EXHIBIT 4(i)
CERTIFICATE OF DESIGNATION
OF
4.50% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
CMS ENERGY CORPORATION
Pursuant to Section 302(4) of the Michigan Business Corporation Act,
MCLA Section 450.1302(4):
CMS ENERGY CORPORATION, a Michigan corporation (the "Corporation"),
does hereby certify that the following resolution was duly adopted pursuant to
the authority of the Board of Directors of the Corporation, with the provisions
thereof fixing the number of shares of the series and the dividend rate being
set through a Special Financing Committee of the Board of Directors:
RESOLVED: That, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of Article
III of the Restated Articles of Incorporation of the Corporation , as amended
from time to time (the "Articles of Incorporation"), and pursuant to Section
302(4) of the Michigan Business Corporation Act, the Board of Directors hereby
establishes a series of the preferred stock of the Corporation and hereby states
that the series' voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof (in addition to the provisions set forth in the Articles
of Incorporation which are applicable to the preferred stock of all series),
shall be as follows:
1. Designation and Amount; Ranking.
(a) There shall be created from the 10,000,000 shares of preferred
stock, par value $0.01 per share, of the Corporation authorized to be issued
pursuant to the Articles of Incorporation, a series of preferred stock,
designated as the "4.50% Cumulative Convertible Preferred Stock," par value
$0.01 per share (the "Preferred Stock"), and the number of shares of such series
shall be 5,000,000. Such number of shares may be decreased by resolution of the
Board of Directors; provided that no decrease shall reduce the number of shares
of Preferred Stock to a number less than that of the shares of Preferred Stock
then outstanding plus the number of shares issuable upon exercise of options or
rights then outstanding.
(b) The Preferred Stock will, with respect to both dividend rights
and rights upon the liquidation, winding-up or dissolution of the Corporation,
rank (i) senior to all Junior Stock and (ii) on a parity with all other Parity
Stock.
2. Definitions. As used herein, the following terms shall have
the following meanings:
"Accumulated Dividends" shall mean, with respect to any share
of Preferred Stock, as of any date, the aggregate accumulated and
unpaid dividends on such share from and including the most recent
Dividend Payment Date to which dividends have been paid (or the Issue
Date, if such date is prior to the first Dividend Payment Date) to but
not including such date.
"Additional Dividends" shall have the meaning given to it in
Section 3(b).
"Affiliate" shall have the meaning ascribed to it, on the date
hereof, under Rule 405 of the Securities Act..
"Agent Members" shall have the meaning given to it in Section
11(a)(ii).
"Board of Directors" shall mean the Board of Directors of the
Corporation or, with respect to any action to be taken by the Board of
Directors, any committee (special or otherwise) of the Board of
Directors duly authorized to take such action.
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"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in The City of New York
are authorized or required by law or executive order to close.
"Certificate of Designation" means this certificate of
designation designating the Preferred Stock.
"Certificated Preferred Stock" shall have the meaning given to
it in Section 4(f).
"Common Equity" of any Person means capital stock of such
Person that is generally entitled to (i) vote in the election of
directors of such Person or (ii) if such Person is not a corporation,
vote or otherwise participate in the selection of the governing body,
partners, managers or others that will control the management or
policies of such Person.
"Common Stock" shall mean the common stock, par value $0.01
per share, of the Corporation, or any other class of stock resulting
from successive changes or reclassifications of such common stock
consisting solely of changes in par value, or from par value to no par
value, or as a result of a subdivision, combination or merger,
consolidation or similar transaction in which the Corporation is a
constituent corporation.
"Continuing Director" means a director who either was a member
of the Board of Directors on December 5, 2003 or who becomes a member
of the Board of Directors subsequent to that date and whose
appointment, election or nomination for election by the Corporation's
shareholders is duly approved by a majority of the Continuing Directors
on the Board of Directors at the time of such approval, either by a
specific vote or by approval of the proxy statement issued by the
Corporation on behalf of the Board of Directors in which such
individual is named as nominee for director.
"Conversion Agent" means the office or agency designated by
the Corporation where Preferred Stock may be presented for conversion.
Initially, the Conversion Agent shall be the Corporation located at One
Energy Plaza, Jackson, Michigan 49201.
"Conversion Date" shall have the meaning given to it in
Section 7(b).
"Conversion Notice" shall have the meaning given to it in
Section 7(a).
"Conversion Price" shall mean $9.893 per share of Common
Stock.
"Conversion Rate" shall mean the number of shares of Common
Stock issuable upon conversion of a share of Preferred Stock per
Liquidation Preference. The initial Conversion Rate is 5.0541 shares of
Common Stock issuable upon conversion of a share of Preferred Stock per
Liquidation Preference.
"Corporation Notice" shall have the meaning given to it in
Section 4(e).
"Corporation Notice Date" shall have the meaning given to it
in Section 4(e).
"Distributed Assets or Securities" shall have the meaning
given to it in Section 7(f)(iii).
"Dividend Payment Date" shall mean March 1, June 1, September
1 and December 1 of each year, commencing March 1, 2004.
"Dividend Rate" shall have the meaning given to it in Section
3(a).
"Dividend Record Date" shall mean February 15, May 15, August
15 and November 15 of each year.
"DTC" or "Depository" means The Depository Trust Company.
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"Equity Interests" means any capital stock, partnership, joint
venture, member or limited liability or unlimited liability company
interest, beneficial interest in a trust or similar entity or other
equity interest or investment of whatever nature.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Fair Market Value" means the amount which a willing buyer
would pay a willing seller in an arm's length transaction.
A "Fundamental Change" shall be deemed to have occurred at
such time after the original issuance of the Preferred Stock that any
of the following occurs: (i) the Common Stock or other capital stock
into which the Preferred Stock is convertible is neither listed for
trading on a United States national securities exchange nor approved
for trading on the NASDAQ National Market or another established
automated over-the-counter trading market in the United States; (ii) a
"person" or "group" within the meaning of Section 13(d) of the Exchange
Act, other than the Corporation, any subsidiary of the Corporation or
any employee benefit plan of the Corporation or any such subsidiary,
files a Schedule TO (or any other schedule, form or report under the
Exchange Act) disclosing that such person or group has become the
direct or indirect ultimate "beneficial owner" (as such term is used in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or
group shall be deemed to have "beneficial ownership" of all shares that
such Person or group has the right to acquire whether such right is
exercisable immediately or only after the passage of time) of Common
Equity of the Corporation representing more than 50% of the voting
power of the Corporation's Common Equity; (iii) consummation of any
share exchange, consolidation or merger of the Corporation pursuant to
which the Common Stock will be converted into cash, securities or other
property or any sale, lease or other transfer (in one transaction or a
series of transactions) of all or substantially all of the consolidated
assets of the Corporation and its subsidiaries, taken as a whole, to
any Person (other than the Corporation or one or more of the
Corporation's subsidiaries); provided, however, that a transaction
where the holders of the Corporation's Common Equity immediately prior
to such transaction own, directly or indirectly, more than 50% of the
aggregate voting power of all classes of Common Equity of the
continuing or surviving corporation or transferee immediately after
such event shall not be a Fundamental Change; or (iv) Continuing
Directors cease to constitute at least a majority of the Board of
Directors; provided, however, that a Fundamental Change shall not be
deemed to have occurred in respect of any of the foregoing if either
(A) the Last Reported Sale Price per share of Common Stock for any five
Trading Days within the period of 10 consecutive Trading Days ending
immediately before the later of the Fundamental Change or the public
announcement thereof shall equal or exceed 105% of the Conversion Price
in effect immediately before the Fundamental Change or the public
announcement thereof or (B) at least 90% of the consideration
(excluding cash payments for fractional shares) in the transaction or
transactions constituting the Fundamental Change consists of shares of
capital stock traded on a national securities exchange or quoted on the
NASDAQ National Market (or which shall be so traded or quoted when
issued or exchanged in connection with such Fundamental Change) (such
securities being referred to as "Publicly Traded Securities") and as a
result of such transaction or transactions the Preferred Stock becomes
convertible into such Publicly Traded Securities (excluding cash
payments for fractional shares).
"Fundamental Change Purchase Date" shall have the meaning
given to it in Section 4(a).
"Fundamental Change Purchase Notice" shall have the meaning
given to it in Section 4(c).
"Fundamental Change Purchase Price" shall have the meaning
given to it in Section 4(a).
"Global Preferred Stock" shall have the meaning given to it in
Section 11(a)(i).
"Holder" or "holder" shall mean a holder of record of the
Preferred Stock.
"Issue Date" shall mean December 5, 2003, the original date of
issuance of the Preferred Stock.
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"Junior Stock" shall mean all classes of common stock of the
Corporation and each other class of capital stock or series of
preferred stock established after the Issue Date, by the Board of
Directors, the terms of which do not expressly provide that such class
or series ranks senior to or on parity with the Preferred Stock as to
dividend rights or rights upon the liquidation, winding-up or
dissolution of the Corporation.
"Last Reported Sale Price" of Common Stock on any date means
the closing sale price per share (or, if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in
either case, the average of the average bid and the average ask prices)
on that date as reported in composite transactions for the principal
U.S. securities exchange on which Common Stock is traded or, if the
Common Stock is not listed on a U.S. national or regional securities
exchange, as reported by the NASDAQ National Market. If the Common
Stock is not listed for trading on a U.S. national or regional
securities exchange and not reported by the NASDAQ National Market on
the relevant date, the Last Reported Sale Price shall be the last
quoted bid price for Common Stock in the over-the-counter market on the
relevant date as reported by the National Quotation Bureau or similar
organization. If the Common Stock is not so quoted, the Last Reported
Sale Price will be the average of the mid-point of the last bid and ask
prices for the Common Stock on the relevant date from each of at least
three nationally recognized independent investment banking firms
selected by the Corporation for this purpose.
"Liquidation Preference" shall mean, with respect to each
share of Preferred Stock, $50.
"Mandatory Conversion Date" shall have the meaning given to it
in Section 8(b).
"Market Price" means the average of the Last Reported Sales
Price per share of Common Stock for the 20 Trading Day period ending on
the applicable date of determination (if the applicable date of
determination is a Trading Day or, if not, then on the last Trading Day
prior to such applicable date of determination), appropriately adjusted
to take into account the occurrence, during the period commencing on
the first of the Trading Days during such 20 Trading Day period and
ending on the applicable date of determination, of any event that would
result in an adjustment of the Conversion Rate under this Certificate
of Designation.
"Market Value" shall mean the average closing price of the
Common Stock for a five consecutive Trading Day period on the NYSE (or
such other national securities exchange or automated quotation system
on which the Common Stock is then listed or authorized for quotation
or, if the Common Stock is not so listed or authorized for quotation,
an amount determined in good faith by the Board of Directors to be the
fair value of the Common Stock).
"Maximum Conversion Rate" shall have the meaning given to it
in Section 7(f)(viii).
"NYSE" shall mean the New York Stock Exchange, Inc.
"Officer" means the Chairman of the Board of Directors, the
President, any Vice President, the Treasurer, the Secretary or any
Assistant Secretary of the Corporation.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel' means a written opinion from legal
counsel who is acceptable to the Transfer Agent. The counsel may be an
employee of or counsel to the Corporation or the Transfer Agent.
"Parity Stock" shall mean any class of capital stock or series
of preferred stock established as of or after the Issue Date by the
Board of Directors, the terms of which expressly provide that such
class or series will rank on parity with the Preferred Stock as to
dividend rights or rights upon the liquidation, winding-up or
dissolution of the Corporation.
"Paying Agent" means any Person authorized by the Corporation
to pay the dividends or Fundamental
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Change Purchase Price on any of the shares of Preferred Stock on behalf
of the Corporation. Initially, the Paying Agent shall be the
Corporation.
"Person" shall mean any individual, corporation, general
partnership, limited partnership, limited liability partnership, joint
venture, association, joint-stock company, trust, limited liability
company, unincorporated organization or government or any agency or
political subdivision thereof.
"Registration Default" shall have the meaning given to it in
Section 3(b).
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of December 5, 2003, among the Corporation,
Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and the certain other initial purchasers of the Preferred
Stock.
"SEC" or "Commission" shall mean the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" means the security register recording the
holders of Preferred Stock kept at the offices of the Corporation.
"Security Registrar" shall be the Person holding the Security
Register, and the Corporation will initially be designated as the
Security Registrar.
