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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SEMCO CAPITAL TRUST I
SEMCO CAPITAL TRUST II
SEMCO ENERGY, INC. SEMCO CAPITAL TRUST III
(Exact name of each registrant as specified in its
(Exact name of registrant as specified in its charter) certificate of trust)
MICHIGAN DELAWARE
(State of Incorporation) (State of Organization)
38-2144267 PENDING
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
405 WATER STREET
PORT HURON, MICHIGAN 48060
(810) 987-2200
(Address, including zip code and telephone number, including area code, of
registrants' principal executive offices)
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SEBASTIAN COPPOLA
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
SEMCO ENERGY, INC.
405 WATER STREET
PORT HURON, MICHIGAN 48060
(810) 987-2200
(Name, address including zip code, and telephone number, including area code of
agent for service)
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Copies to:
JEFFREY S. RUPRICH, ESQ. STEVEN R. LOESHELLE, ESQ.
DICKINSON WRIGHT PLLC DEWEY BALLANTINE LLP
500 WOODWARD, SUITE 4000 1301 AVENUE OF THE AMERICAS
DETROIT, MICHIGAN 48226 NEW YORK, NEW YORK 10019
(313) 223-3500 (212) 259-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.: [ ]
CALCULATION OF REGISTRATION FEE
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AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2)(4) OFFERING PRICE(2)(4)
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Senior Debt Securities and Subordinated Debt
Securities of SEMCO Energy, Inc. ....................
Preferred Stock, $1.00 par value, of SEMCO Energy,
Inc..................................................
Common Stock, $1.00 par value, of SEMCO Energy,
Inc..................................................
Stock Purchase Contracts(5)............................
Stock Purchase Units(5)................................
Trust Preferred Securities of SEMCO Capital Trust
I....................................................
Trust Preferred Securities of SEMCO Capital Trust
II...................................................
Trust Preferred Securities of SEMCO Capital Trust
III..................................................
Guarantees of Trust Preferred Securities of SEMCO
Capital Trust I, SEMCO Capital Trust II and SEMCO
Capital Trust III(6)...................................
Total.......................................... $500,000,000(3) 100% $500,000,000
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AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTRATION FEE(3)
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Senior Debt Securities and Subordinated Debt
Securities of SEMCO Energy, Inc. ....................
Preferred Stock, $1.00 par value, of SEMCO Energy,
Inc..................................................
Common Stock, $1.00 par value, of SEMCO Energy,
Inc..................................................
Stock Purchase Contracts(5)............................
Stock Purchase Units(5)................................
Trust Preferred Securities of SEMCO Capital Trust
I....................................................
Trust Preferred Securities of SEMCO Capital Trust
II...................................................
Trust Preferred Securities of SEMCO Capital Trust
III..................................................
Guarantees of Trust Preferred Securities of SEMCO
Capital Trust I, SEMCO Capital Trust II and SEMCO
Capital Trust III(6)...................................
Total.......................................... $132,000
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(1) Such indeterminate number or amount of Senior Debt Securities, Subordinated
Debt Securities, Preferred Stock and Common Stock of SEMCO Energy, Inc.
("SEMCO"), Trust Preferred Securities (the "Trust Preferred Securities") of
SEMCO Capital Trust I, SEMCO Capital Trust II and SEMCO Capital Trust III
(collectively, the "SEMCO Trusts") and guarantees by SEMCO of the Trust
Preferred Securities as may from time to time be issued at indeterminate
prices (collectively, the "Offered Securities"). Subordinated Debentures may
be issued and sold to any of the SEMCO Trusts, in which event such
Subordinated Debentures may later be distributed to the holders of Trust
Preferred Securities of the applicable SEMCO Trust upon certain events
described in the applicable Trust Agreement of such SEMCO Trust.
(2) Such amount in U. S. Dollars or the equivalent thereof in foreign currencies
as shall result in an aggregate initial offering price for all securities of
$500,000,000. In addition, this Registration Statement includes such
presently indeterminate number or amount of Offered Securities as may be
issuable from time to time upon conversion or exchange of other Offered
Securities.
(3) An aggregate principal amount of $142,400,000 of unsold securities
registered by SEMCO on Registration Statement No. 333-58715, which was
declared effective on July 24, 1998 are being carried forward in this
Registration Statement pursuant to Rule 429 under the Securities Act of
1933. The registration fee of $42,008 associated with such securities was
previously paid. Accordingly, pursuant to Rule 429, the registration fee
consists of $89,992 paid herewith and the $42,008 previously paid.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 and exclusive of accrued interest and dividends, if
any.
(5) Contracts to purchase shares of common stock of SEMCO may be offered as
parts of units that also include the trust preferred securities being
registered hereunder or debt obligations of third parties, including U. S.
treasury securities, purchased with the proceeds of the sale of such units
and pledged to secure the obligations of holders to purchase such shares of
common stock.
(6) SEMCO is also registering under this Registration Statement all other
obligations that it may have with respect to Trust Preferred Securities
issued by any of the SEMCO Trusts. No separate consideration will be
received for any Guarantee or any other such obligations.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
THE WITHIN PROSPECTUS RELATES TO SECURITIES REGISTERED HEREUNDER AND TO THE
$142,400,000 UNSOLD SECURITIES REGISTERED BY SEMCO AND SEMCO CAPITAL TRUST UNDER
REGISTRATION STATEMENT NO. 333-58715.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION, NOVEMBER 30, 1999
SEMCO ENERGY, INC.
