Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF
5.00% SERIES B CONVERTIBLE CUMULATIVE PREFERRED STOCK
OF
SEMCO ENERGY, INC.
(Pursuant to Section 302 of the
Michigan Business Corporation Act)
SEMCO Energy, Inc., a corporation organized and existing under the laws of
the State of Michigan (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, the dividend rate, the liquidation preference and other
terms being set through a duly authorized Pricing 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 pursuant to the provisions of
Article III of the Restated Articles of Incorporation of the Corporation, as
amended (the "Articles of Incorporation") and pursuant to Section 302 of the
Michigan Business Corporation Act, the Board of Director hereby establishes a
series of the preferred stock of the Corporation and hereby states that the
series' designations, relative rights, preferences, privileges, powers and
restrictions (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. Of the 500,000 shares of Cumulative
Preferred Stock, $1 par value, authorized pursuant to the Articles of
Incorporation, a series of preferred stock is hereby designated as the "5.00%
Series B Convertible Cumulative Preferred Stock" (the "Preferred Stock"), and
the number of shares of such series shall be 350,000. Such number of shares may
be increased (but not in excess of the total number of authorized shares of
Preferred Stock) by resolution of the Board of Directors.
2. Ranking. The Preferred Stock, with respect to dividend rights or
rights upon the Corporation's liquidation, winding-up or dissolution, ranks:
(a) senior to all classes of the Corporation's common stock
("Common Stock"), Preference Stock and to each other class of capital stock or
series of preferred stock established after the Issue Date, the terms of which
do not expressly provide that such class or series ranks senior to or on a
parity with the Preferred Stock as to dividend rights or rights upon the
Corporation's liquidation, winding-up or dissolution ("Junior Stock");
(b) on a parity, in all respects, with any class of capital stock
or series of preferred stock established after the Issue Date, the terms of
which expressly provide that such
class or series will rank on a parity with the Preferred Stock as to dividend
rights or rights upon the Corporation's liquidation, winding-up or dissolution
("Parity Stock"); and
(c) junior to each class of capital stock or series of preferred
stock established after the Issue Date, 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 Corporation's liquidation, winding-up or dissolution
("Senior Stock").
3. Liquidation Rights. In the event of liquidation, winding-up or
dissolution of the Corporation or any reduction of its capital resulting in any
distribution of its assets to its shareholders, each Holder of Preferred Stock
shall be entitled to receive and to be paid out of the assets of the Corporation
available for distribution to shareholders, before any payment or distribution
is made to holders of Junior Stock with respect to liquidation preference
(including Common Stock), a liquidation preference in the amount of $200 per
share of Preferred Stock (the "Liquidation Preference"), plus accumulated and
unpaid dividends on the shares of Preferred Stock to the date fixed for
liquidation, winding-up or dissolution.
4. Voting Rights. The Holders shall have no voting rights except as set
forth in Article III, Section 2, Division A, paragraph 5 of the Articles of
Incorporation. The authorization of, the increase in the authorized amount of,
or the issuance of any shares of any class of Junior Stock (as to rights upon
the liquidation, winding-up or dissolution of the Corporation) will not be
deemed to affect adversely the powers, preferences or special rights of the
Holders.
5. Dividends.
(a) Each Holder shall be entitled to receive cumulative cash
dividends at the rate per annum of 5.00% per share on the Liquidation Preference
per share of Preferred Stock (equivalent to $10.00 per annum per share).
Dividends on the Preferred Stock (including Additional Dividends, if any) will
be payable quarterly in arrears on each Dividend Payment Date at such annual
rate, and shall accumulate from the most recent date as to which dividends shall
have been paid or, if no dividends have been paid, from the Issue Date of the
Preferred Stock, whether or not in any dividend period or periods such dividends
have been declared or there have been funds legally available for the payment of
such dividends. Dividends with respect to each Dividend Payment Date shall be
payable to Holders of record as they appear on the stock register of the
Corporation on the immediately preceding February 1, May 1, August 1 and
November 1. Accumulations of dividends on shares of Preferred Stock shall
compound quarterly. Dividends payable on the Preferred Stock for any period less
than a full dividend period (based upon the number of days elapsed during the
period) shall be computed on the basis of a 360-day year consisting of twelve
30-day months.
(b) 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.
(c) No dividends or other distributions (other than a dividend or
distribution payable solely in shares of Parity Stock or Junior Stock (as to
dividend rights), in the case of Parity Stock, or Junior Stock (as to dividend
rights), in the case of Junior Stock, and cash in lieu of fractional shares) may
be declared, made or paid, or set apart for payment upon, any Parity Stock or
Junior Stock (as to dividend rights), nor may any Parity Stock or Junior Stock
(as to dividend rights) 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 (as to dividend rights)) by the
Corporation or on the Corporation's behalf (except by conversion into or
exchange for shares of Parity Stock or Junior Stock (as to dividend rights), in
the case of Parity Stock, or Junior Stock (as to dividend rights), in the case
of Junior Stock) unless all accumulated and unpaid dividends 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 (as to dividend rights) for all dividend payment periods
terminating on or prior to the date of such declaration, payment, redemption,
purchase or acquisition. Notwithstanding any other provision hereof, so long as
any shares of the Preferred Stock remain outstanding, the Corporation shall not
purchase or redeem any of its Junior Stock.
(d) Notwithstanding the preceding paragraphs (a), (b) and (c), 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 the Preferred Stock and such Parity Stock
bear to each other. Holders will not be entitled to any dividend, whether
payable in cash, property or stock, in excess of full cumulative dividends.
6. Conversion Rights.
(a) Subject to the terms and provisions of this Section 6, each
Holder shall have the right, at its option, exercisable at any time and from
time to time from the Issue Date to convert its shares of Preferred Stock, in
whole or in part, into shares of the Common Stock, unless the Corporation has
redeemed or purchased those shares. The conversion rate initially shall be
26.1438 shares of Common Stock per share of Preferred Stock, subject to
adjustment as described below (the "Conversion Rate"). The conversion price of a
share shall be equal to $200 divided by the then applicable Conversion Rate at
the time of determination (the "Conversion Price"). The initial Conversion Price
is approximately $7.65 per share of Preferred Stock.
(b) The shares of Common Stock issuable upon conversion will be
delivered through the Conversion Agent as soon as practicable following the
Conversion Date. No fractional shares of Common Stock will be issued upon
conversion. A Holder that would otherwise be entitled to fractional shares of
Common Stock will receive a cash amount based on the Applicable Stock Price on
the Trading Day immediately before the Conversion Date.
(c) (1) The Corporation must give notice of each Fundamental
Change to all Holders on a date (the "Effective Notice Date") that is within 10
Trading Days after the Effective Date thereof. If a Holder converts its shares
of Preferred Stock at any time beginning at the
opening of business on the Effective Notice Date and ending at the close of
business on the 30th Trading Day immediately following the Effective Date, the
Holder will receive:
(A) Common Stock and cash for fractional shares of the
Common Stock, as described above under Section 6(b) (subject to
adjustment as described below under Section 6(d) in the event of (i)
any reclassification of the Common Stock, (ii) a consolidation,
merger or combination involving the Corporation or (iii) a sale or
conveyance to another Person of all or substantially all of the
Corporation's property and assets, in which holders of the
outstanding Common Stock would be entitled to other types of
consideration), plus
(B) the Make-Whole Premium, if any, if the Fundamental
Change occurs before February 20, 2010.
