of
Authentication
This is one of the
Securities of the series
provided for under the
within-mentioned Indenture.
Bank One Trust Company, NA,
as Trustee
By: _____________________________
Authorized Signatory
3
<PAGE> 4
1. This Note is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of September 1, 1995 (herein called the
"Indenture"), between the Company and Bank One Trust Company, NA (f/k/a NBD
Bank), as Trustee (herein called 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, limitations 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. As provided in the
Indenture, the Securities may be issued in one or more series which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject
to different redemption provisions, if any, may be subject to different sinking,
purchase or analogous funds, if any, may be subject to different covenants and
Events of Default and may otherwise vary as in the Indenture provided or
permitted. This Note is one of a series designated on the face hereof as
Medium-Term Notes, Series C (the "Notes"), limited to $620,000,000 in aggregate
principal amount. The Notes of this series may be issued at various times with
different maturity dates and different principal repayment provisions, may bear
interest at different rates, and may otherwise vary, all as provided in the
Indenture.
2. A. The regular record date (the "Regular Record Date") for a
Fixed Rate Note will be the fifteenth day, whether or not a Business Day, of the
calendar month immediately preceding the month in which the related Interest
Payment Date (as defined below) occurs and for a Floating Rate Note will be the
fifteenth day, whether or not a Business Day, immediately preceding the related
Interest Payment Date (as defined below) (unless otherwise shown on the face
hereof or specified in paragraph B below). Interest which is payable and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the person in whose name the Note is registered at the close of business on
the Regular Record Date for such Interest Payment Date; provided, however, that
interest payable on the Interest Payment Date occurring at Stated Maturity will
be to the person to whom principal shall be payable. "Maturity Date" means the
date on which the principal amount hereof becomes due and payable, whether at
Stated Maturity or earlier by declaration of acceleration, call for redemption,
repayment or otherwise. Notwithstanding the foregoing, any interest that is
payable but not punctually paid or duly provided for on any Interest Payment
Date shall forthwith cease to be payable to the registered owner hereof on such
Regular Record Date, and may be paid to the person in whose name such note is
registered on the close of business on a special record date (the "Special
Record Date") for the payment
4
<PAGE> 5
of such Defaulted Interest to be fixed by the Trustee, notice whereof having
been given to the Holder of such Note not less than ten days prior to such
Special Record Date, or may be paid at any time and in any other lawful manner,
or as more fully provided in the Indenture. The term "Business Day" as used
herein shall mean any day other than a Saturday or Sunday, which is (i) not a
day on which banking institutions or trust companies in the City of New York are
authorized or required by law, regulation or executive order to close and (ii)
if such Note is a LIBOR Note (as defined below), a London Business Day. "London
Business Day" with respect to any Note means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market. In
connection with any calculations, all percentages resulting from any calculation
on Floating Rate Notes will be rounded, if necessary, to the nearest 1/100,000
of 1% (.0000001), with five one-millionths of a percentage point rounded
upwards, and all dollar amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded to the nearest cent, with one-half cent
being rounded upwards.
B. If this is a Fixed Rate Note, the Company promises to pay
interest on the principal amount at the rate per annum shown on the face hereof
until the principal amount hereof is paid or duly made available for payment.
Unless otherwise provided on the face hereof, the Company will pay interest
semi-annually in arrears on March 1 and September 1 (each an "Interest Payment
Date"), commencing with the Interest Payment Date immediately following the
Original Issue Date shown on the face hereof and at the Maturity Date; provided,
however, that the first payment of interest on any Fixed Rate Note with an
Original Issue Date shown on the face hereof between a Regular Record Date and
an Interest Payment Date will be made on the Interest Payment Date following the
next succeeding Regular Record Date; provided, further, that any payment
required to be made on a date that is not a Business Day need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment. Unless otherwise specified on the
face hereof the Regular Record Date with respect to Interest Payment Dates
occurring on March 1 and September 1 shall be the preceding February 15 and
August 15, respectively. Interest will accrue from and including the most recent
Interest Payment Date or, if no interest has been paid or duly provided for,
from and including the Original Issue Date on the face hereof, to, but excluding
the Interest Payment Date. The amount of such interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months.