"Senior Stock" shall mean each class of capital stock or
series of preferred stock established after the Issue Date by the Board
of Directors, the terms of which expressly provide that such class or
series will rank senior to the Preferred Stock as to dividend rights or
rights upon the liquidation, winding-up or dissolution of the
Corporation.
"Shelf Registration Statement" shall mean a shelf registration
statement filed with the SEC to cover resales of Transfer Restricted
Securities by holders thereof, as required by the Registration Rights
Agreement.
"Spin-Off Market Price" per share of Common Stock of the
Corporation or the Equity Interests in a Subsidiary or other business
unit of the Corporation on any day means the average of the daily Last
Reported Sale Prices for the 10 consecutive Trading Days commencing on
and including the fifth Trading Day after the ex date with respect to
the issuance or distribution requiring such computations. As used
herein, the term "ex date," when used with respect to any issuance or
distribution, shall mean the first date on which the security trades
regular way on the NYSE or such other national regional exchange or
market in which the security trades without the right to receive such
issuance or distribution.
"Subsidiary" means a Person more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the
Corporation or by one or more other Subsidiaries, or by the Corporation
and one or more other Subsidiaries. For the purposes of this
definition, "voting stock" means stock which ordinarily has voting
power of the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Trading Day" means (i) if the applicable security is listed,
admitted for trading or quoted on the NYSE, the NASDAQ National Market
or another national security exchange, a day on which the NYSE, the
NASDAQ National Market or another national security exchange is open
for business or (ii) if the applicable security is not so listed,
admitted for trading or quoted, any day other than a Saturday or Sunday
or a day on which banking institutions in the State of New York are
authorized or obligated by law, regulation or executive order to close.
"Trading Exception" shall have the meaning given to it in
Section 7(a)(ii).
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"Trading Price" of the Preferred Stock on any date of
determination means the average of the secondary market bid quotations
per share of Preferred Stock obtained by the Conversion Agent for
$5,000,000 Liquidation Preference of the Preferred Stock at
approximately 3:30 p.m., New York City time, on such determination date
from three independent nationally recognized securities dealers the
Corporation selects, provided that if three such bids cannot reasonably
be obtained by the Conversion Agent, but two such bids are obtained,
then the average of the two bids shall be used, and if only one such
bid can reasonably be obtained by the Conversion Agent, this one bid
shall be used. If the Conversion Agent cannot reasonably obtain at
least one bid for $5,000,000 Liquidation Preference of the Preferred
Stock from a nationally recognized securities dealer, then the Trading
Price will be deemed to be less than 95% of the product of the sale
price of Common Stock and the then applicable Conversion Rate.
"Transfer Agent" shall mean the Corporation's duly appointed
transfer agent for the Preferred Stock. Initially, the Corporation will
be the Transfer Agent.
"Transfer Restricted Securities" shall mean each share of
Preferred Stock (or the shares of Common Stock into which such share of
Preferred Stock is convertible) until (i) the date on which such
security or its predecessor has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf
Registration Statement, (ii) the date on which such security or
predecessor is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act or (iii) the date that such Preferred Stock ceases to be
outstanding.
"Voting Rights Class" shall have the meaning given to it in
Section 5(a)(i).
"Voting Rights Triggering Event" shall mean the failure of the
Corporation to pay dividends on the Preferred Stock with respect to six
or more quarterly periods (whether or not consecutive).
"Voting Stock" shall mean, with respect to any Person,
securities of any class or classes of Capital Stock in such Person
entitling the holders thereof (whether at all times or only so long as
no senior class of stock has voting power by reason of contingency)
generally to vote in the election of members of the Board of Directors
or other governing body of such Person. For purposes of this
definition, "Capital Stock" shall mean, with respect to any Person, any
and all shares, interests, participations or other equivalents (however
designated) of corporate stock or partnership interests and any and all
warrants, options and rights with respect thereto (whether or not
currently exercisable), including each class of common stock and
preferred stock of such Person.
3. Dividends.
(a) The holders of shares of the outstanding Preferred Stock shall
be entitled, when, as and if declared by the Board of Directors out of funds of
the Corporation legally available therefor, to receive cumulative cash dividends
at the rate per annum of 4.50% per share on the Liquidation Preference
(equivalent to $2.25 per annum per share), payable quarterly in arrears (the
"Dividend Rate"). The Dividend Rate may be increased in the circumstances
described in Section 3(b) below. Dividends payable for each full dividend period
will be computed by dividing the Dividend Rate by four and shall be payable in
arrears on each Dividend Payment Date (commencing March 1, 2004) for the
quarterly period ending immediately prior to such Dividend Payment Date, to the
holders of record of Preferred Stock at the close of business on the Dividend
Record Date applicable to such Dividend Payment Date. Such dividends shall be
cumulative from the most recent date as to which dividends shall have been paid
or, if no dividends have been paid, from the Issue Date (whether or not in any
dividend period or periods the Board of Directors shall have declared such
dividends or there shall be funds of the Corporation legally available for the
payment of such dividends) and shall accumulate on a day-to-day basis, whether
or not earned or declared, from and after the Issue Date. Dividends payable for
any partial dividend period shall be computed on the basis of days elapsed over
a 360-day year consisting of twelve 30-day months. Accumulated unpaid dividends
accrue and cumulate dividends at the annual rate of 4.50% and are payable in the
manner provided in this Section 3.
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(b) If (i) by November 5, 2004, the Shelf Registration Statement
has not been filed with the Commission, (ii) by March 5, 2005, the Shelf
Registration Statement has not been declared effective by the Commission, (iii)
after the Shelf Registration Statement has been declared effective the
Corporation fails to file a post-effective amendment, prospectus supplement,
amendment or supplement to any document incorporated by reference into such
prospectus or document if required by applicable law with the SEC within five
business days after a Holder provides the Corporation with certain required
information, if such filing is necessary to enable the Holder to deliver the
prospectus to purchasers of such Holder's Transfer Restricted Securities, (iv)
the Shelf Registration Statement ceases to be effective or fails to be usable
without being succeeded within 30 days by a post-effective amendment or an
additional registration statement filed and declared effective (other than as
permitted in (iii) above) pursuant to the Exchange Act that cures the failure of
the registration statement to be effective or usable, and (v) the aggregate
duration of any suspension periods in any period exceeds certain limits
described in the Registration Rights Agreement (each such event referred to in
clauses (i), (ii), (iii), (iv) and (v) a "Registration Default"), additional
dividends shall accumulate on the Preferred Stock, from and including the date
on which any such Registration Default shall occur to, but excluding, the date
on which the Registration Default has been cured, at the rate of 0.25% per year
for the first 90 days following such date and at a rate of 0.50% per year
thereafter ("Additional Dividends"). With respect to shares of Common Stock
issued upon conversion of the Preferred Stock, Additional Dividends will
accumulate on the then applicable conversion price from and including the date
on which any such Registration Default shall occur to, but excluding, the date
on which the Registration Default has been cured, at the rate of 0.25% per year
for the first 90 days following such date and at a rate of 0.50% per year
thereafter. Except as mentioned above, the Corporation will have no other
liabilities for monetary damages with respect to its registration obligations.
The receipt of Additional Dividends will be the sole monetary remedy available
to a Holder if the Corporation fails to meet these obligations.
(c) No dividend will be declared or paid upon, or any sum set
apart for the payment of dividends upon, any outstanding share of the Preferred
Stock with respect to any dividend period unless all dividends for all preceding
dividend periods have been declared and paid or declared and a sufficient sum
set apart for the payment of such dividend upon all outstanding shares of
Preferred Stock.
(d) No dividends or other distributions (other than a dividend or
distribution payable solely in shares of Parity Stock or Junior Stock (in the
case of Parity Stock) or Junior Stock (in the case of Junior Stock) and other
than cash paid in lieu of fractional shares) may be declared, made or paid, or
set apart for payment upon, any Parity Stock or Junior Stock, nor may any Parity
Stock or Junior Stock be redeemed, purchased or otherwise acquired for any
consideration (or any money paid to or made available for a sinking fund for the
redemption of any Parity Stock or Junior Stock) by or on behalf of the
Corporation (except by conversion into or exchange for shares of Parity Stock or
Junior Stock (in the case of Parity Stock) or Junior Stock (in the case of
Junior Stock)), unless full Accumulated Dividends shall have been or
contemporaneously are declared and paid, or are declared and a sum sufficient
for the payment thereof is set apart for such payment, on the Preferred Stock
and any Parity Stock for all dividend payment periods terminating on or prior to
the date of such declaration, payment, redemption, purchase or acquisition.
Notwithstanding the foregoing, if full dividends have not been paid on the
Preferred Stock and any Parity Stock, dividends may be declared and paid on the
Preferred Stock and such Parity Stock so long as the dividends are declared and
paid pro rata so that the amounts of dividends declared per share on the
Preferred Stock and such Parity Stock will in all cases bear to each other the
same ratio that accumulated and unpaid dividends per share on the shares of
Preferred Stock and such other Parity Stock bear to each other.
(e) Holders of shares of Preferred Stock shall not be entitled to
any dividends on the Preferred Stock, whether payable in cash, property or
stock, in excess of full cumulative dividends and Additional Dividends (if any).
(f) The holders of shares of Preferred Stock at the close of
business on a Dividend Record Date will be entitled to receive the dividend
payment on those shares on the corresponding Dividend Payment Date
notwithstanding the subsequent conversion thereof or the Corporation's default
in payment of the dividend due on that Dividend Payment Date. However, shares of
Preferred Stock surrendered for conversion during the period between the close
of business on any Dividend Record Date and the close of business on the
Business Day
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immediately preceding the applicable Dividend Payment Date must be accompanied
by payment of an amount equal to the dividend payable on the shares on that
Dividend Payment Date; provided, however, that no such payment need be made if
(1) the Corporation has specified a Mandatory Conversion Date that is after a
Dividend Record Date and on or prior to the immediately following Dividend
Payment Date or (2) any accumulated and unpaid dividends exist at the time of
conversion with respect to such shares of Preferred Stock to the extent of such
accumulated and unpaid dividends. A holder of shares of Preferred Stock on a
Dividend Record Date who (or whose transferee) tenders any shares for conversion
on the corresponding Dividend Payment Date will receive the dividend payable by
the Corporation on the Preferred Stock on that date, and the converting holder
need not include payment in the amount of such dividend upon surrender of shares
of Preferred Stock for conversion. Except as provided above with respect to a
voluntary conversion pursuant to Section 7, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of Common Stock issued upon
conversion.
(g) In any case where any Dividend Payment Date or Conversion Date
(including upon the occurrence of a Fundamental Change) of any Preferred Stock
shall not be a Business Day, at any place of payment, then payment of dividends
(and Additional Dividends, if any) need not be made on such date, but may be
made on the next succeeding Business Day at such place of payment with the same
force and effect as if made on the dividend payment date or Conversion Date
(including upon the occurrence of a Fundamental Change); and no interest shall
accumulate on the amount so payable for the period from and after such Dividend
Payment Date or Conversion Date, as the case may be, to such Business Day.
(h) The Paying Agent shall return to the Corporation upon written
request any money or property held by it for the payment of any amount with
respect to the Preferred Stock that remains unclaimed for two years, provided,
however, that the Paying Agent, before being required to make any such return,
shall at the expense of the Corporation cause to be published once in a
newspaper of general circulation in The City of New York or mail to each such
Holder notice that such money or property remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed money or property then remaining
shall be returned to the Corporation. After return to the Corporation, Holders
entitled to the money or property must look to the Corporation for payment as
general creditors unless an applicable abandoned property law designates another
Person.
4. Fundamental Change.
(a) Purchase at the Option of the Holder Upon a Fundamental
Change. Each Holder shall have the right, at such Holder's option, to require
the Corporation to purchase any or all of such Holder's Preferred Stock for cash
or a check on the date that is no earlier than 60 days nor later than 90 days
after the date of the Corporation Notice of the occurrence of such Fundamental
Change (subject to extension to comply with applicable law, as provided in
Section 4(h) (the "Fundamental Change Purchase Date"). The Preferred Stock shall
be repurchased in integral multiples of $50.00 (representing the Liquidation
Preference). The Corporation shall purchase such Preferred Stock at a price (the
"Fundamental Change Purchase Price") equal to 100% of the Liquidation Price of
the number of shares of Preferred Stock to be purchased plus accumulated and
unpaid dividends, including Additional Dividends, if any, to the Fundamental
Change Purchase Date.