(2) Upon a Fundamental Change, if the Market Value on the
Effective Date is less than the Conversion Price, Holders shall have a one-time
option to convert all of their outstanding shares of Preferred Stock at an
adjusted Conversion Price equal to the greater of (x) the Market Value as of the
Effective Date and (y) $3.00. This option shall be exercisable during a period
of not less than 30 days nor more than 60 days commencing on the third business
day after the Effective Date.
(d) (1) The Conversion Rate shall be adjusted from time to time by
the Corporation as follows:
(A) In case the Corporation shall (i) issue shares of its
Common Stock as a dividend or distribution on its Common Stock or
(ii) subdivide, combine or reclassify its outstanding Common Stock,
the Conversion Rate in effect immediately prior thereto shall be
adjusted so that the Holder of any Preferred Stock thereafter
surrendered for conversion shall be entitled to receive that number
of shares of Common Stock that it would have been entitled to
(without giving effect to any arrangement pursuant to such dividend,
distribution, subdivision, combination or reclassification not to
issue fractional shares of Common Stock) had such Preferred Stock
been converted immediately prior to the record date of such event or
the happening of such event. An adjustment made pursuant to this
Section 6(d)(1)(A) shall become effective immediately after the
record date in the case of a dividend or distribution and shall
become effective immediately after the effective date in the case of
a subdivision, combination or reclassification.
(B) In case the Corporation shall issue rights or warrants
to all or substantially all holders of its Common Stock entitling
them (for a period of not more than 60 days) to subscribe for or
purchase shares of Common Stock (or securities convertible into
Common Stock) at a price per share (or a conversion price per share)
less than the Current Market Price on the record date for such
issuance, the Conversion Rate in effect immediately prior to the
close of business on the record date for the issuance shall be
increased by multiplying the Conversion Rate in effect immediately
prior to the close of business on such
record date by a fraction of which (A) the numerator shall be the
sum of (I) the number of shares of Common Stock outstanding
(excluding shares held in the treasury of the Corporation) at the
close of business on such record date and (II) the aggregate number
of shares (the "Underlying Shares") of Common Stock underlying all
such issued rights or warrants (whether by exercise, conversion,
exchange or otherwise) and (B) the denominator shall be the sum of
(I) number of shares of Common Stock outstanding (excluding shares
held in the treasury of the Corporation) at the close of business on
such record date and (II) the number of shares of Common Stock which
the aggregate exercise, conversion, exchange or other price at which
the Underlying Shares may be subscribed for or purchased pursuant to
such rights or warrants would purchase at such Current Market Price,
provided that, the Conversion Rate shall be readjusted to the extent
that the rights or warrants are not exercised prior to their
expiration. Such increase shall become effective immediately prior
to the opening of business on the Business Day following such record
date. In determining whether any rights or warrants entitle the
Holders to subscribe for or purchase shares of Common Stock at less
than Current 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 in good faith by the Board of Directors. In
no event shall the Conversion Rate be decreased pursuant to this
Section 6(d)(1)(B).
(C) In case the Corporation shall distribute to all or
substantially all holders of its Common Stock any shares of capital
stock of the Corporation, evidences of indebtedness or other
non-cash assets, or rights or warrants (excluding (i) dividends,
distributions and rights or warrants referred to in Section
6(d)(1)(A) or (B), (ii) distributions referred to in Section
6(d)(1)(E), and (iii) the distribution of rights pursuant to a
shareholder rights plan for which provision has been made in
accordance with the third paragraph of this Section 6(d)(1)(C)) the
Conversion Rate shall be increased by multiplying the Conversion
Rate in effect immediately prior to the close of business on the
record date for the distribution by a fraction of which (A) the
numerator shall be the Current Market Price on such record date and
(B) the denominator shall be an amount equal to (I) such Current
Market Price per share less (II) the fair market value on such
record date (as determined in good faith by the Board of Directors)
of the portion of the capital stock, evidences of indebtedness or
other non-cash assets so distributed or of such rights or warrants
applicable to one share of Common Stock (determined on the basis of
the number of shares of Common Stock outstanding at the close of
business on the record date); provided, however, that, in the event
the then fair market value (as so determined) of the portion of the
capital stock, evidences of indebtedness or other non-cash assets so
distributed or of such rights or warrants applicable to one share of
Common Stock is equal to or greater than the Current Market Price on
such record date, 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 any other
consideration payable hereunder upon conversion) the amount of
capital stock, evidences of
indebtedness or other non-cash assets so distributed or of such
rights or warrants such holder would have received had such holder
converted each Preferred Stock on such record date. Subject to the
first sentence in the immediately following paragraph and subject to
the last sentence of the last paragraph of this Section 6(d)(1)(C),
in no event shall the Conversion Rate be decreased pursuant to this
Section 6(d)(1)(C). Such increase shall become effective immediately
prior to the opening of business on the Business Day following such
record date.
If such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate
that would then be in effect if such dividend or distribution had
not been declared. If the Board of Directors determines the fair
market value of any distribution for purposes of this Section
6(d)(1)(C) by reference to the actual or when issued trading market
for any securities, it must in doing so consider the prices in such
market over the same period used in computing the applicable Current
Market Price.
The Corporation shall make adequate provisions such that, upon
conversion of the Preferred Stock into Common Stock, to the extent
that any shareholder rights plan (i.e., poison pill) implemented by
the Corporation is in effect upon such conversion, the Holders of
Preferred Stock will receive, in addition to the Common Stock and
other consideration payable hereunder upon conversion, the rights
described in such rights plan (whether or not the rights have
separated from the Common Stock at the time of conversion), subject
to the limitations set forth in such rights plan. Any distribution
of rights or warrants pursuant to such rights plan complying with
the requirements set forth in the immediately preceding sentence of
this paragraph shall not constitute a distribution of rights or
warrants pursuant to this Section 6(d)(1)(C).
Rights or warrants distributed by the Corporation to all
holders of Common Stock entitling the holders thereof to subscribe
for or purchase shares of the Corporation's capital stock (either
initially or under certain circumstances), which rights or warrants,
until the occurrence of a specified event or events ("Trigger
Event") (i) are deemed to be transferred with such shares of Common
Stock, (ii) are not exercisable, and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to
have been distributed for purposes of this Section 6(d)(1) (and no
adjustment to the Conversion Rate under this Section 6(d)(1) will be
required) until the occurrence of the earliest Trigger Event,
whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to
the Conversion Rate shall be made under this Section 6(d)(1)(C). If
any such right or warrant, including any such existing rights or
warrants distributed prior to the Issue Date, are subject to events,
upon the occurrence of which such rights or warrants become
exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any
and each such event shall be deemed to be the date of distribution
and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or
warrants without exercise by any of the holders thereof). In
addition, in the event
of any distribution (or deemed distribution) of rights or warrants,
or any Trigger Event or other event (of the type described in the
preceding sentence) with respect thereto that was counted for
purposes of calculating a distribution amount for which an
adjustment to the Conversion Rate under this Section 6(d)(1) was
made, (1) in the case of any such rights or warrants which shall all
have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Rate shall be increased upon such final
redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price
received by a holder or holders of Common Stock with respect to such
rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of
such redemption or repurchase, and (2) in the case of such rights or
warrants which shall have expired or been terminated without
exercise by any holders thereof, the Conversion Rate shall be
readjusted as if such rights and warrants had not been issued.