C. If this is a Floating Rate Note, the Company promises to pay
interest on the principal amount at the rate per annum determined in accordance
with the provisions below under the heading "Determination of CD Rate",
"Determination of CMT
5
<PAGE> 6
Rate", "Determination of Commercial Paper Rate", "Determination of Eleventh
District Cost of Funds Rate", "Determination of Federal Funds Rate",
"Determination of LIBOR", "Determination of Prime Rate" or "Determination of
Treasury Rate", depending upon whether the Base Rate specified above is CD Rate,
CMT Rate, Commercial Paper Rate, Eleventh District Cost of Funds Rate, Federal
Funds Rate, LIBOR, Prime Rate or Treasury Rate, respectively, and in accordance
with any applicable provisions on the face hereof under the heading "Other
Provisions", until the principal hereof is paid or duly made available for
payment. The Company will pay interest monthly, quarterly, semi-annually or
annually as specified on the face hereof under "Interest Payment Period",
commencing with the first Interest Payment Date specified on the face hereof
next succeeding the Original Issue Date, and at the Maturity Date; provided,
however, that the first payment of interest on any Floating Rate Note with an
Original Issue Date shown on the face hereof between a Regular Record Date and
an Interest Payment Date will be made on the Interest Payment Date following the
next succeeding Regular Record Date. Unless otherwise provided on the face
hereof and below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly, or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified on the face hereof; in the case of Floating Rate Notes that reset
quarterly, on the third Wednesday of March, June, September and December of each
year; in the case of Floating Rate Notes that reset semiannually, on the third
Wednesday of each of two months of each year specified on the face hereof; and
in the case of Floating Rate Notes that reset annually, on the third Wednesday
of the one month of each year specified on the face hereof (each such day being
an "Interest Payment Date") and, in each case, on the Maturity Date. If any
Interest Payment Date for any Floating Rate Note (other than the Stated
Maturity) would otherwise be a day that is not a Business Day, such Interest
Payment Date will be postponed to the next succeeding day that is a Business
Day, except that in the case of a LIBOR Note, if such Business Day falls in the
next succeeding calendar month, such Interest Payment Date will be the
immediately preceding Business Day. If the Stated Maturity of a Floating Rate
Note falls on a day that is not a Business Day, the required payment of
principal, premium, if any, and/or interest will be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest shall
accrue on such payment for the period from and after the Stated Maturity to the
date of such payment on the next succeeding Business Day.
The interest payable on a Floating Rate Note on each Interest Payment
Date will include accrued interest from and including the Original Issue Date or
from and including the last date in respect of which interest has been paid or
duly provided for, as the case may be, to but excluding such Interest Payment
Date or the Maturity Date, as the case may be. Such accrued interest will be
calculated by multiplying the principal amount of such Note by an accrued
interest factor. Such accrued
6
<PAGE> 7
interest factor will be computed by adding the interest factor calculated for
each day in the period for which accrued interest is being calculated. Unless
otherwise specified on the face hereof, the interest factor (expressed as a
decimal calculated to seven decimal places without rounding) for each such day
is computed by dividing the interest rate in effect on such day by 360, if the
Base Rate is CD Rate, Commercial Paper Rate, Eleventh District Cost of Funds
Rate, LIBOR, Federal Funds Rate or Prime Rate, or by the actual number of days
in the year if the Base Rate is the CMT Rate or the Treasury Rate, as indicated
on the face hereof. For purposes of making the foregoing calculation, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date. The interest rate in effect from the Original Issue Date
to the first Interest Reset Date (the "Initial Interest Rate") will be
determined as if the Original Issue Date were an Interest Reset Date.
Notwithstanding the foregoing, the interest rate hereon shall not be greater
than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate,
if any, shown on the face hereof. In addition, the interest rate hereon shall in
no event be higher than the maximum rate, if any, permitted by Michigan law, as
the same may be modified by United States law of general application. Commencing
with the first Interest Reset Date specified on the face hereof following the
Original Issue Date and thereafter upon each succeeding Interest Reset Date
specified on the face hereof, the rate at which interest on a Floating Rate Note
is payable shall be adjusted as specified on the face hereof under Interest
Reset Period; provided, however, that if any Interest Reset Date would otherwise
be a day that is not a Business Day, such Interest Reset Date shall be postponed
to the next day that is a Business Day, except that (i) if the Base Rate is
LIBOR and such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business Day or (ii) if
the Base Rate is Treasury Rate and the Interest Reset Date falls on a date which
is an auction date, the Interest Reset Date shall be the following day that is a
Business Day.