(b) Notice of Fundamental Change. The Corporation, or at its
request (which must be received by the Paying Agent at least three Business Days
(or such lesser period as agreed to by the Paying Agent) prior to the date the
Paying Agent is requested to give such notice as described below), the Paying
Agent, in the name of and at the expense of the Corporation, shall mail to all
Holders a Corporation Notice of the occurrence of a Fundamental Change and of
the purchase right arising as a result thereof, including the information
required by Section 4(e) hereof, on or before the 30th day after the occurrence
of such Fundamental Change.
(c) Exercise of Option. For Preferred Stock to be so purchased at
the option of the Holder, the Paying Agent must receive at its office in
Jackson, Michigan, or any other offices of the Paying Agent maintained for such
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purposes, such shares of Preferred Stock duly endorsed for transfer, together
with a written notice of purchase in the form attached hereto as Exhibit A (a
"Fundamental Change Purchase Notice") duly completed, on or before the 30th day
prior to the Fundamental Change Purchase Date, subject to extension to comply
with applicable law. The Fundamental Change Purchase Notice shall state:
(i) if certificated, the certificate numbers of the shares of
Preferred Stock which the Holder shall deliver to be
purchased, or, if not certificated, the Fundamental Change
Purchase Notice must comply with appropriate Depository
procedures;
(ii) the number of shares of Preferred Stock which the Holder shall
deliver to be purchased, which portion must be $50.00 or an
integral multiple thereof; and
(iii) that such Preferred Stock shall be purchased as of the
Fundamental Change Purchase Date pursuant to the terms and
conditions specified in the Preferred Stock and in this
Certificate of Designation.
(d) Procedures. The Corporation shall purchase from a Holder,
pursuant to this Section 4, shares of Preferred Stock or multiples of $50.00 if
so requested by such Holder.
Any purchase by the Corporation contemplated pursuant to the provisions
of this Section 4 shall be consummated by the delivery of the Fundamental Change
Purchase Price to be received by the Holder promptly following the later of the
Fundamental Change Purchase Date or the time of book-entry transfer or delivery
of the Preferred Stock.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Fundamental Change Purchase Notice contemplated by
Section 4(c) hereof shall have the right at any time prior to the close of
business on the Business Day prior to the Fundamental Change Purchase Date to
withdraw such Fundamental Change Purchase Notice (in whole or in part) by
delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 4(f) hereof.
The Paying Agent shall promptly notify the Corporation of the receipt
by it of any Fundamental Change Purchase Notice or written notice of withdrawal
thereof.
On or before 10:00 a.m. (New York City time) on the Fundamental Change
Purchase Date, the Corporation shall deposit with the Paying Agent (or if the
Corporation or an Affiliate of the Corporation is acting as the Paying Agent,
shall segregate and hold in trust) money sufficient to pay the aggregate
Fundamental Change Purchase Price of the Preferred Stock to be purchased
pursuant to this Section 4. Payment by the Paying Agent of the Fundamental
Change Purchase Price for such Preferred Stock shall be made promptly following
the later of the Fundamental Change Purchase Date or the time of book-entry
transfer or delivery of such Preferred Stock. If the Paying Agent holds, in
accordance with the terms of this Certificate of Designation, money sufficient
to pay the Fundamental Change Purchase Price of such Preferred Stock on the
Business Day following the Fundamental Change Purchase Date, then, on and after
such date, such Preferred Stock shall cease to be outstanding and dividends
(including Additional Dividends, if any) on such Preferred Stock shall cease to
accumulate, whether or not book-entry transfer of such Preferred Stock is made
or such Preferred Stock is delivered to the Paying Agent, and all other rights
of the Holder shall terminate (other than the right to receive the Fundamental
Change Purchase Price upon delivery or transfer of the Preferred Stock). Nothing
herein shall preclude any withholding tax required by law.
The Corporation shall require each Paying Agent to agree in writing
that the Paying Agent shall hold in trust for the benefit of Holders all money
held by the Paying Agent for the payment of the Fundamental Change Purchase
Price. If the Corporation or an Affiliate of the Corporation acts as Paying
Agent, it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund.
All questions as to the validity, eligibility (including time of
receipt) and acceptance of any Preferred Stock pursuant to a Fundamental Change
shall be determined by the Corporation, whose determination shall be final and
binding.
9
(e) Notice of Fundamental Change. The Corporation shall send
notices (each, a "Corporation Notice") to the Holders (and to beneficial owners
as required by applicable law) at their addresses shown in the Security Register
maintained by the Security Registrar, and delivered to the Paying Agent on or
before the 30th day after the occurrence of the Fundamental Change ("Corporation
Notice Date"). Each Corporation Notice shall include a form of Fundamental
Change Purchase Notice to be completed by a Holder and shall state:
(i) the applicable Fundamental Change Purchase Price, excluding
accumulated and unpaid dividends, Conversion Rate at the time
of such notice (and any adjustments to the Conversion Rate)
and, to the extent known at the time of such notice, the
amount of dividends (including Additional Dividends, if any),
if any, that will be payable with respect to the Preferred
Stock on the applicable Fundamental Change Purchase Date;
(ii) the events causing the Fundamental Change and the date of the
Fundamental Change;
(iii) the Fundamental Change Purchase Date;
(iv) the last date on which a Holder may exercise its purchase
right;
(v) the name and address of the Paying Agent and the Conversion
Agent;
(vi) that the Preferred Stock must be surrendered to the Paying
Agent to collect payment of the Fundamental Change Purchase
Price;
(vii) that the Preferred Stock as to which a Fundamental Change
Purchase Notice has been given may be converted only if the
applicable Fundamental Change Purchase Notice has been
withdrawn in accordance with the terms of this Certificate of
Designation;
(viii) that the Fundamental Change Purchase Price for any of the
Preferred Stock as to which a Fundamental Change Purchase
Notice has been given and not withdrawn shall be paid by the
Paying Agent promptly following the later of the Fundamental
Change Purchase Date or the time of book-entry transfer or
delivery of such Preferred Stock;
(ix) the procedures the Holder must follow under this Section 4;
(x) briefly, the conversion rights of the Preferred Stock;
(xi) that, unless the Corporation defaults in making payment of
such Fundamental Change Purchase Price on the Preferred Stock
covered by any Fundamental Change Purchase Notice, dividends
(including Additional Dividends, if any) will cease to
accumulate on and after the Fundamental Change Purchase Date;
(xii) the CUSIP or ISIN number of the Preferred Stock; and
(xiii) the procedures for withdrawing a Fundamental Change Purchase
Notice.
In connection with providing such Corporation Notice, the Corporation
will issue a press release and publish a notice containing the information in
such Corporation Notice in a newspaper of general circulation in The City of New
York or publish such information on the Corporation's then existing Web site or
through such other public medium as the Corporation may use at the time.
At the Corporation's request, made at least five Business Days prior to
the date upon which such notice is to be mailed, and at the Corporation's
expense, the Paying Agent shall give the Corporation Notice in the Corporation's
name; provided, however, that, in all cases, the text of the Corporation Notice
shall be prepared by the Corporation.
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(f) Effect of Fundamental Change Purchase Notice. Upon receipt by
the Corporation of the Fundamental Change Purchase Notice specified in this
Section 4, the Holder of the Preferred Stock in respect of which such
Fundamental Change Purchase Notice was given shall (unless such Fundamental
Change Purchase Notice is withdrawn as specified in this Section 4(f))
thereafter be entitled to receive solely the Fundamental Change Purchase Price
with respect to such Preferred Stock. Such Fundamental Change Purchase Price
shall be paid by the Paying Agent to such Holder promptly following the later of
(x) the Fundamental Change Purchase Date with respect to such Preferred Stock
(provided the conditions in this Section 4 have been satisfied) and (y) the time
of delivery or book-entry transfer of such Preferred Stock to the Paying Agent
by the Holder thereof in the manner required by this Section 4. Preferred Stock
in respect of which a Fundamental Change Purchase Notice has been given by the
Holder thereof may not be converted for shares of Common Stock on or after the
date of the delivery of such Fundamental Change Purchase Notice unless such
Fundamental Change Purchase Notice has first been validly withdrawn as specified
in this Section 4(f). Payment of the Fundamental Change Purchase Price for
shares of Preferred Stock in registered, certificated form ("Certificated
Preferred Stock") for which a Fundamental Change Purchase Notice has been
delivered and not withdrawn is conditioned upon delivery of such Certificated
Preferred Stock (together with necessary endorsements) to the Paying Agent at
its office in Jackson, Michigan, or any other office of the Paying Agent
maintained for such purpose, at any time (whether prior to, on or after the
Fundamental Change Purchase Date) after the delivery of such Fundamental Change
Purchase Notice. Payment of the Fundamental Change Purchase Price for such
Certificated Preferred Stock will be made promptly following the later of the
Fundamental Change Purchase Date or the time of delivery of such Certificated
Preferred Stock.
If the Paying Agent holds, in accordance with the terms of this
Certificate of Designation, money sufficient to pay the Fundamental Change
Purchase Price of shares of Preferred Stock on the Business Day following the
Fundamental Change Purchase Date for such Preferred Stock, then, on and after
such date, dividends on such Preferred Stock will cease to accumulate, whether
or not such Preferred Stock is delivered to the Paying Agent, and all other
rights of the Holder shall terminate (other than the right to receive the
Fundamental Change Purchase Price upon delivery of the Preferred Stock).
A Fundamental Change Purchase Notice may be withdrawn by means of a
written notice of withdrawal delivered to the office of the Paying Agent at any
time prior to 5:00 p.m. New York City time on the Business Day prior to the
Fundamental Change Purchase Date to which it relates specifying:
(i) if certificated, the certificate number of Preferred Stock in
respect of which such notice of withdrawal is being submitted,
or, if not certificated, the written notice of withdrawal must
comply with appropriate Depository procedures;
(ii) the number of shares of Preferred Stock with respect to which
such notice of withdrawal is being submitted; and
(iii) the number of shares of Preferred Stock, if any, which remains
subject to the original Fundamental Change Purchase Notice and
which have been or shall be delivered for purchase by the
Corporation.
(g) Preferred Stock Purchased in Part. Any shares of Preferred
Stock that are to be purchased only in part shall be surrendered (in physical or
book-entry form) at the office of the Paying Agent (with, if the Corporation so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Corporation duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing) and the Corporation shall execute
and the Transfer Agent shall authenticate and deliver to the Holder of such
Preferred Stock, without service charge, new shares of Preferred Stock, as
requested by such Holder in an amount equal to, and in exchange for, the portion
of the Liquidation Preference of the Preferred Stock so surrendered which is not
purchased.
(h) Covenant to Comply with Securities Laws Upon Purchase of the
Preferred Stock. In connection with any offer to purchase Preferred Stock under
this Section 4, the Corporation shall, to the extent applicable: (i) comply with
Rules 13e-4 and 14e-1 (and any successor provisions thereto) under the Exchange
Act, if applicable; (ii) file the related Schedule TO (or any successor
schedule, form or report) under the Exchange Act, if applicable; and (iii)
otherwise comply with all applicable federal and state securities laws so as to
permit the rights and obligations under this Section 4 hereof to be exercised in
the time and in the manner specified in this Section 4.
11
(i) Repayment to the Corporation. The Paying Agent shall return to
the Corporation any cash or property that remains unclaimed as provided in the
Preferred Stock, together with interest that the Paying Agent has agreed to pay,
if any, held by it for the payment of a Fundamental Change Purchase Price;
provided, however, that to the extent that the aggregate amount of cash or
property deposited by the Corporation pursuant to this Section 4 exceeds the
aggregate Fundamental Change Purchase Price of the Preferred Stock or portions
thereof which the Corporation is obligated to purchase as of the Fundamental
Change Purchase Date, then promptly on and after the Business Day following the
Fundamental Change Purchase Date, the Paying Agent shall return any such excess
to the Corporation together with interest that the Paying Agent has agreed to
pay, if any.
(j) Officers' Certificate. At least five Business Days before the
Corporation Notice Date, the Corporation shall deliver an Officers' Certificate
to the Paying Agent (provided, that, at the Corporation's option, the matters to
be addressed in such Officers' Certificate may be divided among two such
certificates) specifying:
(i) the manner of payment selected by the Corporation; and
(ii) whether the Corporation desires the Paying Agent to give the
Corporation Notice required by Section 4(e) hereof.