(D) In case the Corporation shall dividend or distribute
(other than in connection with a liquidation, dissolution or winding
up of the Corporation) cash to all holders of Common Stock, the
Conversion Rate shall be increased by multiplying the Conversion
Rate in effect immediately prior to the close of business on the
record date for the determination of holders of Common Stock
entitled to such dividend or distribution by a fraction (1) whose
numerator shall be the Current Market Price on the Ex Date; and (2)
whose denominator shall be an amount equal to (I) such Current
Market Price less (II) the aggregate amount of such dividend or
distribution per share of Common Stock. An adjustment to the
Conversion Rate pursuant to this Section 6(d)(1)(D) shall become
effective immediately prior to the opening of business on the
Business Day immediately following such record date. In no event
shall the Conversion Rate be decreased pursuant to this Section
6(d)(1)(D). Notwithstanding anything herein to the contrary, no
adjustment to the Conversion Rate shall be made pursuant to this
Section 6(d)(1)(D) to the extent, and only to the extent, such
adjustment would cause the Conversion Rate to exceed the Conversion
Rate Limit.
(E) In case the Corporation or any subsidiary of the
Corporation shall distribute cash or other consideration in respect
of a tender offer or exchange offer for all or any portion of the
Common Stock where the sum of the aggregate amount of such cash
distributed and the aggregate fair market value (as determined in
good faith by the Board of Directors, whose determination shall be
conclusive and set forth in a resolution of the Board of Directors),
as of the Expiration Date of such other consideration distributed
(such sum, the "Aggregate Amount") expressed as an amount per share
of Common Stock validly tendered or exchanged, and not withdrawn,
pursuant to such tender offer or exchange offer as of the Expiration
Time (such tendered or exchanged shares of Common Stock, the
"Purchased Shares") exceeds the Current Market Price on the last
date (such last date, the "Expiration Date") on which tenders or
exchanges could have been made pursuant to such tender offer or
exchange offer (as the same may be amended through the Expiration
Date), then the Conversion Rate shall be
increased by multiplying the Conversion Rate in effect immediately
prior to the close of business on the Expiration Date by a fraction
(A) whose numerator shall be equal to the sum of (I) the Aggregate
Amount and (II) the product of (a) the Current Market Price on the
Expiration Date and (b) an amount equal to (i) the number of shares
of Common Stock outstanding as of the last time (the "Expiration
Time") at which tenders or exchanges could have been made pursuant
to such tender offer or exchange offer (including all Purchased
Shares but excluding shares held at such time in the treasury of the
Corporation) less (ii) the Purchased Shares and (B) whose
denominator is equal to the product of (I) the number of shares of
Common Stock outstanding as of the Expiration Time (including all
Purchased Shares but excluding shares held at such time in the
treasury of the Corporation) and (II) such Current Market Price on
the Expiration Date. An increase, if any, to the Conversion Rate
pursuant to this Section 6(d)(1)(E) shall become effective
immediately prior to the opening of business on the Business Day
following the Expiration Date. In the event that the Corporation or
a subsidiary of the Corporation is obligated to purchase shares of
Common Stock pursuant to any such tender offer or exchange offer,
but the Corporation or such subsidiary is permanently prevented by
applicable law from effecting any such purchases, or all such
purchases are rescinded, then the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be in effect if
such tender offer or exchange offer had not been made. If the
application of this Section 6(d)(1)(E) to any tender offer or
exchange offer would result in a decrease in the Conversion Rate, no
adjustment shall be made for such tender offer or exchange offer
under this Section 6(d)(1)(E).
(F) In any case in which this Section 6(d)(1) shall require
that an adjustment be made following a record date or Expiration
Date, as the case may be, established for purposes of this Section
6(d)(1), the Corporation may elect to defer issuing to the Holder of
any Preferred Stock converted after such record date or Expiration
Date the shares of Common Stock and other capital stock of the
Corporation, evidences of indebtedness or other non-cash assets or
rights or warrants issuable upon such conversion over and above the
shares of Common Stock and other capital stock of the Corporation,
evidences of indebtedness or other non-cash assets or rights or
warrants issuable, or cash payable, upon such conversion only on the
basis of the Conversion Rate prior to adjustment; and, in lieu of
the shares, evidences of indebtedness or other non-cash assets or
rights or warrants the issuance of which, or cash the payment of
which, is so deferred, the Corporation shall issue or cause its
transfer agents to issue due bills or other appropriate evidence
prepared by the Corporation of the right to receive such shares or
cash, as the case may be. If any distribution in respect of which an
adjustment to the Conversion Rate is required to be made as of the
record date or Expiration Date therefor is not thereafter made or
paid by the Corporation for any reason, the Conversion Rate shall be
readjusted to the Conversion Rate which would then be in effect if
such record date had not been fixed or such effective date or
Expiration Date had not occurred.
(2) Exclusions.
(A) No adjustment in the Conversion Rate shall be required
pursuant to Section 6(d)(1) unless the adjustment would result in a
change in the Conversion Rate of at least 1.0%; provided, however,
that any adjustment which by reason of this Section 6(d)(2)(A) is
not required to be made shall be carried forward and taken into
account in subsequent adjustments. All calculations under this
Section 6 shall be made to the nearest one-thousandth of a cent or
to the nearest one-thousandth of a share, as the case may be.
(B) No adjustment to the Conversion Rate need be made
pursuant to Section 6(d)(1) for a transaction if Holders are to
participate in the transaction without conversion on a basis and
with notice that the Board of Directors of the Corporation
determines in good faith to be fair and appropriate in light of the
basis and notice on which holders of Common Stock participate in the
transaction.
(C) The Conversion Rate will not be adjusted pursuant to
Section 6(d)(1): (I) upon the issuance of any shares of Common Stock
or options or rights to purchase shares of Common Stock 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; (II) upon the issuance of any shares of Common Stock
pursuant to any option, warrant, right or exercisable, exchangeable
or convertible security outstanding on the Issue Date; or (III) for
accumulated and unpaid dividends on the Preferred Stock, including
Additional Dividends, if any.
(3) Whenever the Conversion Rate or conversion privilege is
adjusted, the Corporation shall promptly mail to Holders a notice of the
adjustment stating the facts requiring the adjustment and the manner of
computing it.
(4) If not otherwise required in connection with a
Fundamental Change, in the event that:
(A) the Corporation takes any action which would require an
adjustment in the Conversion Rate;
(B) the Corporation consolidates or merges with, or
transfers all or substantially all of its property and assets to,
another corporation and shareholders of the Corporation must approve
the transaction; or
(C) there is a dissolution or liquidation of the
Corporation,
the Corporation shall mail to Holders a notice stating the proposed record or
effective date, as the case may be. The Corporation shall mail the notice at
least ten days before such date. Failure to mail such notice or any defect
therein shall not affect the validity of any transaction referred to in clause
(A), (B) or (C) of this Section 6(d)(4).