The interest rate applicable to each Interest Reset Period commencing
on the Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date on or prior to the related Calculation Date (as
defined below). The "Interest Determination Date" with respect to the CD Rate,
CMT Rate, Commercial Paper Rate, Federal Funds Rate and Prime Rate will be the
second Business Day immediately preceding the applicable Interest Reset Date and
the Interest Determination Date with respect to LIBOR will be the second London
Business Day immediately preceding the applicable Interest Reset Date. With
respect to the Eleventh District Cost of Funds Rate, the Interest Determination
Date will be the last working day of the month immediately preceding each
Interest Reset Date on which the
7
<PAGE> 8
Federal Home Loan Bank of San Francisco publishes the Index. With respect to the
Treasury Rate, the Interest Determination Date will be the day in the week in
which the applicable Interest Reset Date falls on which day direct obligations
of the United States ("Treasury Bills") of the Index Maturity specified on the
face hereof are normally auctioned. Treasury Bills are normally sold at an
auction held on Monday of each week, unless that day is a legal holiday, in
which case the auction is normally held on the following Tuesday, except that
such auction may be held on the preceding Friday; provided, however, that if an
auction is held on the Friday of the week preceding the applicable Interest
Reset Date, the Interest Determination Date will be such preceding Friday.
Unless otherwise provided on the face hereof, the "Calculation Date",
if applicable, pertaining to any Interest Determination Date will be the earlier
of (i) the tenth calendar day after such Interest Determination Date, or, if
such day is not a Business Day, the next succeeding Business Day or (ii) the
Business Day immediately preceding the applicable Interest Payment Date or the
Maturity Date, as the case may be.
Subject to applicable provisions of law and except as specified herein,
on each Interest Reset Date the rate of interest shall be the rate determined in
accordance with the provisions of the applicable heading below.
Determination of CD Rate. If the Base Rate indicated on the face hereof is the
CD Rate, the interest rate shall equal the rate on the Interest Determination
Date specified on the face hereof for negotiable certificates of deposit having
the Index Maturity specified on the face hereof as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication of the Board of Governors
of the Federal Reserve System ("H.15(519)") under the heading "CDs (Secondary
Market)" or, if not so published by 3:00 p.m., New York City time, on the
related Calculation Date, the rate on such Interest Determination Date for
negotiable certificates of deposit of the Index Maturity designated on the face
hereof as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Certificates of Deposit." If such rate is not published by either
H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on the
related Calculation Date, then the CD Rate on such Interest Determination Date
will be calculated by the Calculation Agent and will be the arithmetic mean of
the secondary market rates as of 10:00 a.m., New York City time, on such
Interest Determination Date of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York (which may include any of
the Agents or their affiliates) selected by the
8
<PAGE> 9
Calculation Agent for negotiable certificates of deposit of major United States
money market banks for negotiable certificates of deposit with a remaining
maturity closest to the Index Maturity designated on the face hereof in an
amount that is representative for a single transaction in that market at that
time. In each of the above cases, the rate shall be adjusted by the addition or
subtraction of the Spread, if any, specified on the face hereof, or by
multiplication by the Spread Multiplier, if any, specified on the face hereof.
If the dealers selected as aforesaid by the Calculation Agent are not quoting
rates as mentioned in this sentence, the CD Rate determined as of such Interest
Determination Date will be the CD Rate in effect on such Interest Determination
Date.
Determination of CMT Rate. If an Interest Rate Basis for this Note is specified
on the face hereof as the CMT Rate, the CMT Rate shall be determined as of the
applicable Interest Determination Date (a "CMT Rate Interest Determination
Date") as the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption "...Treasury Constant Maturities...Federal Reserve
Board Release H.15...Mondays Approximately 3:45 P.M.", under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7051, or any other page as may replace such page on such
service, the rate on such CMT Rate Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, or any other page as may replace such page
on such service, the weekly or monthly average, as specified on the face hereof,
for the week or month, as applicable, ended immediately preceding the week or
month, as applicable, in which such CMT Rate Interest Determination Date falls.