5. Voting.
(a) The shares of Preferred Stock shall have no voting rights
except as set forth below or as otherwise required by Michigan law from time to
time:
(i) If and whenever at any time or times a Voting Rights
Triggering Event occurs, then the holders of shares of
Preferred Stock, voting as a single class with any other
preferred stock or preference securities having similar voting
rights that are exercisable (the "Voting Rights Class"), will
be entitled at the next regular or special meeting of
shareholders of the Corporation to elect two additional
directors of the Corporation, unless the Board of Directors is
comprised of fewer than six directors at such time, in which
case the Voting Rights Class shall be entitled to elect one
additional director. Upon the election of any such additional
directors, the number of directors that comprise the Board of
Directors shall be increased by such number of additional
directors.
(ii) Such voting rights may be exercised at a special meeting of
the holders of the shares of the Voting Rights Class, called
as hereinafter provided, or at any annual meeting of
shareholders held for the purpose of electing directors, and
thereafter at each such annual meeting until such time as all
dividends in arrears on the shares of Preferred Stock shall
have been paid in full, at which time or times such voting
rights and the term of the directors elected pursuant to
Section 5(a)(i) shall terminate.
(iii) At any time when such voting rights shall have vested in
holders of shares of the Voting Rights Class, an Officer of
the Corporation may call, and, upon written request of the
record holders of shares representing at least twenty-five
percent (25%) of the voting power of the shares then
outstanding of the Voting Rights Class, addressed to the
Secretary of the Corporation, shall call a special meeting of
the holders of shares of the Voting Rights Class. Such meeting
shall be held at the earliest practicable date upon the notice
required for annual meetings of shareholders at the place for
holding annual meetings of shareholders of the Corporation,
or, if none, at a place designated by the Board of Directors.
Notwithstanding the provisions of this Section 5(a)(iii), no
such special meeting shall be called during a period within
the 60 days immediately preceding the date fixed for the next
annual meeting of shareholders, in which such case the
election of directors pursuant to Section 5(a)(i) shall be
held at such annual meeting of shareholders.
(iv) At any meeting held for the purpose of electing directors at
which the holders of the Voting Rights Class shall have the
right to elect directors as provided herein, the presence in
person or by proxy of the holders of shares representing more
than fifty percent (50%) in voting power of the then
outstanding shares of the Voting Rights Class shall be
required and shall be sufficient to constitute a quorum of
such class for the election of directors by such class. The
affirmative vote of the holders of shares of Preferred
12
Stock constituting a majority of the shares of Preferred Stock
present at such meeting, in person or by proxy shall be
sufficient to elect any such director.
(v) Any director elected pursuant to the voting rights created
under this Section 5(a) shall hold office until the next
annual meeting of shareholders (unless such term has
previously terminated pursuant to Section 5(a)(ii)) and any
vacancy in respect of any such director shall be filled only
by vote of the remaining director so elected by holders of the
Voting Rights Class, or, if there be no such remaining
director, by the holders of shares of the Voting Rights Class
at a special meeting called in accordance with the procedures
set forth in this Section 5, or, if no such special meeting is
called, at the next annual meeting of shareholders. Upon any
termination of such voting rights, the term of office of all
directors elected pursuant to this Section 5 shall terminate.
(vi) So long as any shares of Preferred Stock remain outstanding,
unless a greater percentage shall then be required by law, the
Corporation shall not, without the affirmative vote or consent
of the holders of all of the outstanding Preferred Stock
voting or consenting, as the case may be, separately as one
class, (i) create, authorize or issue any class or series of
Senior Stock (or any security convertible into Senior Stock)
or (ii) amend the Articles of Incorporation so as to affect
adversely the specified rights, preferences, privileges or
voting rights of holders of shares of Preferred Stock.
(vii) In exercising the voting rights set forth in this Section
5(a), each share of Preferred Stock shall be entitled to one
vote.
(b) The Corporation may authorize, increase the authorized amount
of, or issue any class or series of Parity Stock or Junior Stock, without the
consent of the holders of Preferred Stock, and in taking such actions the
Corporation shall not be deemed to have affected adversely the rights,
preferences, privileges or voting rights of holders of shares of Preferred
Stock.
6. Liquidation Rights.
(a) In the event of any liquidation, winding-up or dissolution of
the Corporation, whether voluntary of involuntary, each holder of shares of
Preferred Stock shall be entitled to receive and to be paid out of the assets of
the Corporation available for distribution to its shareholders the Liquidation
Preference plus Accumulated Dividends and Additional Dividends thereon in
preference to the holders of, and before any payment or distribution is made on,
any Junior Stock, including, without limitation, on any Common Stock.
(b) Neither the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
the assets or business of the Corporation (other than in connection with the
liquidation, winding-up or dissolution of its business) nor the merger or
consolidation of the Corporation into or with any other Person shall be deemed
to be a liquidation, winding-up or dissolution, voluntary or involuntary, for
the purposes of this Section 6.
(c) After the payment to the holders of the shares of Preferred
Stock of full preferential amounts provided for in this Section 6, the holders
of Preferred Stock as such shall have no right or claim to any of the remaining
assets of the Corporation.
(d) In the event the assets of the Corporation available for
distribution to the holders of shares of Preferred Stock upon any liquidation,
winding-up or dissolution of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to Section 6(a), no such distribution shall be made on account
of any shares of Parity Stock upon such liquidation, dissolution or winding-up
unless proportionate distributable amounts shall be paid on account of the
shares of Preferred Stock, ratably, in proportion to the full distributable
amounts for which holders of all Preferred Stock and of any Parity Stock are
entitled upon such liquidation, winding-up or dissolution.
13
7. Conversion.
(a) Conversion Rights. A Holder may convert Preferred Stock into
Common Stock during the periods and upon satisfaction of at least one of the
conditions set forth below:
(i) in any calendar quarter (and only during such calendar
quarter) if the Last Reported Sale Price for Common Stock for
at least 20 Trading Days during the period of 30 consecutive
Trading Days ending on the last Trading Day of the previous
calendar quarter is greater than or equal to 120% of the
Conversion Price per share of Common Stock on such last
Trading Day;
(ii) during the five Business Days immediately following any ten
consecutive Trading Day period in which the Trading Price per
Liquidation Preference of Preferred Stock (as determined
following a request by a Holder of Preferred Stock in
accordance with the procedures described herein) for each day
of that period was less than 95% of the product of the sale
price of Common Stock and the then applicable Conversion Rate
(the "Trading Exception"); provided, however, that a Holder
may not convert its Preferred Stock if the average closing
sale price of Common Stock for such ten consecutive Trading
Day period is between the then current Conversion Price and
120% of the then applicable Conversion Price; in connection
with any conversion upon satisfaction of such Trading Price
condition, the Conversion Agent shall have no obligation to
determine the Trading Price unless the Corporation has
requested such determination; and the Corporation shall have
no obligation to make such request unless the Holder provides
reasonable evidence that the Trading Price would be less than
95% of the product of the sale price of Common Stock and the
then applicable Conversion Rate; at which time, the
Corporation shall instruct the Conversion Agent to determine
the Trading Price beginning on the next Trading Day and on
each successive Trading Day until the Trading Price is greater
than or equal to 95% of the product of the sale price of
Common Stock and the then applicable Conversion Rate;
(iii) the Corporation becomes a party to a consolidation, merger or
binding share exchange pursuant to which the Common Stock
would be converted into cash or property (other than
securities), in which case a Holder may surrender Preferred
Stock for conversion at any time from and after the date which
is 15 days prior to the anticipated effective date for the
transaction until 15 days after the actual effective date of
such transaction; or
(iv) the Corporation elects to (i) distribute to all holders of
Common Stock assets, debt securities or rights to purchase
securities of the Corporation, which distribution has a per
share value as determined by the Board of Directors exceeding
15% of the Last Reported Sale Price of a share of Common Stock
on the Trading Day immediately preceding the declaration date
for such distribution, or (ii) distribute to all holders of
Common Stock rights entitling them to purchase, for a period
expiring within 60 days after the date of such distribution,
shares of Common Stock at less than the Last Reported Sale
Price of Common Stock on the Trading Day immediately preceding
the declaration date of the distribution. In the case of the
foregoing clauses (i) and (ii), the Corporation must notify
the Holders at least 20 Business Days immediately prior to the
ex-dividend date for such distribution. Once the Corporation
has given such notice, Holders may surrender their Preferred
Stock for conversion at any time thereafter until the earlier
of the close of business on the Business Day immediately prior
to the ex-dividend date or the Corporation's announcement that
such distribution will not take place; provided, however, that
a Holder may not exercise this right to convert if the Holder
may participate in the distribution without conversion. As
used herein, the term "ex dividend date," when used with
respect to any issuance or distribution, shall mean the first
date on which the Common Stock trades regular way on such
exchange or in such market without the right to receive such
issuance or distribution.
The initial Conversion Rate is 5.0541 shares of Common Stock per share
of Preferred Stock, subject to adjustment in certain events as described herein.
The Corporation shall deliver cash or a check in lieu of any fractional share of
Common Stock. A Holder may convert fewer than all of its Preferred Stock so long
as the Preferred Stock converted is an integral multiple of the Liquidation
Preference.
Holders of Preferred Stock at the close of business on a Dividend
Record Date will receive payment of
14
dividends, payable on the corresponding Dividend Payment Date notwithstanding
the conversion of such Preferred Stock at any time after the close of business
on such Dividend Record Date. Preferred Stock surrendered for conversion by a
Holder during the period from the close of business on any Dividend Record Date
to the opening of business on the immediately following Dividend Payment Date
must be accompanied by payment of an amount equal to the dividend that the
Holder is to receive on such Preferred Stock; provided, however, that no such
payment need be made if (1) the Corporation has specified a Mandatory Conversion
Date that is after a Dividend Record Date and on or prior to the immediately
following Dividend Payment Date or (2) any accumulated and unpaid dividends
exist at the time of conversion with respect to such shares of Preferred Stock
to the extent of such accumulated and unpaid dividends.
To convert Preferred Stock a Holder must (i) complete and manually sign
the irrevocable conversion notice in the form attached hereto as Exhibit B (a
"Conversion Notice") (or complete and manually sign a facsimile of such notice)
and deliver such notice to the Conversion Agent at its office in Jackson,
Michigan or any other offices of the Conversion Agent maintained by the
Conversion Agent for such purpose, (ii) surrender the shares of Preferred Stock
to the Conversion Agent, (iii) furnish appropriate endorsements and transfer
documents if required by the Conversion Agent or the Corporation and (iv) pay
any transfer or similar tax, if required.
(b) Conversion Procedures. To convert Preferred Stock, a Holder
must satisfy the requirements in this Section 7 and in the Preferred Stock. The
date on which the Holder satisfies all those requirements is the conversion date
(the "Conversion Date"). As soon as practicable, but in no event later than the
fifth Business Day following the Conversion Date, the Corporation shall update
the global security representing the shares of Common Stock to record the
Holder's interest in the Common Stock, or deliver to the Holder, through the
Conversion Agent, a certificate for the number of full shares of Common Stock
issuable upon the conversion and cash or a check in lieu of any fractional share
determined pursuant to Section 7(c) hereof. The Person in whose name the
certificate is registered shall be treated as a shareholder of record on and
after the Conversion Date; provided, however, that no surrender of Preferred
Stock on any date when the stock transfer books of the Corporation shall be
closed shall be effective to constitute the Person or Persons entitled to
receive the shares of Common Stock upon such conversion as the record holder or
holders of such shares of Common Stock on such date, but such surrender shall be
effective to constitute the Person or Persons entitled to receive such shares of
Common Stock as the record holder or holders thereof for all purposes at the
close of business on the next succeeding day on which such stock transfer books
are open; such conversion shall be at the Conversion Rate in effect on the date
that such shares of Preferred Stock shall have been surrendered for conversion,
as if the stock transfer books of the Corporation had not been closed. Upon
conversion of Preferred Stock, such Person shall no longer be a Holder of such
Preferred Stock.
No payment or adjustment shall be made for dividends on or other
distributions with respect to any Common Stock except as provided in Section
7(f) hereof or as otherwise provided in this Certificate of Designation.