(5) If (A) there shall occur (I) any reclassification of the
Corporation's 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) a statutory share
exchange, consolidation, merger or combination involving the Corporation other
than a merger in which the Corporation is the continuing corporation and which
does not result in any reclassification of, or change (other than 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) in, outstanding shares of Common Stock;
or (III) a sale or conveyance of all or substantially all of the property and
assets of the Corporation, directly or indirectly, to another Person; and (B)
pursuant to such reclassification, statutory share exchange, consolidation,
merger, combination, sale or conveyance (each, a "Major Transaction"), holders
of outstanding shares of Common Stock would be entitled to receive stock, other
securities, other property, assets or cash for such shares of Common Stock, then
the Corporation, or such successor or surviving, purchasing or transferee
Person, as the case may be, shall, as a condition precedent to such Major
Transaction shall provide that, at and after the effective time of such Major
Transaction: (x) the Holder of each share of Preferred Stock then outstanding
shall have the right to convert each share of such Preferred Stock into the kind
and amount of shares of stock and other securities and property (including cash)
receivable upon such Major Transaction by a holder of the number of shares of
Common Stock deliverable upon conversion of such share of Preferred Stock
immediately prior to such Major Transaction, assuming that such Holder would not
have exercised any rights of election that such Holder would have had as a
holder of Common Stock to select a particular type of consideration and (y)
adjustments shall be made to the Conversion Rate which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Rate
provided for in this Section 6. If, in the case of any such Major Transaction
the stock or other securities and property (including cash) receivable thereupon
by a holder of Common Stock include shares of stock or other securities and
property of a Person other than the successor or surviving, purchasing or
transferee Person, as the case may be, in such Major Transaction, such other
Person shall be required to adopt additional provisions to protect the interests
of the Holders of the Preferred Stock as the Board of Directors of the
corporation shall reasonably consider necessary by reason of the foregoing. The
provisions of this Section 6(d)(5) shall similarly apply to successive Major
Transactions. The foregoing, however, shall not in any way affect the right a
Holder of a Preferred Stock may otherwise have pursuant to Section 6(d)(1)(C) to
receive rights and warrants in accordance therewith.
(e) (1) The right of conversion attaching to any share of
Preferred Stock may be exercised (x) if such share is represented by a global
security, by book-entry transfer to the Conversion Agent through the facilities
of the DTC, or (y) if such share is represented by a certificated security, by
delivery of such share at the specified office of the Conversion Agent,
accompanied, in either case, by a duly signed and completed conversion notice
substantially in the form attached hereto as Exhibit A and appropriate
endorsements and transfer documents if required by the Conversion Agent.
(2) No separate payment or adjustment will be made for
accumulated and unpaid dividends on a converted share of Preferred Stock or for
dividends or distributions on any of the Common Stock issued upon conversion of
a share of Preferred Stock. By delivering to the Holder the number of shares of
the Common Stock issuable upon conversion together with a cash payment in lieu
of any fractional shares of the Common Stock plus any other consideration due
upon conversion, the Corporation will satisfy the Corporation's obligation with
respect to the conversion of the shares of Preferred Stock. That is, accumulated
dividends (including Additional Dividends) will be deemed to be paid in full
rather than canceled,
extinguished or forfeited. The Corporation will not adjust the Conversion Rate
to account for any accumulated dividends (including Additional Dividends, if
any).
(3) If the Holder converts after the close of business on a
record date for a dividend payment but prior to the corresponding Dividend
Payment Date, such Holder will receive on the Dividend Payment Date dividends
accumulated on those shares of Preferred Stock, notwithstanding the conversion
of shares of Preferred Stock prior to the Dividend Payment Date, assuming the
Holder was the Holder of record at the close of business on the corresponding
record date. Each Holder, however, agrees, by accepting a share of Preferred
Stock, that if the Holder surrenders any shares of Preferred Stock for
conversion during such period, such Holder must pay the Corporation at the time
such Holder surrenders its share for conversion an amount equal to the dividend
that will be paid on the shares of Preferred Stock being converted on the
Dividend Payment Date. The preceding sentence does not apply, however, if (1)
the Corporation has specified a Redemption Date that is after a record date for
a dividend payment but prior to the corresponding Dividend Payment Date or (2)
any overdue dividend exists at the time of conversion with respect to the shares
of Preferred Stock being converted, but only to the extent of the amount of such
overdue dividend. Accordingly, under the circumstances described in clause (1),
a Holder who chooses to convert those shares on a date that is after a record
date but prior to the corresponding Dividend Payment Date, will not be required
to pay the Corporation, at the time that Holder surrenders those shares for
conversion, the amount of regularly scheduled dividend it will receive on the
Dividend Payment Date.
(4) Holders are not required to pay any taxes or duties
relating to the issuance or delivery of the Common Stock upon exercise of
conversion rights, but they are required to pay any tax or duty which may be
payable relating to any transfer involved in the issuance or delivery of the
Common Stock in a name other than the name of the Holder of the shares of
Preferred Stock. Certificates representing shares of the Common Stock will be
issued or delivered only after all applicable taxes and duties, if any, payable
by the Holder have been paid.
(5) The Preferred Stock shares will be deemed to have been
converted immediately prior to the close of business on the Conversion Date.
Delivery of shares of Preferred Stock will be accomplished by delivery to the
Conversion Agent of certificates for the relevant number of shares, other than
in the case of Holders in book-entry form with DTC, which shares shall be
delivered in accordance with DTC customary practices. A Holder will not be
entitled to any rights as a holder of the Common Stock, including, among other
things, the right to vote and receive dividends and notices of shareholder
meetings, until the conversion is effective.
(6) A certificate for the number of full shares of Common
Stock into which the shares are converted (and cash in lieu of fractional shares
of Common Stock) will be delivered to such Holder of Preferred Stock, assuming
all of the other requirements have been satisfied by such Holder, as soon as
practicable following the Conversion Date.
7. Determination of the Make-Whole Premium.
(a) If a Fundamental Change occurs prior to February 20, 2010, the
Corporation shall pay a make-whole premium (the "Make-Whole Premium") upon
certain conversions of the shares of the Preferred Stock as described above
under Section 6(c). The Make-Whole Premium will be:
(1) equal to a percentage of the Liquidation Preference of
the shares of the Preferred Stock converted determined by reference to the table
below, based on the Effective Date, and the price (the "Stock Price") paid, or
deemed to be paid, per share of the Common Stock in the transaction constituting
the Fundamental Change, subject to adjustment as described below; and
(2) in addition to, and not in substitution for, any cash,
securities or other assets otherwise due to Holders upon conversion.
The Corporation shall pay the Make-Whole Premium solely in shares of
Common Stock (other than cash in lieu of fractional shares of the Common Stock)
or in the same form of consideration into which all or substantially all of the
shares of Common Stock have been converted or exchanged in connection with the
Fundamental Change (other than cash paid in lieu of fractional interests in any
security or pursuant to dissenters' rights). The Corporation shall pay cash in
lieu of fractional interests in any security or other property delivered in
connection with such Fundamental Change. The Make-Whole Premium will be payable
on the 35th Trading Day following the Effective Date (the "Make-Whole Payment
Date") for shares of the Preferred Stock converted in connection with a
Fundamental Change. If holders of the Common Stock receive or have the right to
receive more than one form of consideration in connection with such Fundamental
Change, then, for purposes of the foregoing, the forms of consideration in which
the Make-Whole Premium will be paid will be in proportion to the relative value,
determined as described below, of the different forms of consideration paid to
the holders of Common Stock in connection with the Fundamental Change.