If such rate is no longer displayed on the relevant page or is not so displayed
by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for such CMT Rate Interest Determination Date will be such treasury
constant maturity rate for the Designated CMT Maturity Index as published in
H.15(519). If such rate is no longer published or is not so published by 3:00
P.M., New York City time, on the related Calculation Date, then the CMT Rate on
such CMT Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for such CMT Rate Interest
Determination Date as may then be published by either the Board of Governors of
the Federal Reserve System or the United States Department of the Treasury that
the Calculation Agent determines to be comparable to the rate formerly displayed
on the Designated CMT Telerate Page and published in H.15(519). If such
information is not so provided by 3:00 P.M., New York City time, on the related
Calculation Date, then such CMT Rate on the CMT Rate Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity,
based on the arithmetic mean of the secondary market offered rates as of
approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date reported, according
9
<PAGE> 10
to their written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of New York selected
by the Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United Stated ("Treasury Notes") with an original
maturity of approximately the Designated CMT Maturity Index and a remaining term
to maturity of not less than such Designated CMT Maturity Index and a remaining
term to maturity of not less than such Designated CMT Maturity Index minus one
year. If the Calculation Agent is unable to obtain three such Treasury Note
quotations, the CMT Rate on such CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on the
arithmetic mean of the secondary market offered rates as of approximately 3:30
P.M., New York City time , on such CMT Rate Interest Determination Date of three
Reference Dealers in The City of New York (from five such Reference Dealers
selected by the Calculation Agent and eliminating th highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)),for Treasury Notes with an original
maturity of the number of years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closet to the Designated CMT
Maturity Index and in an amount of at least U.S. $100 million. If three or four
(and not five) of such Reference Dealers are quoting as described above, then
the CMT Rate will be calculated by the Calculation Agent based on the arithmetic
mean of the offered rates obtained and neither the highest nor the lowest of
such quotes will be eliminated; provided, however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting as mentioned
herein, the CMT Rate determined as of such CMT Rate Interest Determination Date
will be the CMT Rate in effect on such CMT Rate Interest Determination Date. If
two Treasury Notes with an original maturity as described in the second
preceding sentence have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the Calculation Agent will obtain from five
Reference Dealers quotations for the Treasury Note with the shorter remaining
term to maturity. In each of the above cases, the rate shall be adjusted by the
addition or subtraction of the Spread, if any, specified on the face hereof, or
by multiplication by the Spread Multiplier, if any, specified on the face
hereof.
"Designated CMT Telerate Page" means the display on Bridge Telerate,
Inc. (or any successor service) on the page specified on the face hereof (or any
other page as may replace such page on such service) for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519) or, if no such
page is specified on the face hereof, page 7052.
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<PAGE> 11
"Designated CMT Maturity Index" means the original period to maturity
of the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30
years) specified on the face hereof with respect to which the CMT Rate will be
calculated or, if no such maturity is specified on the face hereof, 2 years.
Determination of Commercial Paper Rate. If the Base Rate indicated on the face
hereof is the Commercial Paper Rate, the interest rate shall equal the Money
Market Yield (as defined below) on the Interest Determination Date specified on
the face hereof of the rate for commercial paper having the Index Maturity
specified on the face hereof, as such rate shall be published in H.15(519) under
the heading "Commercial Paper-Nonfinancial." In the event that such rate is not
published by 3:00 p.m., New York City time, on the related Calculation Date,
then the Commercial Paper Rate will be the Money Market Yield on such Interest
Determination Date of the rate for commercial paper of the Index Maturity
specified on the face hereof as published in H.15 Daily Update, or other
recognized electronic source used for the purpose of displaying the applicable
rate, under the caption "Commercial Paper-Nonfinancial." If by 3:00 p.m., New
York City time, on the related Calculation Date such rate is not yet published
in either H.15(519) or Composite Quotations, then the Commercial Paper Rate on
such Interest Determination Date will be calculated by the Calculation Agent and
will be the Money Market Yield of the arithmetic mean of the offered rates, at
approximately 11:00 a.m., New York City time, on such Interest Determination
Date of three leading dealers of commercial paper in The City of New York (which
may include any of the Agents or their affiliates) selected by the Calculation
Agent for commercial paper having the Index Maturity designated on the face
hereof placed for industrial issuers whose bonds are rated "AA", or the
equivalent, from a nationally recognized statistical rating organization. In
each of the above cases, the rate shall be adjusted by the addition or
subtraction of the Spread, if any, specified on the face hereof, or by
multiplication by the Spread Multiplier, if any, specified on the face hereof.
If the dealers selected as aforesaid are not quoting rates described in this
sentence, the Commercial Paper Rate will be the Commercial Paper Rate in effect
on such Interest Determination Date.