On conversion of Preferred Stock, that portion of Accumulated Dividends
with respect to the converted Preferred Stock will be deemed canceled,
extinguished or forfeited, rather than paid in full to the Holder thereof
through delivery of the Common Stock (together with the cash or check payment,
if any, in lieu of fractional shares) in exchange for the shares of Preferred
Stock being converted pursuant to the provisions hereof, and the Fair Market
Value of such shares of Common Stock (together with any such cash or check
payment in lieu of fractional shares) shall be treated as issued, to the extent
thereof, first in exchange for Accumulated Dividends through the Conversion
Date, and the balance, if any, of such Fair Market Value of such Common Stock
(and any such cash or check payment) shall be treated as issued in exchange for
the Liquidation Preference of the Preferred Stock being converted pursuant to
the provisions hereof.
Upon surrender of Preferred Stock that is converted in part, the
Corporation shall execute, and the Transfer Agent shall authenticate and deliver
to the Holder, new shares of Preferred Stock in a number equal to the
unconverted portion of the shares of Preferred Stock surrendered.
If the last day on which Preferred Stock may be converted is a legal
holiday in a place where a Conversion Agent is located, the Preferred Stock may
be surrendered to that Conversion Agent on the next succeeding day that it is
not a legal holiday.
15
(c) Cash or Check Payments in Lieu of Fractional Shares. The
Corporation shall not issue a fractional share of Common Stock upon conversion
of Preferred Stock. Instead the Corporation shall deliver cash (or Corporation's
check) for the current market value of the fractional share. The current market
value of a fractional share shall be determined to the nearest 1/10,000th of a
share by multiplying the Last Reported Sale Price of a full share of Common
Stock on the Trading Day immediately preceding the Conversion Date by the
fractional amount and rounding the product to the nearest whole cent.
(d) Taxes on Conversion. If a Holder converts Preferred Stock, the
Corporation shall pay any documentary, stamp or similar issue or transfer tax
due on the issue of shares of Common Stock upon the conversion. However, the
Holder shall pay any such tax which is due because the Holder requests the
shares to be issued in a name other than the Holder's name. The Conversion Agent
may refuse to deliver the certificates representing the Common Stock being
issued in a name other than the Holder's name until the Conversion Agent
receives a sum sufficient to pay any tax which shall be due because the shares
are to be issued in a name other than the Holder's name. Nothing herein shall
preclude any withholding tax required by law.
(e) Covenants of the Corporation. The Corporation shall, prior to
issuance of any Preferred Stock hereunder, and from time to time as may be
necessary, reserve out of its authorized but unissued Common Stock a sufficient
number of shares of Common Stock to permit the conversion of the Preferred
Stock.
All shares of Common Stock delivered upon conversion of the Preferred
Stock shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Corporation shall endeavor promptly to comply with all federal and
state securities laws regulating the order and delivery of shares of Common
Stock upon the conversion of Preferred Stock, if any, and shall cause to have
listed or quoted all such shares of Common Stock on each United States national
securities exchange or over-the-counter or other domestic market on which the
Common Stock is then listed or quoted.
(f) Adjustments to Conversion Rate. The Conversion Rate shall be
adjusted from time to time, without duplication, as follows:
(i) In case the Corporation shall: (a) pay a dividend, or make a
distribution, exclusively in shares of its capital stock, on
the Common Stock; (b) subdivide its outstanding Common Stock
into a greater number of shares; (c) combine its outstanding
Common Stock into a smaller number of shares; or (d)
reclassify its Common Stock, the Conversion Rate in effect
immediately prior to the record date or effective date, as the
case may be, for the adjustment pursuant to this Section 7(f)
as described below, shall be adjusted so that the Holder of
any Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common
Stock of the Corporation which such Holder would have owned or
have been entitled to receive after the happening of any of
the events described above had such Preferred Stock been
converted immediately prior to such record date or effective
date, as the case may be. An adjustment made pursuant to this
Section 7(f) shall become effective immediately after the
applicable record date in the case of a dividend or
distribution and shall become effective immediately after the
applicable effective date in the case of subdivision,
combination or reclassification of the Corporation's Common
Stock. If any dividend or distribution of the type described
in clause (a) above is not so paid or made, the Conversion
Rate shall again be adjusted to the Conversion Rate which
would then be in effect if such dividend or distribution had
not been declared.
(ii) In case the Corporation shall issue rights or warrants to all
holders of the Common Stock entitling them (for a period
expiring within 60 days after the date of issuance of such
rights or warrants) to subscribe for or purchase Common Stock
at a price per share less than the Market Price per share of
Common Stock on the record date fixed for determination of
shareholders entitled to receive such rights or warrants, the
Conversion Rate in effect immediately after such record date
shall be adjusted so that the same shall equal the Conversion
Rate determined by multiplying the Conversion Rate in effect
immediately after such record date by a fraction of which (a)
the numerator shall be the number
16
of shares of Common Stock outstanding on such record date plus
the number of additional shares of Common Stock offered for
subscription or purchase, and (b) the denominator shall be the
number of shares of Common Stock outstanding on such record
date plus the number of shares which the aggregate offering
price of the total number of shares so offered would purchase
at the Market Price per share of Common Stock on the earlier
of such record date or the Trading Day immediately preceding
the ex-dividend date for such issuance of rights or warrants.
Such adjustment shall be made successively whenever any such
rights or warrants are issued, and shall become effective
immediately after the opening of business on the day following
the record date for the determination of shareholders entitled
to receive such rights or warrants. To the extent that shares
of Common Stock are not delivered after the expiration of such
rights or warrants, the Conversion Rate shall be readjusted to
the Conversion Rate which would then be in effect had the
adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of
shares of Common Stock actually delivered. If such rights or
warrants are not so issued, the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be in
effect if such record date for the determination of
shareholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of
Common Stock at less than such Market Price, and in
determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any
consideration received by the Corporation for such rights or
warrants, the value of such consideration, if other than cash,
to be determined by the Board of Directors.
(iii) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of Common Stock any assets, debt
securities or rights or warrants to purchase any of its
securities (excluding (a) any dividend, distribution or
issuance covered by those referred to in Section 7(f)(i) or
Section 7(f)(ii) hereof and (b) any dividend or distribution
paid exclusively in cash) (any of the foregoing hereinafter in
this Section 7(f)(iii) called the "Distributed Assets or
Securities") in an aggregate amount per share of Common Stock
that, combined together with the aggregate amount of any other
such distributions to all holders of its Common Stock made
within the 12 months preceding the date of payment of such
distribution, and in respect of which no adjustment pursuant
to this Section 7(f)(iii) has been made, exceeds 15% of the
Market Price on the Trading Day immediately preceding the
declaration of such distribution, then the Conversion Rate
shall be adjusted so that the same shall equal the Conversion
Rate determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on the record date
mentioned below by a fraction of which (A) the numerator shall
be the Market Price per share of the Common Stock on the
earlier of such record date or the Trading Day immediately
preceding the ex-dividend date for such dividend or
distribution, and (B) the denominator shall be (1) the Market
Price per share of the Common Stock on the earlier of such
record date or the Trading Day immediately preceding the
ex-dividend date for such dividend or distribution less (2)
the Fair Market Value on the earlier of such record date or
the Trading Day immediately preceding the ex-dividend date for
such dividend or distribution (as determined by the Board of
Directors, whose determination shall be conclusive, and
described in a certificate filed with the Paying Agent) of the
Distributed Assets or Securities so distributed applicable to
one share of Common Stock. Such adjustment shall become
effective immediately after the record date for the
determination of shareholders entitled to receive such
distribution; provided, however, that, if (a) the Fair Market
Value of the portion of the Distributed Assets or Securities
so distributed applicable to one share of Common Stock is
equal to or greater than the Market Price of the Common Stock
on the record date for the determination of shareholders
entitled to receive such distribution or (b) the Market Price
of the Common Stock on the record date for the determination
of shareholders entitled to receive such distribution is
greater than the Fair Market Value per share of such
Distributed Assets or Securities by less than $1.00, then, in
lieu of the foregoing adjustment, adequate provision shall be
made so that each Holder shall have the right to receive upon
conversion, in addition to the shares of Common Stock, the
kind and amount of assets, debt securities, or rights or
warrants comprising the Distributed Assets or Securities the
Holder would have received had such Holder converted such
Preferred Stock immediately prior to the record date for the
determination of shareholders entitled to receive such
distribution. In the event that such distribution is not so
paid or made, the Conversion Rate shall again
17
be adjusted to the Conversion Rate which would then be in
effect if such distribution had not been declared.
(iv) In case the Corporation shall make (a) any distributions, by
dividend or otherwise, during any quarterly fiscal periods
consisting exclusively of cash to all holders of outstanding
shares of Common Stock in an aggregate amount that, together
with (b) other all-cash or all-check distributions made to all
holders of outstanding shares of Common Stock during such
quarterly fiscal period, and (c) any cash and the Fair Market
Value, as of the expiration of any tender or exchange offer
(other than consideration payable in respect of any odd-lot
tender offer) of consideration payable in respect of any
tender or exchange offer by the Corporation or any of the
Corporation's Subsidiaries for all or any portion of shares of
Common Stock concluded during such quarterly fiscal period,
exceed the product of $0 multiplied by the number of shares of
Common Stock outstanding on the record date for such
distribution, then, and in each such case, the Conversion Rate
shall be adjusted so that the same shall equal the Conversion
Rate determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on the record date
fixed for the determination of holders of Common Stock
entitled to receive such distribution by a fraction of which
(A) the numerator shall be the Market Price per share of the
Common Stock on the earlier of such record date or the Trading
Day immediately preceding the ex-dividend date for such
dividend or distribution and (B) the denominator shall be (1)
the Market Price per share of Common Stock on the earlier of
such record date or the Trading Day immediately preceding the
ex-dividend date for such dividend or distribution plus (2) $0
less (3) an amount equal to the quotient of (x) the combined
amount distributed or payable in the transactions described in
clauses (a), (b) and (c) above during such quarterly fiscal
period and (y) the number of shares of Common Stock
outstanding on such record date, such adjustment to become
effective immediately after the record date for the
determination of shareholders entitled to receive such
distribution.
(v) With respect to Section 7(f)(iii) hereof, in the event that
the Corporation makes any distribution to all holders of
Common Stock consisting of Equity Interests in a Subsidiary or
other business unit of the Corporation, the Conversion Rate
shall be adjusted so that the same shall equal the Conversion
Rate determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on the record date
fixed for the determination of holders of Common Stock
entitled to receive such distribution by a fraction of which
(i) the numerator shall be (x) the Spin-off Market Price per
share of the Common Stock on such record date plus (y) the
Spin-off Market Price per Equity Interest of the Subsidiary or
other business unit of the Corporation on such record date and
(ii) the denominator shall be the Spin-off Market Price per
share of the Common Stock on such record date, such adjustment
to become effective 10 Trading Days after the effective date
of such distribution of Equity Interests in a Subsidiary or
other business unit of the Corporation.
(vi) Upon conversion of the Preferred Stock, the Holders shall
receive, in addition to the Common Stock issuable upon such
conversion, the rights issued under any future shareholder
rights plan the Corporation implements (notwithstanding the
occurrence of an event causing such rights to separate from
the Common Stock at or prior to the time of conversion)
unless, prior to conversion, the rights have expired,
terminated or been redeemed or exchanged in accordance with
such rights plan. If, and only if, the Holders of Preferred
Stock receive rights under such shareholder rights plans as
described in the preceding sentence upon conversion of their
Preferred Stock, then no other adjustment pursuant to this
Section 7(f) shall be made in connection with such shareholder
rights plans.
(vii) For purposes of this Section 7(f), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Corporation but shall include
shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock. The Corporation
shall not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Corporation.
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(viii) Notwithstanding the foregoing, in no event shall the
Conversion Rate exceed the maximum conversion rate specified
under this Section 7(f)(viii) (the "Maximum Conversion Rate")
as a result of an adjustment pursuant to Section 7(f)(iii) or
Section 7(f)(iv) hereof. The Maximum Conversion Rate shall
initially be 6.5703 and shall be appropriately adjusted from
time to time for any stock dividends on or subdivisions or
combinations of the Common Stock. The Maximum Conversion Rate
shall not apply to any adjustments made pursuant to any of the
events in Section 7(f)(i) or Section 7(f)(ii) hereof.