(b) The Stock Price paid, or deemed paid, per share of the Common
Stock in the transaction constituting the Fundamental Change will be calculated
as follows:
(1) In the case of a Fundamental Change in which all or
substantially all of the shares of the Common Stock have been, as of the
Effective Date, converted into or exchanged for the right to receive securities
or other assets or property, the consideration shall be valued as follows:
(A) securities that are traded on a U.S. national securities
exchange or approved for quotation on the NASDAQ or any similar
system of automated dissemination of quotations of securities
prices, will be valued at the average of the applicable closing
prices of such securities for the five consecutive Trading Days
beginning on the second Trading Day after the Effective Notice Date,
(B) other securities, assets or property, other than cash,
that Holders will have the right to receive will be valued based on
the average of the fair market value of the securities, assets or
property, other than cash, as determined by two independent
nationally recognized investment banks, and
(C) 100% of any cash.
(2) In all other cases, the value of the shares of Common
Stock will equal the average of the closing stock price of the Common Stock for
the five consecutive Trading Days beginning on the second Trading Day after the
Effective Notice Date.
The value of the Corporation's shares of the Common Stock or other
consideration for purposes of determining the number of shares of Common Stock
or other consideration to be issued in respect of the Make-Whole Premium will be
calculated in the same manner, except that to the extent such value is
calculated pursuant to clause (1)(A), (1)(B) or (2), such value shall be
multiplied by 98%.
The following table sets forth the Stock Price paid, or deemed paid, per
share of the Common Stock in the transaction constitutes the Fundamental Change,
the Effective Date and Make-Whole Premium (expressed as a percentage of
Liquidation Preference) upon a conversion in connection with a Fundamental
Change:
MAKE-WHOLE PREMIUM
(% OF LIQUIDATION PREFERENCE)
EFFECTIVE DATE
----------------------------------------------------------------------------------
STOCK MARCH 15, MARCH 15, MARCH 15, MARCH 15, MARCH 15, FEBRUARY 20,
PRICE(1) 2005 2006 2007 2008 2009 2010
-------- ---- ---- ---- ---- ---- ----
$6.00...................... 0.0 0.0 0.0 0.0 0.0 0.0
$7.00...................... 10.4 8.4 6.1 3.5 0.3 0.0
$8.00...................... 16.9 14.8 12.2 9.2 5.3 0.0
$9.00...................... 15.4 13.2 10.6 7.5 3.6 0.0
$10.00..................... 14.2 12.1 9.5 6.4 2.7 0.0
$11.00..................... 13.3 11.1 8.7 5.8 2.4 0.0
$12.00..................... 12.4 10.4 8.0 5.3 2.2 0.0
$13.00..................... 11.6 9.7 7.5 5.0 2.0 0.0
$14.00..................... 10.9 9.1 7.1 4.7 1.9 0.0
$15.00..................... 10.3 8.6 6.7 4.4 1.8 0.0
$20.00..................... 7.3 6.2 4.9 3.3 1.4 0.0
$25.00..................... 4.8 4.1 3.2 2.2 0.9 0.0
$30.00..................... 2.8 2.3 1.8 1.2 0.5 0.0
$35.00..................... 1.2 1.0 0.7 0.4 0.1 0.0
- ----------
(1) The Stock Prices set forth in the table will be adjusted as of any date on
which the Conversion Rate of the shares of Common Stock is adjusted. The
adjusted Stock Prices will equal the Stock Prices applicable immediately
prior to the adjustment multiplied by a fraction, the numerator of which
is the Conversion Rate immediately prior to the adjustment to the
Conversion Rate and the denominator of which is the Conversion Rate as so
adjusted.
(c) The exact Stock Price and Effective Dates may not be set forth
on the table, in which case:
(1) if the Stock Price is between two Stock Prices on the
table or the Effective Date is between two Effective Dates on the table, the
Make-Whole Premium will be
determined by straight-line interpolation between Make-Whole Premium amounts set
forth for the higher and lower Stock Prices and the two Effective Dates, as
applicable, based on a 365-day year;
(2) if the Stock Price is in excess of $35.00 per share
(subject to adjustment in the same manner as the Stock Price) the payment
corresponding to row $35.00 will be paid; and
(3) if the Stock Price is less than or equal to $6.00 per
share (subject to adjustment in the same manner as the Stock Price), no
Make-Whole Premium will be paid.
(d) A Calculation Agent appointed from time to time by the
Corporation shall, on behalf of and on request by the Corporation, calculate (A)
the Stock Price and (B) the Make-Whole Premium with respect to such Stock Price,
based on the Effective Date specified by the Corporation, and shall deliver its
calculation of the Stock Price and Make-Whole Premium to the Corporation and the
Transfer Agent within three Business Days of the request by the Corporation. In
addition, the Calculation Agent shall, on behalf of and upon request by the
Corporation or the Transfer Agent, make the determinations described in Section
7(b) above and deliver its calculations to the Corporation by 9:00 p.m., New
York City time, on the Business Day prior to the applicable Make-Whole Payment
Date. The Corporation shall, on the date that is the seventh Trading Day after
the Effective Notice Date with respect to a Fundamental Change in connection
with which a Make-Whole Premium is payable, mail to each Holder and disseminate
on such day a press release, setting forth the Stock Price and Make-Whole
Premium per share of Preferred Stock (including the amount and kind of
consideration per share of Preferred Stock in which such Make-Whole Premium is
payable) with respect to such Fundamental Change. Any notice so given shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. The Corporation shall verify, in writing, to the Transfer
Agent all calculations made by the Calculation Agent pursuant to this Section
7(d).
(e) Prior to 1:00 p.m., New York City time, on each Make-Whole
Payment Date, the Corporation shall deposit with the Transfer Agent an amount of
shares of Common Stock (or other consideration in which such Make-Whole-Premium
is payable as herein provided), plus an amount in cash for fractional interests
sufficient to pay the aggregate Make-Whole Premium due on such Make-Whole
Payment Date. Payment of the Make-Whole Premium for Preferred Stock surrendered
for conversion within the period described in Section 6(c) shall be made
promptly on the applicable Make-Whole Payment Date by mailing checks in respect
of cash (or delivering such cash by wire transfer) and otherwise delivering
entitlements to securities, other assets or property for the amount payable to
the Holders entitled thereto as they shall appear in the stock register of the
Corporation.
8. Optional Redemption
(a) Prior to February 20, 2010, the Preferred Stock shall not be
redeemable at the Corporation's option. On or after February 20, 2010, the
Corporation, at its option, may redeem the Preferred Stock in accordance with
this Section 8 in cash at any time, in whole or in part, at a price of 100% of
the Liquidation Preference being redeemed, plus accumulated and
unpaid dividends (including Additional Dividends, if any) (the "Redemption
Price"), to the date of redemption (the "Redemption Date").
(b) If less than all of the Preferred Stock are to be redeemed,
unless the Articles of Incorporation or the applicable procedures of DTC (the
"Applicable Procedures") provide otherwise, the Corporation shall select the
Preferred Stock to be redeemed by lot, on a pro rata basis or by any other
method the Corporation considers fair and appropriate. The Corporation shall
make the selection within five Business Days after it receives the notice
provided for in Section 8(c) from outstanding Preferred Stock not previously
called for redemption. Shares of Preferred Stock may only be redeemed in whole.