"Money Market Yield" means yield (expressed as a percentage) calculated
in accordance with the following formula:
Money Market Yield = D x 360 x 100
------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
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<PAGE> 12
Determination of Eleventh District Cost of Funds Rate. If the Base Rate for this
Note is indicated on the face hereof as Eleventh District Cost of Funds Rate,
the Eleventh District Cost of Funds Rate shall be determined as of the
applicable Interest Determination Date (an "Eleventh District Cost of Funds Rate
Interest Determination Date") as the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month in which
such Eleventh District Cost of Funds Rate Interest Determination Date falls, as
set forth under the caption "11th District" on the display on Bridge Telerate,
Inc. (or any successor service) on page 7058 or any other page as may replace
such page on such service ("Telerate Page 7058") as of 11:00 A.M., San Francisco
time, on such Eleventh District Cost of Funds Rate Interest Determination Date.
If such rate does not appear on Telerate Page 7058 on such Eleventh District
Cost of Funds Rate Interest Determination Date, then the Eleventh District Cost
of Funds Rate on such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the monthly weighted average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District ("FHLB")that
was most recently announced (the"Index") by the FHLB of San Francisco as such
cost of funds for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date. In each of the above
cases, the rate shall be adjusted by the addition or subtraction of the Spread,
if any, specified on the face hereof, or by multiplication by the Spread
Multiplier, if any, specified on the face hereof. If the FHLB of San Francisco
fails to announce the Index on or prior to such Eleventh District Cost of Funds
Rate Interest Determination Date for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date, the
Eleventh District Cost of Funds Rate determined as of such Eleventh District
Cost of Funds Rate Interest Determination Date will be the Eleventh District
Cost of Funds Rate in effect on such Eleventh District Cost of Funds Rate
Interest Determination Date.
Determination of Federal Funds Rate. If the Base Rate indicated on the face
hereof is the Federal Funds Rate, the interest rate shall equal the rate on the
Interest Determination Date specified on the face hereof for federal funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
so published by 3:00 p.m., New York City time, on the related Calculation Date,
the rate on such Interest Determination Date as published in H.15 Daily Update,
or other recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "Federal Funds (Effective)." If by 3:00 p.m.,
New York City time, on the related Calculation Date such rate is not published
in either H.15(519) or Composite Quotations, then the Federal Funds Rate on such
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the rates for the last transaction in overnight United
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<PAGE> 13
States dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include any of the Agents or
their affiliates) selected by the Calculation Agent prior to 9:00 a.m., New York
City time, on such Interest Determination Date. In each of the above cases, the
rate shall be adjusted by the addition or subtraction of the Spread, if any,
specified on the face hereof, or by multiplication by the Spread Multiplier, if
any, specified on the face hereof. If the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate determined as of such Interest Determination Date will be the Federal
Funds Rate in effect on such Interest Determination Date.
Determination of LIBOR. If the Base Rate indicated on the face hereof is LIBOR,
the interest rate with respect to the Interest Determination Date specified on
the face hereof shall be determined in accordance with the following provisions:
(i) With respect to an Interest Determination Date, LIBOR will be
either: (a) if "LIBOR Reuters" is specified on the face hereof, the
arithmetic mean of the offered rates (unless the specified Designated LIBOR
Page by its terms provides for only a single rate, in which case such single
rate shall be used) for deposits in U.S. dollars having the Index Maturity
specified on the face hereof, commencing on the second London Business Day
immediately following such Interest Determination Date, which appear on the
Reuters Screen LIBO Page as of 11:00 a.m., London time, on such Interest
Determination Date, if at least two such rates appear (unless, as aforesaid,
only a single rate is required) on the Reuters Screen LIBO Page ("LIBOR
Reuters"), or (b) if "LIBOR Telerate" is specified on the face hereof or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for
calculating LIBOR, the rate for deposits in U.S. dollars having the Index
Maturity designated on the face hereof, commencing on the second London
Business Day immediately following such Interest Determination Date, that
appears on the Telerate Page 3750 as of 11:00 a.m., London time, on such
Interest Determination Date ("LIBOR Telerate").
(ii) With respect to an Interest Determination Date on which fewer than
two offered rates appear, or no rate appears, as the case may be, on the
designated LIBOR page as specified above, LIBOR will be determined on the
basis of the rates at which deposits in U.S. dollars having the Index
Maturity designated on the face hereof are at approximately 11:00 a.m.,
London time, on such Interest Determination Date by four reference major
banks ("Reference Banks") in the London interbank market selected by the
Calculation Agent to prime banks in the London interbank market commencing
on the second London Business Day immediately following such Interest
Determination Date and in a principal amount that is representative for a
single
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<PAGE> 14
transaction in such market at such time. The Calculation Agent will request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, LIBOR
for such Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR for such
Interest Determination Date will be the arithmetic mean of the rates quoted
at approximately 11:00 a.m., New York City time, on such Interest
Determination Date by three major banks (which may include the Agents) in
The City of New York selected by Calculation Agent for loans in U.S. dollars
to leading European banks having the specified Index Maturity designated on
the face hereof and in a principal amount that is representative for a
single transaction in such market at such time; provided, however, that if
the banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR determined as of such Interest
Determination Date will be LIBOR in effect on such Interest Determination
Date.