(g) Calculation Methodology. No adjustment in the Conversion Price
need be made unless the adjustment would require an increase or decrease of at
least 1% in the Conversion Price then in effect, provided that any adjustment
that would otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment. Except as stated in this Section 7,
the Conversion Rate will not be adjusted for the issuance of Common Stock or any
securities convertible into or exchangeable for Common Stock or carrying the
right to purchase any of the foregoing. Any adjustments that are made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under Section 4 and Section 7(f) hereof and this Section 7(g) shall
be made to the nearest cent or to the nearest 1/10,000th of a share, as the case
may be.
(h) When No Adjustment Required. No adjustment to the Conversion
Rate need be made:
(i) upon the issuance of any shares of Common Stock pursuant to
any present or future plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation
and the investment of additional optional amounts in shares of
Common Stock under any plan;
(ii) upon the issuance of any shares of Common Stock or options or
rights to purchase those shares pursuant to any present or
future employee, director or consultant benefit plan or
program of or assumed by the Corporation or any of its
Subsidiaries;
(iii) upon the issuance of any shares of Common Stock pursuant to
any option, warrant, right, or exercisable, exchangeable or
convertible security not described in clause (ii) above and
outstanding as of the date of this Certificate of Designation;
(iv) for a change in the par value or no par value of the Common
Stock;
(v) for accumulated and unpaid dividends (including Additional
Dividends, if any); or
(vi) if Holders are to participate in a merger or consolidation on
a basis and with notice that the Board of Directors determines
to be fair and appropriate in light of the basis and notice on
which holders of Common Stock participate in the transaction;
provided that the basis on which the Holders are to
participate in the transaction shall not be deemed to be fair
if it would require the conversion of securities at any time
prior to the expiration of the conversion period specified for
such securities.
To the extent the Preferred Stock becomes convertible into cash, assets
or property (other than capital stock of the Corporation or securities to which
Section 7(l) hereof applies), no adjustment shall be made thereafter as to the
cash, assets or property. Interest shall not accumulate on such cash.
(i) Notice of Adjustment. Whenever the Conversion Rate is adjusted, the
Corporation shall promptly mail to Holders a notice of the adjustment. The
Corporation shall file with the Conversion Agent such notice. The certificate
shall, absent manifest error, be conclusive evidence that the adjustment is
correct. No Conversion Agent shall be under any duty or responsibility with
respect to any such certificate except to exhibit the same to any Holder
desiring inspection thereof.
(j) Voluntary Increase. The Corporation may make such increases in the
Conversion Rate, in addition to those required by Section 7(f) hereof, as the
Board of Directors considers to be advisable to avoid or diminish any income tax
to holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. To the
19
extent permitted by applicable law, the Corporation may from time to time
increase the Conversion Rate by any amount, temporarily or otherwise, for any
period of at least 20 days if the increase is irrevocable during the period and
the Board of Directors shall have made a determination that such increase would
be in the best interests of the Corporation, which determination shall be
conclusive. Whenever the Conversion Rate is so increased, the Corporation shall
mail to Holders and file with the Conversion Agent a notice of such increase.
The Conversion Agent shall not be under any duty or responsibility with respect
to any such notice except to exhibit the same to any holder desiring inspection
thereof. The Corporation shall mail the notice at least 15 days before the date
the increased Conversion Rate takes effect. The notice shall state the increased
Conversion Rate and the period it shall be in effect.
(k) Notice to Holders Prior to Certain Actions. In case:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock that would require an
adjustment in the Conversion Rate pursuant to Section 7(f)
hereof;
(ii) the Corporation shall authorize the granting to all or
substantially all the holders of its Common Stock of rights or
warrants to subscribe for or purchase any share of any class
or any other rights or warrants;
(iii) of any reclassification or reorganization of the Common Stock
of the Corporation (other than a subdivision or combination of
its outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the
Corporation is a party and for which approval of any
shareholders of the Corporation is required, or of the sale or
transfer of all or substantially all of the assets of the
Corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation,
the Corporation shall cause to be filed with the Conversion
Agent and to be mailed to each Holder at its address appearing
on the Security Register, as promptly as possible but in any
event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to
be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, or
rights or warrants are to be determined or (y) the date on
which such reclassification, reorganization, consolidation,
merger, sale, transfer, dissolution, liquidation or winding-up
is expected to become effective or occur, and the date as of
which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to
give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution,
reclassification, reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up.
(l) Effect of Reclassification, Consolidation, Merger, Binding
Share Exchange or Sale. If any of the following events occur, namely: (i) any
reclassification or change of outstanding shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination); (ii) any
consolidation, merger, combination or binding share exchange of the Corporation
with another Person as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock; or (iii) any sale or
conveyance of the properties and assets of the Corporation as, or substantially
as, an entirety to any other Person as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then the
Corporation or the successor or purchasing Person, as the case may be, shall
cause an amendment to this Certificate of Designation to be executed and filed
in accordance with Michigan law, providing that each share of Preferred Stock
shall be convertible into the kind and amount of shares of stock and other
securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, binding share
exchange, sale or conveyance by a holder of a number of shares of Common Stock
issuable upon conversion of such Preferred Stock
20
immediately prior to such reclassification, change, consolidation, merger,
combination, binding share exchange, sale or conveyance. Such amended
Certificate of Designation shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 7(l).
The Corporation shall cause notice of the execution of such amended
Certificate of Designation to be mailed to each Holder, at its address appearing
on the Security Register, within 20 days after filing thereof. Failure to
deliver such notice shall not affect the legality or validity of such
supplemental indenture.
The above provisions of this Section 7(l) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
binding share exchanges, sales and conveyances.
If this Section 7(l) applies to any event or occurrence, Section 7(f)
hereof shall not apply.
(m) Responsibility of Conversion Agent. The Conversion Agent shall
not at any time be under any duty or responsibility to any Holder to either
calculate the Conversion Rate or determine whether any facts exist which may
require any adjustment of the Conversion Rate, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the
method employed, or herein or in any amended Certificate of Designation provided
to be employed, in making the same and shall be protected in relying upon an
Officers' Certificate with respect to the same. The Conversion Agent shall not
be accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, which may at any
time be issued or delivered upon the conversion of any Preferred Stock and the
Conversion Agent makes no representations with respect thereto. The Conversion
Agent shall not be responsible for any failure of the Corporation to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property or cash upon the surrender of any Preferred Stock for the
purpose of conversion or to comply with any of the duties, responsibilities or
covenants of the Corporation contained in this Section 7(m). Without limiting
the generality of the foregoing, the Conversion Agent shall not be under any
responsibility to determine the correctness of any provisions contained in any
amended Certificate of Designation entered into pursuant to this Section 7
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders upon the conversion of their
Preferred Stock after any event referred to in this Section 7 or to any
adjustment to be made with respect thereto, but may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, the Officers' Certificate (which the Corporation shall be
obligated to file with the Conversion Agent prior to the execution of any such
amended Certificate of Designation) with respect thereto.
(n) Simultaneous Adjustments. In the event that Section 7(f)
hereof requires adjustments to the Conversion Rate under more than one of
Section 7(f)(i), Section 7(f)(ii), Section 7(f)(iii) or Section 7(f)(iv) hereof,
and the Dividend Record Dates for the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be made by
applying, first, the provisions of Section 7(f)(iii) hereof, second, the
provisions of Section 7(f)(i) hereof and third, the provisions of Section
7(f)(ii) hereof; provided, however, that nothing in this Section 7(n) shall be
done to evade the principle set forth in Section 7(f)(viii) hereof that the
Maximum Conversion Rate shall not apply to any adjustments made with respect to
any of the events in Section 7(f)(i) or Section 7(f)(ii) hereof.
(o) Successive Adjustments. After an adjustment to the Conversion
Rate under Section 7(f) hereof, any subsequent event requiring an adjustment
under Section 7(f) shall cause an adjustment to the Conversion Rate as so
adjusted.
(p) General Considerations. Whenever successive adjustments to the
Conversion Rate are called for pursuant to this Section 7, such adjustments
shall be made to the Market Price as may be necessary or appropriate to
effectuate the intent of this Section 7 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.
(q) Corporation Determination Final. Any determination which the
Board of Directors must make pursuant to this Section 7 shall be conclusive and
binding on the Holders.
21
8. Mandatory Conversion.
(a) At any time on or after December 5, 2008, the Corporation
shall have the right, at its option, to cause the Preferred Stock, in whole but
not in part, to be automatically converted into that number of whole shares of
Common Stock for each share of Preferred Stock equal to the quotient of (i) the
Liquidation Preference divided by (ii) the Conversion Price then in effect, with
any resulting fractional shares of Common Stock to be settled in accordance with
Section 7(c). The Corporation may exercise its right to cause a mandatory
conversion pursuant to this Section 8(a) only if the Last Reported Sale Price of
the Common Stock equals or exceeds 130% of the Conversion Price then in effect
for at least 20 Trading Days in any consecutive 30-day trading period on the
NYSE (or such other national securities exchange or automated quotation system
on which the Common Stock is then listed or authorized for quotation), including
the last Trading Day of such 30-day period, ending on the Trading Day prior to
the Corporation's issuance of a press release announcing the mandatory
conversion as described in Section 8(b).
(b) To exercise the mandatory conversion right described in
Section 8(a), the Corporation must issue a press release for publication on the
Dow Jones News Service prior to the opening of business on the first trading day
following any date on which the conditions described in Section 8(a) are met,
announcing such a mandatory conversion. The Corporation shall also give notice
by mail or by publication (with subsequent prompt notice by mail) to the holders
of Preferred Stock (not more than four Business Days after the date of the press
release) of the mandatory conversion announcing the Corporation's intention to
convert the Preferred Stock. The conversion date will be a date selected by the
Corporation (the "Mandatory Conversion Date") and will be no more than five days
after the date on which the Corporation issues the press release described in
this Section 8(b).
(c) In addition to any information required by applicable law or
regulation, the press release and notice of a mandatory conversion described in
Section 8(b) shall state, as appropriate: (i) the Mandatory Conversion Date;
(ii) the number of shares of Common Stock to be issued upon conversion of each
share of Preferred Stock; (iii) the number of shares of Preferred Stock to be
converted; and (iv) that dividends on the Preferred Stock to be converted will
cease to accumulate on the Mandatory Conversion Date.
(d) On and after the Mandatory Conversion Date, dividends will
cease to accumulate on the Preferred Stock called for a mandatory conversion
pursuant to Section 8(a) and all rights of holders of such Preferred Stock will
terminate except for the right to receive the whole shares of Common Stock
issuable upon conversion thereof and cash, in lieu of any fractional shares of
Common Stock in accordance with Section 7(c). The dividend payment with respect
to the Preferred Stock called for a mandatory conversion pursuant to Section
8(a) on a date during the period between the close of business on any Dividend
Record Date to the close of business on the corresponding Dividend Payment Date
will be payable on such Dividend Payment Date to the record holder of such share
on such Dividend Record Date if such share has been converted after such
Dividend Record Date and prior to such Dividend Payment Date. Except as provided
in the immediately preceding sentence with respect to a mandatory conversion
pursuant to Section 8(a), no payment or adjustment will be made upon conversion
of Preferred Stock for Accumulated Dividends or for dividends with respect to
the Common Stock issued upon such conversion.
(e) The Corporation may not authorize, issue a press release or
give notice of any mandatory conversion pursuant to Section 8(a) unless, prior
to giving the mandatory conversion notice, all Accumulated Dividends on the
Preferred Stock for periods ended prior to the date of such mandatory conversion
notice shall have been paid in cash.
(f) In addition to the mandatory conversion right described in
Section 8(a), if there are less than 250,000 shares of Preferred Stock
outstanding, the Corporation shall have the right, at any time on or after
December 5, 2008, at its option, to cause the Preferred Stock to be
automatically converted into that number of whole shares of Common Stock equal
to the quotient of (i) the Liquidation Preference divided by (ii) the lesser of
(A) the Conversion Price then in effect and (B) the Market Value for the period
ending on the second Trading Day immediately prior to the Mandatory Conversion
Date, with any resulting fractional shares of Common Stock to be
22
settled in cash in accordance with Section 7(c). The provisions of clauses (b),
(c), (d) and (e) of this Section 8 shall apply to any mandatory conversion
pursuant to this clause (f); provided, that (i) the Mandatory Conversion Date
described in Section 8(b) shall not be less than 15 days nor more than 30 days
after the date on which the Corporation issues a press release pursuant to
Section 8(b) announcing such mandatory conversion and (ii) the press release and
notice of mandatory conversion described in Section 8(c) will not state the
number of shares of Common Stock to be issued upon conversion of each share of
Preferred Stock.