Shares of Preferred Stock that are to be redeemed are convertible by the
Holder until 5:00 p.m., New York City time, on the Business Day immediately
preceding the Redemption Date. If any shares of Preferred Stock selected for
partial redemption are converted in part before termination of the conversion
right with respect to the portion of the Preferred Stock so selected, the
converted portion of such shares of Preferred Stock shall be deemed to be taken
from the portion selected for redemption. Shares of Preferred Stock that have
been converted subsequent to the Corporation commencing selection of Preferred
Stock to be redeemed but prior to redemption of such Preferred Stock shall be
treated by the Corporation as outstanding for the purpose of such selection.
(c) At least 30 days but not more than 60 days before a Redemption
Date, the Corporation shall mail or cause to be mailed a notice of redemption to
each Holder. The notice shall identify the Preferred Stock (including the CUSIP
number(s) of the Preferred Stock) to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the then current Conversion Rate;
(4) the names and addresses of the Dividend Disbursement
Agent and Conversion Agent;
(5) that shares of Preferred Stock called for redemption
must be presented and surrendered to the Dividend Disbursement Agent to collect
the Redemption Price;
(6) that Holders who wish to convert shares of Preferred
Stock must surrender such shares of Preferred Stock for conversion prior to 5:00
p.m., New York City time, on the Business Day immediately preceding the
Redemption Date and must satisfy the other requirements set forth in Section 6
hereof;
(7) that, unless the Corporation defaults in making the
payment of the Redemption Price, dividends on shares of Preferred Stock called
for redemption shall cease accruing on and after the Redemption Date; and
(8) if any certificate representing shares of Preferred
Stock are being redeemed in part, the number of shares of such Preferred Stock
to be redeemed and that, after the Redemption Date, upon presentation and
surrender of such certificate, a new certificate for the unredeemed portion
thereof shall be issued.
(d) Once notice of redemption is mailed, the Redemption Price of
Preferred Stock called for redemption shall become due and payable on the
Redemption Date and at the Redemption Price stated in the notice, except for
shares of Preferred Stock that are converted in accordance with the provisions
of this Certificate of Designation. Upon surrender to the Dividend Disbursement
Agent, such Preferred Stock shall be paid at the Redemption Price.
(e) Prior to 1:00 p.m., New York City time, on the applicable
Redemption Date, the Corporation shall deposit with the Dividend Disbursement
Agent an amount of cash (in immediately available funds if deposited on such
Redemption Date) sufficient to pay the aggregate Redemption Price of all shares
of Preferred Stock that are to be redeemed on that Redemption Date, other than
shares of Preferred Stock called for redemption on that date that have been
delivered by the Corporation to the Corporation for cancellation or have been
delivered by the Holder thereof for conversion.
If the Dividend Disbursement Agent holds, in accordance with the terms
hereof, at 1:00 p.m., New York City time, on the applicable Redemption Date,
cash sufficient to pay the Redemption Price of all Preferred Stock to be
redeemed on such date, then, on and after such Redemption Date, such Preferred
Stock shall cease to be outstanding and dividends on such Preferred Stock shall
cease to accrue, whether or not certificates representing such Preferred Stock
are delivered by their Holders to the Dividend Disbursement Agent, and the
rights of the Holders in respect thereof shall terminate (other than the right
to receive the Redemption Price upon delivery of such certificates by their
Holders to the Dividend Disbursement Agent).
(f) To the extent that the aggregate amount of cash deposited by
the Corporation pursuant to this Section 8 exceeds the aggregate Redemption
Price of the Preferred Stock or portions thereof that the Corporation is
obligated to redeem on the Redemption Date (because of the conversion of
Preferred Stock pursuant to Section 6 or otherwise) then, promptly after the
Redemption Date, the Dividend Disbursement Agent shall return any such excess
cash to the Corporation.
(g) The provisions of Article III, Section 2, Division A,
paragraph 4 of the Articles of Incorporation will apply to any redemption under
this Section 8.
9. Mandatory Redemption.
(a) The Corporation shall redeem for cash all outstanding shares
of the Preferred Stock on February 20, 2015. The Redemption Price will be equal
to 100% of the Liquidation Preference plus an amount equal to accumulated and
unpaid dividends from, and including, the immediately preceding Dividend Payment
Date to, but excluding, the Redemption Date.
(b) The provisions of Article III, Section 2, Division A,
paragraph 4 of the Articles of Incorporation will apply to any redemption under
this Section 9.
10. Consolidation, Merger and Sale of Assets.
(a) The Corporation may, without the consent of the Holders of any
of the outstanding Preferred Stock (except as provided by Michigan law),
consolidate with or merge into any other Person or convey, transfer or lease all
or substantially all the Corporation's 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
(i) the successor, transferee or lessee is organized under the laws of the
United States or any political subdivision thereof; (ii) 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, preferences and
relative participating, optional or other special rights and the qualification,
limitations or restrictions thereon, the Preferred Stock had immediately prior
to such transaction; and (iii) the Corporation delivers to the Dividend
Disbursement 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 6(d)).
(b) Under 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 Corporation's assets as described in (a) above, 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. This provision does not limit the rights of Holders of the
Preferred Stock in the event of a Fundamental Change, including their right to
receive the Make-Whole Premium in connection with a conversion.
11. SEC Reports.
Whether or not the Corporation is required to file reports with the
Securities and Exchange Commission (the "SEC"), if any shares of Preferred Stock
are outstanding, the Corporation will file with the SEC all such reports and
other information as the Corporation would be required to file with the SEC by
Section 13(a) or 15(d) under the Exchange Act. The Corporation will supply each
Holder of Preferred Stock, upon request, without cost to such Holder, copies of
such reports or other information.
12. Other Provisions.
(a) Notices. With respect to any notice to a Holder required to be
provided hereunder, such notice shall be mailed to the registered address of
such Holder, and 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
conversion, distribution, rights, warrant, reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation, winding-up or other
action, or the vote upon any action with respect to which the Holders are
entitled to vote. All notice periods referred to herein shall commence on the
date of the mailing of the applicable notice. 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) Fractional Shares of Preferred Stock. The shares of the
Preferred Stock shall be issuable, convertible and redeemable in fractional
amounts using decimals rounded up to the nearest hundredth.
(c) Cancellation of Shares of Preferred Stock. Shares of the
Preferred Stock issued and reacquired shall 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 the Preferred Stock must be in
compliance with this Certificate of Designation.
(d) Reservation of Shares. The Corporation covenants that it shall
at all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock, for the purpose
of effecting conversion of shares of the Preferred Stock, the full number of
shares of Common Stock deliverable upon the conversion of all outstanding shares
of the Preferred Stock not theretofore converted. For purposes of this Section
12(d), the number of shares of Common Stock that shall be deliverable upon the
conversion of all outstanding shares of the Preferred Stock shall be computed as
if at the time of computation all such outstanding shares were held by a single
Holder. The Corporation shall take all action required to increase the
authorized number of shares of Common Stock if at any time there shall be
insufficient unissued shares of Common Stock to permit such reservation or to
permit the conversion of all outstanding shares of the Preferred Stock not
theretofore converted.
(e) Shares Validly Issued. The Corporation covenants that any shares
of Common Stock issued upon conversion of or in payment of any dividend on
shares of the Preferred Stock shall be validly issued, fully paid and
nonassessable.