In each of the above cases, the rate shall be adjusted by the addition or
subtraction of the Spread, if any, specified on the face hereof, or by
multiplication by the Spread Multiplier, if any, specified on the face
hereof.
Unless otherwise indicated on the face hereof, "Reuters Screen LIBO Page"
means the display designated as Page "LIBO" on the Reuters Monitor Money
Rate Service (or such other page as may replace the LIBO page on that
service for the purpose of displaying London interbank rates of major
banks). "Telerate Page 3750" means the display designated as page "3750" on
the Bridge Telerate Inc. (or such other page as may replace the 3750 page on
that service or such other service or service as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
rates for U.S. dollar deposits).
Determination of Prime Rate. If the Base Rate, indicated on the face hereof is
the Prime Rate, the interest rate shall equal the rate on the Interest
Determination Date specified on the face hereof as published in H.15(519) under
the heading "Bank Prime Loan." If such rate is not published prior to 3:00 p.m.,
New York time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by at least four
banks that appear on the Reuters Screen USPRIME1 Page (as defined below) as such
bank's prime rate or base lending rate as in effect for such Interest
Determination Date. If fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Interest Determination Date, the Prime Rate shall be the
arithmetic mean of the prime rates or base lending rates quoted on the basis of
the actual number of days in the year divided by a 360-day year as of the close
of business on such Interest
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<PAGE> 15
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than two such rates appear on the
Reuters Screen USPRIME1 Page, the Prime Rate will be determined by the
Calculation Agent on the basis of the rates furnished in The City of New York by
three substituted banks or trust companies organized and doing business under
the laws of the United States, or any State thereof, having total equity capital
of at least $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates. In each of the above cases, the rate shall be adjusted by the
addition or subtraction of the Spread, if any, specified on the face hereof, or
by multiplication by the Spread Multiplier, if any, specified on the face
hereof. If the banks or trust companies selected as aforesaid are not quoting as
mentioned in the second preceding sentence, the Prime Rate determined as of such
Interest Determination Date will be the Prime Rate in effect on such Interest
Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service (or such other page as may
replace the USPRIME1 page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
Determination of Treasury Rate. If the Base Rate indicated on the face hereof is
the Treasury Rate, the interest rate shall equal the rate on the Interest
Determination Date specified on the face hereof applicable to the most recent
auction of direct obligations of the United States ("Treasury Bills") having the
Index Maturity specified on the face hereof, as such rate shall be published in
H.15(519) under the heading "Treasury Bills -- auction average (investment)" or,
in the event that such rate is not published by 3:00 p.m., New York City time,
on the related Calculation Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the auction of Treasury Bills having
the Index Maturity designated on the face hereof are not published or reported
as provided above by 3:00 p.m., New York City time, on such Calculation Date, or
if no such auction is held in a particular week, then the Treasury Rate will be
calculated by the Calculation Agent and will be a yield to maturity (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Interest
Determination Date, of three leading primary United States government securities
dealers (which may include any of the Agents or their affiliates) selected by
such Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified on the
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<PAGE> 16
face hereof. In each of the above cases, the rate shall be adjusted by the
addition or subtraction of the Spread, if any, specified on the face hereof, or
by multiplication by the Spread Multiplier, if any, specified on the face
hereof. If the dealers selected as aforesaid by the Calculation Agent are not
quoting bid rates as described in this sentence, then the Treasury Rate
determined as of such Interest Determination Date will be the Treasury Rate in
effect on such Interest Determination Date.
3. Unless otherwise specified on the face hereof, Bank One Trust
Company, NA, shall be the Calculation Agent. The Calculation Agent shall
calculate the interest rate in accordance with the foregoing and will confirm in
writing such calculation to the Trustee and any Paying Agent. Neither the
Trustee nor any Paying Agent shall be responsible for any such calculation. At
the request of the Holder hereof the Calculation Agent will provide to the
Holder hereof the interest rate hereon then in effect and, if determined, the
interest rate which will become effective as of the next Interest Reset Date.