9. Consolidation, Merger and Sale of Assets.
(a) The Corporation, without the consent of the Holders of any of
the outstanding Preferred Stock, may consolidate with or merge into any other
Person or convey, transfer or lease all or substantially all its assets to any
Person or may permit any Person to consolidate with or merge into, or transfer
or lease all or substantially all its properties to, the Corporation; provided,
however, that: (a) the successor, transferee or lessee is organized under the
laws of the United States or any political subdivision thereof; (b) the shares
of Preferred Stock will become shares of such successor, transferee or lessee,
having in respect of such successor, transferee or lessee the same powers,
designations, preferences and relative, participating, optional or other rights
on which, and the qualification, limitations or restrictions thereon, the
Preferred Stock had immediately prior to such transaction; and (c) the
Corporation delivers to the Transfer Agent an Officers' Certificate and an
Opinion of Counsel stating that such transaction complies with this Certificate
of Designation (including without limitation the requirements of Section 7(l).
(b) Upon any consolidation by the Corporation with, or merger by
the Corporation into, any other Person or any conveyance, transfer or lease of
all or substantially all the assets of the Corporation as described in Section
9(a), the successor resulting from such consolidation or into which the
Corporation is merged or the transferee or lessee to which such conveyance,
transfer or lease is made will succeed to, and be substituted for, and may
exercise every right and power of, the Corporation under the shares of Preferred
Stock, and, thereafter, except in the case of a lease, the predecessor (if still
in existence) will be released from its obligations and covenants with respect
to the Preferred Stock.
10. SEC Reports.
Whether or not the Corporation is required to file reports with the
Commission, if any shares of Preferred Stock are outstanding, the Corporation
shall file with the Commission all such reports and other information as it
would be required to file with the Commission by Section l3(a) or 15(d) under
the Exchange Act. The Corporation shall supply each holder of Preferred Stock,
upon request, without cost to such holder, copies of such reports or other
information.
11. Certificates.
(a) Form and Dating. The Preferred Stock and the Transfer Agent's
certificate of authentication shall be substantially in the form of Exhibit C,
which is hereby incorporated in and expressly made a part of this Certificate of
Designation. The Preferred Stock certificate may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Corporation is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Corporation). Each
Preferred Stock certificate shall be dated the date of its authentication. The
terms of the Preferred Stock certificate set forth in Exhibit C are part of the
terms of this Certificate of Designation.
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(i) Global Preferred Stock. The Preferred Stock shall be issued
initially in the form of one or more fully registered global
certificates with the global securities legend and restricted
securities legend set forth in Exhibit C hereto (the "Global
Preferred Stock"), which shall be deposited on behalf of the
purchasers represented thereby with DTC (or with such
custodian as DTC may direct), and registered in the name of
DTC or a nominee of DTC, duly executed by the Corporation and
authenticated by the Transfer Agent as hereinafter provided.
The number of shares of Preferred Stock represented by Global
Preferred Stock may from time to time be increased or
decreased by adjustments made on the records of the Transfer
Agent and DTC or its nominee as hereinafter provided. With
respect to shares of Preferred Stock that are not "restricted
securities" as defined in Rule 144 under the Securities Act on
a Conversion Date, all shares of Common Stock distributed on
such Conversion Date will be freely transferable without
restriction under the Securities Act (other than by
affiliates), and such shares will be eligible for receipt in
global form through the facilities of DTC.
(ii) Book-Entry Provisions. In the event Global Preferred Stock is
deposited with or on behalf of DTC, the Corporation shall
execute and the Transfer Agent shall authenticate and deliver
initially one or more Global Preferred Stock certificates that
(a) shall be registered in the name of DTC as depository for
such Global Preferred Stock or the nominee of DTC and (b)
shall be delivered by the Transfer Agent to DTC or pursuant to
DTC's instructions or held by the Transfer Agent as custodian
for DTC.
Members of, or participants in, DTC ("Agent Members") shall
have no rights under this Certificate of Designation with
respect to any Global Preferred Stock held on their behalf by
DTC or by the Transfer Agent as the custodian of DTC or under
such Global Preferred Stock, and DTC may be treated by the
Corporation, the Transfer Agent and any agent of the
Corporation or the Transfer Agent as the absolute owner of
such Global Preferred Stock for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent
the Corporation, the Transfer Agent or any agent of the
Corporation or the Transfer Agent from giving effect to any
written certification, proxy or other authorization furnished
by DTC or impair, as between DTC and its Agent Members, the
operation of customary practices of DTC governing the exercise
of the rights of a holder of a beneficial interest in any
Global Preferred Stock.
(iii) Certificated Preferred Stock. Except as provided in Section
11(c), owners of beneficial interests in Global Preferred
Stock will not be entitled to receive Certificated Preferred
Stock.
(b) Execution and Authentication. Two Officers shall sign the
Preferred Stock certificate for the Corporation by manual or facsimile
signature.
If an Officer whose signature is on a Preferred Stock certificate no
longer holds that office at the time the Transfer Agent authenticates the
Preferred Stock certificate, the Preferred Stock certificate shall be valid
nevertheless.
A Preferred Stock certificate shall not be valid until an authorized
signatory of the Transfer Agent and the Security Registrar manually signs the
certificate of authentication on the Preferred Stock certificate. The signature
shall be conclusive evidence that the Preferred Stock certificate has been
authenticated under this Certificate of Designation.
The Transfer Agent shall authenticate and deliver certificates for up
to 5,000,000 shares of Preferred Stock for original issue upon a written order
of the Corporation signed by two Officers or by an Officer and an Assistant
Treasurer of the Corporation. Such order shall specify the number of shares of
Preferred Stock to be authenticated and the date on which the original issue of
Preferred Stock is to be authenticated.
The Transfer Agent may appoint an authenticating agent reasonably
acceptable to the Corporation to authenticate the certificates for Preferred
Stock. Unless limited by the terms of such appointment, an authenticating
24
agent may authenticate certificates for Preferred Stock whenever the Transfer
Agent may do so. Each reference in this Certificate of Designation to
authentication by the Transfer Agent includes authentication by such agent. An
authenticating agent has the same rights as the Transfer Agent or agent for
service of notices and demands.
(c) Transfer and Exchange of Global Preferred Stock. The transfer
and exchange of Global Preferred Stock or beneficial interests therein shall be
effected through DTC, in accordance with this Certificate of Designation
(including applicable restrictions on transfer set forth herein, if any) and the
procedures of DTC therefor.
(i) Restrictions on Transfer and Exchange of Global Preferred
Stock.
(1) Notwithstanding any other provisions of this
Certificate of Designation (other than the provisions
set forth in Section 11(c)(ii)), Global Preferred
Stock may not be transferred as a whole except by DTC
to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC or by DTC or any such nominee
to a successor depository or a nominee of such
successor depository.
(2) In the event that the Global Preferred Stock is
exchanged for Preferred Stock in definitive
registered form pursuant to Section 11(c)(ii) prior
to the effectiveness of a Shelf Registration
Statement with respect to such securities, such
Preferred Stock may be exchanged only in accordance
with such procedures as are substantially consistent
with the provisions of this Section 11(c) (including
the certification requirements set forth in the
Exhibits to this Certificate of Designation intended
to ensure that such transfers comply with Rule 144A
or such other applicable exemption from registration
under the Securities Act, as the case may be) and
such other procedures as may from time to time be
adopted by the Corporation.
(3) The Preferred Stock, and any shares of Common Stock
distributed pursuant to the conversion of the
Preferred Stock, may not be sold or otherwise
transferred until the expiration of two years
following the date of payment for and delivery of the
Preferred Stock, except (a) pursuant to registration
under the Securities Act, (b) in accordance with Rule
144 (if available) or Rule 144A under the Securities
Act (if available) or (c) in offshore transactions in
reliance on Regulation S, and will bear a legend to
this effect.
(ii) Authentication of Certificated Preferred Stock. If at any
time:
(1) DTC notifies the Corporation that DTC is unwilling or
unable to continue as depository for the Global
Preferred Stock and a successor depository for the
Global Preferred Stock is not appointed by the
Corporation within 90 days after delivery of such
notice;
(2) DTC ceases to be a clearing agency registered under
the Exchange Act and a successor depository for the
Global Preferred Stock is not appointed by the
Corporation within 90 days; or
(3) the Corporation, in its sole discretion, notifies the
Transfer Agent in writing that it elects to cause the
issuance of Certificated Preferred Stock under this
Certificate of Designation,
then the Corporation will execute, and the Transfer
Agent, upon receipt of a written order of the
Corporation signed by two Officers or by an Officer
and an Assistant Treasurer of the Corporation
requesting the authentication and delivery of
Certificated Preferred Stock to the Persons
designated by the Corporation, will authenticate and
deliver Certificated Preferred Stock equal to the
number of shares of Preferred Stock represented by
the Global Preferred Stock, in exchange for such
Global Preferred Stock.
(iii) Cancellation or Adjustment of Global Preferred Stock. At such
time as all beneficial interests in Global Preferred Stock
have either been exchanged for Certificated Preferred Stock,
converted or canceled, such Global Preferred Stock shall be
returned to DTC for cancellation or retained and
25
canceled by the Transfer Agent. At any time prior to such
cancellation, if any beneficial interest in Global Preferred
Stock is exchanged for Certificated Preferred Stock, converted
or canceled, the number of shares of Preferred Stock
represented by such Global Preferred Stock shall be reduced
and an adjustment shall be made on the books and records of
the Transfer Agent with respect to such Global Preferred
Stock, by the Transfer Agent or DTC, to reflect such
reduction.
(iv) Obligations with Respect to Transfers and
Exchanges of Preferred Stock.
(1) To permit registrations of transfers and
exchanges, the Corporation shall execute and the Transfer
Agent shall authenticate Certificated Preferred Stock and
Global Preferred Stock as required pursuant to the provisions
of this Section 11(c).
(2) All Certificated Preferred Stock and
Global Preferred Stock issued upon any registration of
transfer or exchange of Certificated Preferred Stock or Global
Preferred Stock shall be the valid obligations of the
Corporation, entitled to the same benefits under this
Certificate of Designation as the Certificated Preferred Stock
or Global Preferred Stock surrendered upon such registration
of transfer or exchange.
(3) Prior to due presentment for
registration of transfer of any shares of Preferred Stock, the
Transfer Agent and the Corporation may deem and treat the
Person in whose name such shares of Preferred Stock are
registered as the absolute owner of such Preferred Stock and
neither the Transfer Agent nor the Corporation shall be
affected by notice to the contrary.
(4) No service charge shall be made to a
Holder for any registration of transfer or exchange upon
surrender of any Preferred Stock certificate or Common Stock
certificate at the office of the Transfer Agent maintained for
that purpose. However, the Corporation may require payment of
a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of
transfer or exchange of Preferred Stock certificates or Common
Stock certificates.
(5) Upon any sale or transfer of shares of
Preferred Stock (including any Preferred Stock represented by
a Global Preferred Stock certificate) or of certificated
Common Stock pursuant to an effective registration statement
under the Securities Act or pursuant to Rule 144 or another
exemption from registration under the Securities Act (and
based upon an Opinion of Counsel reasonably satisfactory to
the Corporation if it so requests):
(A) in the case of any Certificated
Preferred Stock or certificated Common
Stock, the Corporation and the Transfer
Agent shall permit the holder thereof to
exchange such Preferred Stock or
certificated Common Stock for Certificated
Preferred Stock or certificated Common
Stock, as the case may be, that does not
bear the restrictive legend set forth on
Exhibit C and rescind any restriction on the
transfer of such Preferred Stock or Common
Stock issuable in respect of the conversion
of the Preferred Stock; and
(B) in the case of any Global
Preferred Stock, such Preferred Stock shall
not be required to bear the restrictive
legend set forth on Exhibit C; provided,
however, that with respect to any request
for an exchange of Preferred Stock that is
represented by Global Preferred Stock for
Certificated Preferred Stock that does not
bear a restrictive as set forth on Exhibit C
in connection with a sale or transfer
thereof pursuant to Rule 144 or another
exemption from registration under the
Securities Act (and based upon an Opinion of
Counsel if the Corporation so requests), the
Holder thereof shall certify in writing to
the Transfer Agent that such request is
being made pursuant to such exemption (such
certification to be substantially in the
form of Exhibit D hereto).