(f) Headings. The headings of the various sections and subsections
of this Certificate of Designation are for convenience of reference only and
shall not affect the interpretation of any of the provisions of this Certificate
of Designation.
(g) Interpretation. Whenever possible, each provision of this
Certificate of Designation shall be interpreted in a manner as to be effective
and valid under applicable law and public policy. If any provision set forth
herein is held to be invalid, unlawful or incapable of being enforced by reason
of any rule of law or public policy, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions of this Certificate of Designation.
No provision herein set forth shall be deemed dependent upon any other provision
unless so expressed herein. If a court of competent jurisdiction should
determine that a provision of this Certificate of Designation would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
(h) No Other Rights. Except as may otherwise be required by law, the
shares of the Preferred Stock shall not have any powers, designations,
preferences and relative, participating, optional or other special rights, other
than those specifically set forth in this Certificate of Designation or the
Articles of Incorporation.
(i) Remedies. The Corporation acknowledges that a breach by it of
its obligations under this Certificate of Designation will cause irreparable
harm to each Holder of Preferred Stock by vitiating the intent and purpose of
the transactions contemplated hereby. Accordingly, the Corporation acknowledges
that the remedy at law for a breach of its obligations under this Certificate of
Designation will be inadequate and agrees, in the event of a breach or
threatened breach by the Corporation of the provisions of this Certificate of
Designation, that each Holder of Preferred Stock shall be entitled, in addition
to all other available remedies in law or in equity, to any injunction or
injunctions to prevent or cure any breaches of the provisions of this
Certificate of Designation and to enforce specifically the terms and provisions
of this Certificate of Designation, without the necessity of showing economic
loss and without any bond or other security being required.
13. Definitions. As used herein, the following terms shall have the
following meanings:
"Additional Dividends" shall mean the additional dividends that
shall accrue on the Preferred Stock over and above the dividends set forth in
Section 5 hereof from and including the date on which any Registration Default
shall occur to but excluding the date on which all such Registration Defaults
have been cured, at a dividend rate of 0.50% per annum.
"Aggregate Amount" shall have the meaning set forth in Section
6(d)(1)(E).
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a Global Security, the rules and
procedures of the DTC, in each case to the extent applicable to such transfer or
exchange.
"Applicable Stock Price," with respect to a Trading Day, means the
Volume-Weighted Average price per share of the Common Stock (or any security
into which the Common Stock has been converted in connection with a Fundamental
Change) on such Trading Day or, if such price is not available, the Applicable
Stock Price means the market value per share of the Common Stock on such day as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Corporation.
"Articles of Incorporation" shall have the meaning set forth in the
Preamble of this Certificate of Designation.
"Board of Directors" means the Board of Directors or other governing
body charged with the ultimate management of any Person, and, with respect to
the Corporation 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.
"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.
"Calculation Agent" means the calculation agent from time to time
appointed by the Company pursuant to Section 7(d).
"Common Stock" shall have the meaning set forth in Section 2(a).
"Conversion Agent" means the office and agency designated by the
Corporation where Preferred Stock may be presented for conversion. Initially,
the Conversion Agent shall be National City Bank.
"Conversion Date" shall be the date on which the shares of Preferred
Stock and all of the items required for conversion shall have been so delivered
and the requirements for conversion have been met.
"Conversion Price" shall have the meaning set forth in Section 6(a).
"Conversion Rate" shall have the meaning set forth in Section 6(a).
"Conversion Rate Limit" shall mean 33.3333 shares per $200
Liquidation Preference; provided, that such Conversion Rate Limit shall be
adjusted from time to time in the same manner in which the Conversion Rate is
adjusted pursuant to Sections 6(d)(1)(A), (1)(B), (1)(C) and (1)(E).
"Corporation" shall have the meaning set forth in the Preamble of
this Certificate of Designation.
"Current Market Price" on a date of determination shall mean the
Market Value on such date of determination; provided, however, that such Current
Market Price shall be appropriately adjusted by the Board of Directors, in its
good faith determination (which determination shall be described in a resolution
of the Board of Directors), to account for any adjustment pursuant hereto (other
than the adjustment requiring such computation) to the Conversion Rate that
shall become effective, or any event (other than the event requiring such
computation) requiring, pursuant hereto, an adjustment to the Conversion Rate
where the "ex" date of such event occurs, at any time during the five
consecutive Trading Days used to calculate such Market Value.
"Dividend Disbursement Agent" means the office and agency designated
by the Corporation where Preferred Stock called for redemption must be presented
and surrendered by a Holder in order to collect the Redemption Price.
"Dividend Payment Date" shall mean February 15, May 15, August 15
and November 15 of each year, commencing May 15, 2005.
"DTC" means The Depository Trust Company.
"Effective Date" with respect to any Fundamental Change, means the
effective date of such Fundamental Change.
"Effective Notice Date" shall have the meaning set forth in Section
6(c)(1).
"Ex Date" means (i) when used with respect to any dividend or
distribution, the first date on which the Common Stock trades, regular way, on
the relevant exchange or in the relevant market from which the closing sale
price was obtained without the right to receive such dividend or distribution;
and (ii) when used with respect to any tender offer or exchange offer, the first
date on which the Common Stock trades, regular way, on the relevant exchange or
in the relevant market from which the closing sale price was obtained after the
expiration time of such tender offer or exchange offer (as it may be amended or
extended).
"Expiration Date" shall have the meaning set forth in Section
6(d)(1)(E).
"Expiration Time" shall have the meaning set forth in Section
6(d)(1)(E).
"Fundamental Change" will be deemed to have occurred upon the
occurrence of any of the following:
(A) any "Person" or "Group" (other than the Corporation, the
Corporation's subsidiaries or the Corporation's employee
benefit plans) files a Schedule 13D or Schedule TO, or any
successor schedule, form or report under the Securities
Exchange Act of 1934, as amended, disclosing, or the
Corporation otherwise becomes aware, that such Person is or
has become the "Beneficial Owner," directly or indirectly, of
shares of the Corporation's Voting Stock representing 50% or
more of the total voting power of all outstanding classes of
the Corporation's Voting Stock or has the power, directly or
indirectly, to elect a majority of the members of the Board of
Directors;
(B) the Corporation consolidates with, or merges with or into,
another Person, or the Corporation sells, assigns, conveys,
transfers, leases or otherwise disposes of all or
substantially all of the Corporation's assets, or any Person
consolidates with, or merges with or into, the Corporation, in
any such event other than pursuant to a transaction in which
the Persons that "Beneficially Owned," directly or indirectly,
the shares of the Corporation's Voting Stock immediately prior
to such transaction Beneficially Own, directly or indirectly,
shares of Voting Stock representing a majority of the total
voting power of all outstanding classes of Voting Stock of the
surviving or transferee Person;
(C) a majority of the members of the Board of Directors are not
"Continuing Directors"; or
(D) the Common Stock ceases to be listed on a national securities
exchange or quoted on the NASDAQ or another established
automated over-the-counter trading market in the United
States.
A Fundamental Change will not be deemed to have occurred in the case of a
merger or consolidation, if (i) at least 90% of the consideration (excluding
cash payments for fractional shares and cash payments pursuant to dissenters'
appraisal rights) in the merger or consolidation consists of common stock of a
U.S. company traded on a national securities exchange or quoted on the NASDAQ
(or which will be so traded or quoted when issued or exchanged in connection
with such transaction) and (ii) as a result of such transaction or transactions
the shares of Preferred Stock become convertible solely into such common stock.