4. Unless indicated on the face hereof that this Note is a Global
Security, payments of interest (other than interest payable at the Maturity
Date) will be made by mailing a check to the Holder at the address of the Holder
appearing on the Securities Register on the applicable Record Date or by wire
transfer of immediately available funds, but only if appropriate payment
instructions have been received in writing by the Company's Paying Agent in the
City of Detroit not less that 15 days prior to the applicable Interest Payment
Date. Unless indicated on the face hereof that this Note is a Global Security,
principal and any premium and interest payable at the Maturity Date will be paid
in immediately available funds upon surrender of such Note at the office of a
Paying Agent in the City of Detroit or at such other office or agency as the
Company may designate. If indicated on the face hereof that this Note is a
Global Security, the principal hereof and any premium and interest due on any
Interest Payment Date or at the Maturity Date will be made available to the
Trustee on such date. As soon as possible thereafter, the Trustee will make such
payments to the Depositary in immediately available funds in accordance with
existing arrangements between the Trustee and the Depositary.
5. Unless otherwise specified on the face hereof, the Notes will not
be subject to any sinking fund. The Notes will be redeemable at the option of
the Company prior to the Stated Maturity only if an Initial Redemption Date is
specified on the face hereof. If so specified, the Notes will be subject to
redemption at the option of the Company on any date on and after the applicable
Initial Redemption Date in whole or from time to time in part in increments of
$1,000 or the minimum denomination specified on the face hereof (provided that
any remaining principal amount thereof shall be at least $1,000 or such minimum
16
<PAGE> 17
denomination), at the applicable Redemption Price (as defined below) on notice
given not more than 45 nor less than 30 days prior to the date of redemption and
in accordance with the provisions of the Indenture. "Redemption Price", with
respect to an Note, means an amount equal to the sum of (i) the Initial
Redemption Percentage specified on the face hereof (as adjusted by the Annual
Redemption Percentage Reduction, if applicable) multiplied by the unpaid
principal amount of the portion to be redeemed plus (ii) accrued interest to the
date of redemption. The Initial Redemption Percentage, if any, applicable to a
Note shall decline at each anniversary of the Initial Redemption Date by an
amount equal to the applicable Annual Redemption Percentage Reduction, if any,
until the Redemption Price is equal to 100% of the unpaid principal amount
thereof or the portion thereof to be redeemed.
6. If so specified on the face hereof, the Notes will be repayable by
the Company in whole or in part at the option of the Holders thereof on their
respective Optional Repayment Dates specified on the face hereof. If no Optional
Repayment Date is specified with respect to a Note, such Note will not be
repayable at the option of the Holder thereof prior to Stated Maturity. Any
repayment in part will be in increments of $1,000 or the minimum denomination
specified on the face hereof (provided that any remaining principal amount
thereof shall be at least $1,000 or such minimum denomination). Unless otherwise
specified on the face hereof, the repayment price for any Note to be repaid
means an amount equal to the sum of (i) 100% of the unpaid principal amount
thereof or the portion thereof plus (ii) accrued interest to the date of
repayment. For any Note to be repaid, such Note must be received, together with
the form thereon entitled "Option to Elect Repayment" duly completed, by the
Trustee at its Corporate Trust Office (or such other address of which the
Company shall from time to time notify the Holders) not more than 60 nor less
than 30 days prior to the date of repayment. Exercise of such repayment option
by the Holder will be irrevocable.
If indicated on the face hereof that this Note is a Global
Security, the option for repayment may be exercised by the applicable
Participant that has an account with the Depositary, on behalf of the Holder of
any beneficial interest in this Note, by delivering a written notice
substantially similar to the above mentioned form to the Trustee at its
Corporate Trust Office (or such other address of which the Company shall from
time to time notify the Holders), not more than 60 nor less than 30 days prior
to the date of repayment. A notice of election from the applicable Participants
on behalf of the Holder of any beneficial interest in this Note, to exercise its
option to have such Note repaid must be received by the Trustee by 5:00 p.m.,
New York City time, on the last day for giving such notice. In order to ensure
that notice is received by the Trustee on a particular day, the Holder of any
beneficial interest in this Note, must so direct the applicable
17
<PAGE> 18
Participant before such Participant's deadline for accepting instructions for
that day. Different firms may have different deadlines for accepting
instructions from their customers. Accordingly, the Holder of any beneficial
interest in this Note should consult the Participant through which it owns its
interest therein for the respective deadlines for such Participant. All notices
shall be executed by a duly authorized officer of such Participant (with
signature guaranteed) and shall be irrevocable. In addition, the Holder of any
beneficial interest in this Note, shall effect delivery at the time such notice
of election is given to the Depositary by causing the applicable Participant to
transfer such Holder's interest in this Note on the Depositary's records, to the
Trustee.