(v) No Obligation of the Transfer Agent.
(1) The Transfer Agent shall have no responsibility or
obligation to any beneficial owner of Global
26
Preferred Stock, a member of, or a participant in,
DTC or any other Person with respect to the accuracy
of the records of DTC or its nominee or of any
participant or member thereof, with respect to any
ownership interest in the Preferred Stock or with
respect to the delivery to any participant, member,
beneficial owner or other Person (other than DTC) of
any notice or the payment of any amount, under or
with respect to such Global Preferred Stock. All
notices and communications to be given to the Holders
and all payments to be made to Holders under the
Preferred Stock shall be given or made only to the
Holders (which shall be DTC or its nominee in the
case of the Global Preferred Stock). The rights of
beneficial owners in any Global Preferred Stock shall
be exercised only through DTC subject to the
applicable rules and procedures of DTC. The Transfer
Agent may rely and shall be fully protected in
relying upon information furnished by DTC with
respect to its members, participants and any
beneficial owners.
(2) The Transfer Agent shall have no obligation or duty
to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this
Certificate of Designation or under applicable law
with respect to any transfer of any interest in any
Preferred Stock (including any transfers between or
among DTC participants, members or beneficial owners
in any Global Preferred Stock) other than to require
delivery of such certificates and other documentation
or evidence as are expressly required by, and to do
so if and when expressly required by, the terms of
this Certificate of Designation, and to examine the
same to determine substantial compliance as to form
with the express requirements hereof.
(d) Replacement Certificates. If a mutilated Preferred Stock
certificate is surrendered to the Transfer Agent or if the Holder of a Preferred
Stock certificate claims that the Preferred Stock certificate has been lost,
destroyed or wrongfully taken, the Corporation shall issue and the Transfer
Agent shall countersign a replacement Preferred Stock certificate if the
reasonable requirements of the Transfer Agent are met. If required by the
Transfer Agent or the Corporation, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Corporation and the Transfer Agent to protect
the Corporation and the Transfer Agent from any loss which either of them may
suffer if a Preferred Stock certificate is replaced. The Corporation and the
Transfer Agent may charge the Holder for their expenses in replacing a Preferred
Stock certificate.
12. Additional Rights of Holders. In addition to the rights
provided to Holders under this Certificate of Designation, Holders shall have
the rights set forth in the Registration Rights Agreement.
13. Other Provisions.
(a) With respect to any notice to a Holder of shares of Preferred Stock
required to be provided hereunder, neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular Holder shall affect
the sufficiency of the notice or the validity of the proceedings referred to in
such notice with respect to the other Holders or affect the legality or validity
of any distribution, rights, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up, or the vote upon
any such action. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given whether or not the Holder
receives the notice.
(b) Shares of Preferred Stock issued and reacquired will be retired and
canceled promptly after reacquisition thereof and, upon compliance with the
applicable requirements of Michigan law, have the status of authorized but
unissued shares of preferred stock of the Corporation undesignated as to series
and may with any and all other authorized but unissued shares of preferred stock
of the Corporation be designated or redesignated and issued or reissued, as the
case may be, as part of any series of preferred stock of the Corporation, except
that any issuance or reissuance of shares of Preferred Stock must be in
compliance with this Certificate of Designation.
(c) The shares of Preferred Stock shall be issuable only in whole
shares.
(d) All notice periods referred to herein shall commence on the date of
the mailing of the applicable notice.
27
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed and attested this 4th day of December, 2003.
CMS ENERGY CORPORATION
By: /S/ Michael D. VanHemert
--------------------------
Name: Michael D. VanHemert
Title: Vice President and
Secretary
Attest: /S/ Joyce H. Norkey
-------------------
Joyce H. Norkey
28
EXHIBIT A
FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE
To: CMS Energy Corporation
The undersigned registered holder of shares of Preferred Stock hereby
acknowledges receipt of a notice from CMS Energy Corporation (the "Corporation")
as to the occurrence of a Fundamental Change with respect to the Corporation and
requests and instructs the Corporation to repurchase the shares of Preferred
Stock ($50.00 liquidation preference or an integral multiple thereof) designated
below, in accordance with the terms of the Certificate of Designation referred
to in such Preferred Stock and directs that the check of the Corporation, in
payment for these shares of Preferred Stock, be issued and delivered to the
registered holder hereof unless a different name has been indicated below. If
any portion of these shares of Preferred Stock are not repurchased and are to be
issued in the name of a Person other than the undersigned, the undersigned shall
pay all transfer taxes payable with respect thereto.
Dated: _____________________________
Signature(s)
Signature(s) must be guaranteed by a commercial bank
or trust company or a member firm of a major stock
exchange if shares of Preferred Stock are to be
delivered other than to or in the name of the
registered holder.
_____________________________
Signature Guarantee
Fill in for registration
of Preferred Stock if to
be issued other than to
and in the name of
registered holder:
_________________________ Number of shares of Preferred Stock to be
(Name) purchased (if less than all are to be
be purchased):
_________________________
(Street Address) _____________________
_________________________ Certificate Number (if shares of Preferred
(City, state and zip code) Stock are Certificated):
Please print name and address
_____________________
Social Security or other taxpayer number:
_____________________
29
EXHIBIT B
FORM OF CONVERSION NOTICE
To: CMS Energy Corporation
The undersigned registered holder of these shares of Preferred Stock
hereby exercises the option to convert these shares of Preferred Stock, or
portion hereof (which is $50.00 liquidation preference or an integral multiple
thereof) designated below, for shares of Common Stock of CMS Energy Corporation
in accordance with the terms of the Certificate of Designation referred to in
the Preferred Stock, and directs that the shares, if any, issuable and
deliverable upon such conversion, together with any check for cash deliverable
upon such conversion, and any shares of Preferred Stock representing any
unconverted shares hereof, be issued and delivered to the registered holder
hereof unless a different name has been indicated below. If shares or any
portion of the Preferred Stock not converted are to be issued in the name of a
Person other than the undersigned, the undersigned shall pay all transfer taxes
payable with respect thereto.
This notice shall be deemed to be an irrevocable exercise of the option
to convert these shares of Preferred Stock.
Dated: _____________________________
Signature(s)
Signature(s) must be guaranteed by a commercial bank
or trust company or a member firm of a major stock
exchange if shares of Common Stock are to be issued,
or shares of Preferred Stock to be delivered, other
than to or in the name of the registered holder.
_____________________________
Signature Guarantee
Fill in for registration
of shares if to be
delivered, and shares of
Preferred Stock if to be
issued other than to and
in the name of registered
holder:
_________________________ Number of shares of Preferred Stock to be
(Name) converted (if less than all):
_________________________ _____________________
(Street Address)
Certificate Number (if shares of Preferred
_________________________ Stock are Certificated):
(City, state and zip code)
Please print name and address _____________________
Social Security or other taxpayer number:
_____________________
30
EXHIBIT C
FORM OF PREFERRED STOCK
FACE OF SECURITY
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND THE COMMON STOCK ISSUABLE
UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY AND THE COMMON
STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A")) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (IV) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (V) TO CMS ENERGY CORPORATION
OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY FROM
IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE.
THE HOLDER OF THIS SECURITY AGREES THAT SUCH HOLDER WILL NOT ENGAGE IN
HEDGING TRANSACTIONS INVOLVING THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
THIS SECURITY AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR
RESALES AND OTHER TRANSFERS OF THIS SECURITY TO REFLECT ANY CHANGE IN APPLICABLE
LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO
THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS
SECURITY SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY TO HAVE AGREED TO
ANY SUCH AMENDMENT OR SUPPLEMENT.
THE HOLDER OF THIS SECURITY IS SUBJECT TO, AND ENTITLED TO THE BENEFITS
OF, A REGISTRATION RIGHTS AGREEMENT, DATED AS OF DECEMBER 5, 2003 ENTERED INTO
BY THE COMPANY FOR THE BENEFIT OF CERTAIN HOLDERS OF SECURITIES FROM TIME TO
TIME.
31
Certificate Number Number of Shares
[ ] [ ]
CUSIP NO.: ______
4.50% Cumulative Convertible Preferred Stock (par value $0.01) (liquidation
preference $50 per share)
of
CMS Energy Corporation
CMS Energy Corporation, a Michigan corporation (the `Corporation"),
hereby certifies that [______] (the "Holder") is the registered owner of
[______] fully paid and non-assessable preferred securities of the Corporation
designated the 4.50% Cumulative Convertible Preferred Stock (par value $0.01)
(liquidation preference $50 per share) (the "Preferred Stock"). The shares of
Preferred Stock are transferable on the books and records of the Transfer Agent,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Stock represented hereby are issued and shall in all respects be
subject to the provisions of the Certificate of Designation dated December 4,
2003, as the same may be amended from time to time (the "Certificate of
Designation"). Capitalized terms used herein but not defined shall have the
meaning given them in the Certificate of Designation. The Corporation will
provide a copy of the Certificate of Designation to a Holder without charge upon
written request to the Corporation at its principal place of business.
Reference is hereby made to select provisions of the Preferred Stock
set forth on the reverse hereof, and to the Certificate of Designation, which
select provisions and the Certificate of Designation shall for all purposes have
the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Certificate of Designation and is entitled to the benefits thereunder.
Unless the Transfer Agent's Certificate of Authentication hereon has
been properly executed, these shares of Preferred Stock shall not be entitled to
any benefit under the Certificate of Designation or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Corporation has executed this certificate this
____ day of __________, 2003.
CMS ENERGY CORPORATION
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
32
TRANSFER AGENT'S AND SECURITY REGISTRAR'S CERTIFICATE OF AUTHENTICATION
These are shares of the Preferred Stock referred to in the
within-mentioned Certificate of Designation.
Dated: ______________, 2003
CMS Energy Corporation, as Transfer Agent
and Security Registrar
By: __________________________________
Authorized Signatory
REVERSE OF SECURITY
Cash dividends on each share of Preferred Stock shall be payable at a
rate per annum set forth on the face hereof or as provided in the Certificate of
Designation.
The shares of Preferred Stock shall be convertible into the
Corporation's Common Stock in the manner and according to the terms set forth in
the Certificate of Designation.
The Corporation will furnish without charge to each holder who so
requests the powers, designations, preferences and relative, participating,
optional or other rights of each class of stock and the qualifications,
limitations or restrictions of such preferences and/or rights.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of
Preferred Stock evidenced hereby to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints ____________ agent to transfer the shares of
Preferred Stock evidenced hereby on the books of the Transfer Agent. The agent
may substitute another to act for him or her.
Date: _____________________________________________________________
Signature: ________________________________________________________
(Sign exactly as your name appears on the other side of this Preferred
Stock certificate)
Signature Guarantee: (1) __________________________________________
(1) (Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Transfer Agent, which
requirements include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Transfer Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
33
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF PREFERRED STOCK
Re: 4.50% Cumulative Convertible Preferred Stock (the "Preferred
Stock") of CMS Energy Corporation (the "Corporation")
This Certificate relates to ____ shares of Preferred Stock held in [ ]
*/ book-entry or [ ] */ definitive form by __________________ (the
"Transferor").
The Transferor*:
[ ] has requested the Transfer Agent by written order to deliver in
exchange for its beneficial interest in the Preferred Stock held by the
Depository shares of Preferred Stock in definitive, registered form equal to its
beneficial interest in such Preferred Stock (or the portion thereof indicated
above); or
[ ] has requested the Transfer Agent by written order to exchange or
register the transfer of Preferred Stock.
In connection with such request and in respect of such Preferred Stock,
the Transferor does hereby certify that the Transferor is familiar with the
Certificate of Designation relating to the above-captioned Preferred Stock and
that the transfer of this Preferred Stock does not require registration under
the Securities Act of 1933, as amended (the "Securities Act") because */:
[ ] Such Preferred Stock is being acquired for the Transferor's own
account without transfer.
[ ] Such Preferred Stock is being transferred to the Corporation.
[ ] Such Preferred Stock is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities Act), in
reliance on Rule 144A.
[ ] Such Preferred Stock is being transferred in reliance on and in
compliance with another exemption from the registration requirements of the
Securities Act (and based on an Opinion of Counsel if the Corporation so
requests).
- --------
* /Please check applicable box.
[NAME OF TRANFEROR]
____________________________________
By:
Its:
Date: ________________
34