For purposes of this Fundamental Change definition:
(A) "Person" or "Group" shall have the meanings given to them for
purposes of Sections 13(d) and 14(d) of the Exchange Act or
any successor provisions, and the term "Group" includes any
Group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act, or any successor provision;
(B) a "Beneficial Owner" will be determined in accordance with
Rule 13d-3 under the Exchange Act, as in effect on the date
hereof;
(C) "Beneficially Own" and "Beneficially Owned" have meanings
correlative to that of Beneficial Owner;
(D) "Continuing Director" means, as of any date of determination,
any member of the Corporation's Board of Directors who was a
member of such Board of Directors on the date hereof; or was
nominated for election or elected to such Board of Directors
with the approval of: (i) a majority of the Continuing
Directors who were members of such board at the time of such
nomination or election or (ii) a nominating committee, a
majority of which committee were Continuing Directors at the
time of such nomination or election;
(E) "Capital Stock" means: (1) in the case of a corporation,
corporate stock; (2) in the case of an association or business
entity, any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or
membership interests; or (4) any other interest or
participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets
of, the issuing Person; and
(F) "Voting Stock" means any class or classes of Capital Stock or
other interests then outstanding and normally entitled
(without regard to the
occurrence of any contingency) to vote in the election of the
Board of Directors, managers or trustees.
"Holder" or "Holders" shall mean a holder or the holders of record
of the Preferred Stock.
"Issue Date" shall mean the original date of issuance of the
Preferred Stock.
"Junior Stock" shall have the meaning set forth in Section 2.
"Liquidation Preference" shall have the meaning set forth in Section
3.
"Major Transaction" shall have the meaning set forth in Section
6(d)(5).
"Make-Whole Payment Date" shall have the meaning set forth in
Section 7(a)(2).
"Make-Whole Premium" shall have the meaning set forth in Section
7(a).
"Market Value" on any date shall mean the average closing price of
the Common Stock for a five consecutive Trading Day period ending on the Trading
Day immediately prior to such date 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 not so listed or authorized for
quotation, an amount determined in good faith by the Corporation's Board of
Directors to be the fair value of the Common Stock).
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Officer" shall mean any duly authorized officer specified in the
By-Laws of the Corporation.
"Officer's Certificate" means a certificate signed by at least one
Officer of the Company.
"Opinion Of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company.
"Parity Stock" shall have the meaning set forth in Section 2(b).
"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.
"Preferred Stock" means the Corporation's 5.00% Series B Convertible
Cumulative Preferred Stock.
"Purchased Shares" shall have the meaning set forth in Section
6(d)(1)(E).
"Redemption Agent" means the office and agency designated by the
Corporation where Preferred Stock may be presented for redemption. Initially,
the Redemption Agent shall be National City Bank.
"Redemption Date" shall have the meaning set forth in Section 8(a).
"Redemption Price" shall have the meaning set forth in Section 8(a).
"Registration Default" shall have the mean the occurrence of any of
the following events:
(1) the shelf registration statement pursuant to the Registration
Rights Agreement (the "Shelf Registration Statement") has not been filed
with the SEC by the 90th day after the Issue Date;
(2) the Shelf Registration Statement has not been declared
effective by the SEC by the 180th day after the Issue Date; or
(3) the Shelf Registration Statement is declared effective by the
SEC but (A) thereafter ceases to be effective or (B) the Shelf
Registration Statement or the prospectus related thereto ceases to be
usable in connection with resales of the restricted Preferred Stock,
during the periods specified in the Registration Rights Agreement because
either (1) any event occurs as a result of which the prospectus forming
part of such Shelf Registration Statement would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or (2) it shall be necessary to amend
such Shelf Registration Statement or supplement the related prospectus, to
comply with the Securities Act of 1933, as amended or the Exchange Act of
1934, as amended, or the respective rules thereunder.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement between the Corporation and the initial purchasers of the Preferred
Stock to be dated the Issue Date.
"SEC" shall have the meaning set forth in Section 11.
"Senior Stock" shall have the meaning set forth in Section 2(c).
"Stock Price" shall have the meaning set forth in Section 7(a)(1).
"Trading Day" means a day during which trading in securities
generally occurs on the NYSE, or, if the Common Stock is not listed on the NYSE,
on the principal other national or regional securities exchange on which the
Common Stock is then listed or, if the Common Stock is not listed on a national
or regional securities exchange, on NASDAQ, or, if the Common
Stock is not quoted on NASDAQ, on the principal other market on which such
Common Stock is then traded.
"Transfer Agent" shall mean the Corporations duly authorized
transfer agent for the Preferred Stock. Initially, National City Bank will be
the Transfer Agent.
"Trigger Event" shall have the meaning set forth in Section
6(d)(1)(C).
"Underlying Shares" shall have the meaning set forth in Section
6(d)(1)(B).
"Volume Weighted Average," with respect to a Trading Day, means such
price per share of the Common Stock as displayed under the heading "Bloomberg
VWAP" on Bloomberg (or any successor service) page SEN <equity> AQR (or any
successor page) in respect of the period from 9:30 a.m. to 4:00 p.m., New York
City time, on such Trading Day.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of
the Corporation this 14th day of March, 2005.
SEMCO ENERGY, INC.
By: /s/ Michael V. Palmeri
--------------------------------------
Name: Michael V. Palmeri
Title: Senior Vice President and Chief
Financial Officer
EXHIBIT A
FORM OF NOTICE OF CONVERSION
(TO BE EXECUTED BY THE HOLDER
IN ORDER TO CONVERT THE PREFERRED STOCK)
To: SEMCO Energy, Inc.
The undersigned hereby irrevocably elects to convert (the "Conversion")
shares of 5.00% Convertible Cumulative Preferred Stock (the "Preferred Stock")
into shares of common stock ("Common Stock") of SEMCO Energy, Inc. (the
"Company") according to the conditions of the Certificate of Designation of the
Preferred Stock (the "Certificate of Designation"), as of the date written
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith the Preferred Stock Certificates. No fee will
be charged to the Holder for any conversion, except for transfer taxes, if any.
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Preferred Stock shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933 (the "Act"), or pursuant to any
exemption from registration under the Act.
Any Holder, upon the exercise of its conversion rights in accordance with
the terms of the Certificate of Designation and the Preferred Stock, agrees to
be bound by the terms of the Registration Rights Agreement.
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in or pursuant to the Certificate of Designation.
Date of Conversion:______________________________
Applicable Conversion Price:_____________________
Number of shares of
Preferred Stock to be Converted:_________________
Number of shares of
Common Stock to be Issued:*______________________
Signature:_______________________________________
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* The Company is not required to issue shares of Common Stock until the
original Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof) to be converted are received by the Company or its
Transfer Agent. The Company shall issue and deliver shares of Common Stock
to an overnight courier not later than three business days following
receipt of the original Preferred Stock Certificate(s) to be converted.
Name:_______________________________________________
____________________________________________________
____________________________________________________
Social Security Number or
other Taxpayer Number_______________________________
____________________________________________________
Address:**__________________________________________
____________________________________________________
____________________________________________________
- ----------
** Address where shares of Common Stock and any other payments or
certificates shall be sent by the Company.