7. If an Event of Default with respect to the Notes shall occur and
be continuing, the principal of all of the Notes may be declared due and payable
in the manner and with the effect provided in the Indenture. If the principal of
any Original Issue Discount Note is declared to be due and payable as described
in the Indenture, the amount of principal due and payable with respect to such
Note shall be limited to the sum of the aggregate stated principal amount of
such Note multiplied by the Issue Price (expressed as a percentage of the
aggregate principal amount) indicated on the face hereof plus the original issue
discount accrued from the Original Issue Date indicated on the face hereof to
the date of declaration, which accrual shall be calculated using the "interest
method" (computed in accordance with generally accepted accounting principles)
in effect on the date of declaration. An Original Issue Discount Note is a Note
that has a stated redemption price at its maturity that exceeds its Issue Price
by an amount equal to or greater than a de minimis amount (0.25% of the stated
redemption price at maturity multiplied by the number of complete years to the
Stated Maturity for such Note) and any other Note designated by the Company as
issued with original discount.
8. 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 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
18
<PAGE> 19
their consequences. Any such consent or waiver by the Holder of this Note shall
bind such Holder and all future Holders of this Note and of any Note 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 Note.
9. No reference herein to the Indenture and no provision of this Note
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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
10. The Notes of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this series are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by the
Holder surrendering the same.
11. As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note 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 Note 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 his attorney duly
authorized in writing, and thereupon one or more new Notes of authorized
denominations and for the same maturity and aggregate principal amount, will 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 Note for registration of transfer, the Company,
the Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Note is registered as the owner hereof for all purposes, whether
or not this Note be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
12. Unless otherwise defined herein, all terms used in this Note which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
19
<PAGE> 20
13. The Indenture and this Note shall for all purposes be governed by,
and construed in accordance with, the laws of the State of New York.
14. If indicated on the face hereof that this Note is a Global
Security, no holder of any beneficial interest in this Note held on its behalf
by a Depositary or a nominee of such Depositary shall have any rights under the
Indenture with respect to such Global Security, and such Depositary or nominee
may be treated by the Company, the Trustee, and any agent of the Company or the
Trustee as the owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall impair, as between a
Depositary and such holders of beneficial interests, the operation of customary
practices governing the exercise of the rights of the Depositary as holder of
any Security.
15. If not indicated on the face hereof that this Note is a Global
Security, this Note is exchangeable for a like aggregate principal amount of
Notes of a different authorized denomination, as requested by the Holder
surrendering the same, as provided in the Indenture and subject to certain
limitations therein set forth. If indicated on the face hereof that this Note is
a Global Security, it is exchangeable in whole but not in part, for Notes
registered in the names of Persons other than the Depositary or its nominee or
in the name of a successor to the depositary or a nominee of such successor
depositary only if (i) the Depositary notifies the Company that it is unwilling
or unable to continue as Depositary for this Note or if at any time such
Depositary shall no longer be eligible or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation,
and, in either case, a successor depositary is not appointed by the Company, or
(ii) the Company in its discretion at any time determines not to have all of the
Notes represented by one or more Global Security or Securities. If this Note is
exchangeable pursuant to the preceding sentence, it shall be exchangeable for
Notes of like tenor and terms in definitive form in aggregate principal amount
equal to the principal amount of the Global Security. Subject to the foregoing,
if this Note is a Global Security it is not exchangeable, except for a Note or
Notes of the same aggregate denominations to be registered in the name of such
depositary or its nominee or in the name of a successor to the Depositary or a
nominee of such successor depositary.
20
<PAGE> 21
ASSIGNMENT FORM
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 Guaranty: ____________________________________________________________
(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:__________________________________________
1
<PAGE> 22
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company
to repay the within Note (or portion hereof specified below) pursuant to its
terms at a price equal to the applicable Repayment Price thereof together with
interest to the Optional Repayment Date, to the undersigned at _________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the Holder elects to have repaid
___________________; and specify the denomination or denominations (which shall
be in authorized denominations) of the Notes to be issued to the Holder for the
portion of the within Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion not being repaid):
__________________.
2