SEMCO CAPITAL TRUST I
SEMCO CAPITAL TRUST II
SEMCO CAPITAL TRUST III
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The following are types of securities that we may, from time to time, offer
and sell under this prospectus:
- Debt securities
- Preferred Stock
- Common Stock
- Stock purchase contracts
- Stock purchase units
In addition, we, in conjunction with our trusts, may, from time to time,
offer and sell:
- Trust preferred securities and related guarantees
We may offer these securities separately or as units which may include
other securities. We will describe in a prospectus supplement, which must
accompany this prospectus, the type and amount of securities we are offering and
selling, as well as the specific terms of the securities. Those terms may
include:
- Maturity
- Interest or dividend rate
- Sinking fund terms
- Currency of payments
- Redemption terms
- Listing on a securities exchange
- Amount payable at maturity
- Ranking
Our shares of Common Stock are traded on NASDAQ under the symbol SMGS.
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
We may offer the securities in amounts, at prices and on terms determined
at the time of offering. We may sell the securities directly to you, through
agents we select, or through underwriters and dealers we select. If we use
agents, underwriters or dealers to sell the securities, we will name them and
describe their compensation in a prospectus supplement.
, 1999
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TABLE OF CONTENTS
Where You Can Find More Information......................... 2
Incorporation of Certain Documents by Reference............. 3
Cautionary Statement Regarding Forward-Looking
Information............................................... 3
SEMCO Energy................................................ 5
The Trusts.................................................. 10
Use of Proceeds............................................. 11
Accounting Treatment Relating to Trust Securities........... 11
Consolidated Ratios of Earnings to Fixed Charges............ 11
Description of Capital Stock................................ 12
Description of Debt Securities.............................. 16
Description of Trust Preferred Securities................... 28
Description of Trust Guarantees............................. 30
The Agreement as to Expenses and Liabilities................ 32
Additional Description of Subordinated Debentures to be
Issued to Trust........................................... 33
Effect of Obligations Under Subordinated Debentures and
Trust Preferred Securities Guarantees..................... 37
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 38
Plan of Distribution........................................ 38
Legal Matters............................................... 40
Experts..................................................... 40
WHERE YOU CAN FIND MORE INFORMATION
SEMCO files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. You may read and copy this information at the
following locations of the Commission:
Judiciary Plaza, Room 10024 Seven World Trade Center Citicorp Center
450 Fifth Street, N.W. Suite 1300 500 West Madison St., Ste.
Washington, D.C. 20549 New York, New York 10048 1400
Chicago, Illinois 60661
You can also obtain copies of this information by mail from the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Room 10024, Washington
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the Public Reference Room by calling the Commission at (800) SEC-0330.
The Commission also maintains an internet world wide web site that contains
reports, proxy statements and other information about issuers, like SEMCO, who
file electronically with the Commission. The address of that site is
http://www.sec.gov.
We and our trusts have filed jointly with the Commission a registration
statement on Form S-3 that registers the securities we or they are offering. The
registration statement, including the attached exhibits, contains additional
relevant information about SEMCO, the trusts and the securities offered. The
rules and regulations of the Commission allow us to omit certain information
included in the registration statement from this prospectus.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to incorporate by reference information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the Commission. The
information incorporated by reference is considered to be part of this
prospectus, except for any information that is superseded by information that is
included directly in this document.
This prospectus includes by reference the documents listed below that we
have previously filed with the Commission and that are not included in or
delivered with this document. They contain important information about us and
our financial condition.
FILING PERIOD
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Annual Report on Form 10-K................... Year ended December 31, 1998
Quarterly Reports on Form 10-Q............... Quarters ended March 31, 1999, June 30, 1999
and September 30, 1999
Current Reports on Form 8-K.................. Filed March 23, 1999, April 23, 1999, July
16, 1999, November 12, 1999, and November 24,
1999.
We incorporate by reference additional documents that we may subsequently
file with the Commission prior to termination of any offering of securities made
by this prospectus. These documents include periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, as well as proxy statements. The information in this prospectus, in
documents incorporated into this prospectus, and in prospectus supplements may
be changed or superceded by information given at a later date in these
documents.
You can obtain any of the documents incorporated by reference in this
document from us without charge, excluding any exhibits to those documents
unless the exhibit is specifically incorporated by reference as an exhibit to
this prospectus. You can obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone from us at the
following address:
Edric R. Mason, Jr.
Director of Investor Relations
SEMCO Energy, Inc.
405 Water Street
Port Huron, Michigan 48060
(810) 989-4104
We have not authorized anyone to give any information or make any
representation about us that is different from, or in addition to, that
contained in this prospectus or in any of the materials that we have
incorporated by reference into this prospectus. Therefore, if anyone does give
you information of this nature, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
prospectus does not extend to you. The information contained in this prospectus
speaks only as of the date of this prospectus, unless the information
specifically indicates that another date applies.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 that are based on current
expectations, estimates and projections. Statements that are not historical
facts, including statements about our belief and expectations are
forward-looking statements. These statements are subject to potential risks and
uncertainties and, therefore, actual results may differ materially. We undertake
no obligation to update publicly any forward-looking
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statements whether as a result of new information, future events or otherwise.
Factors that may impact forward-looking statements include, but are not limited
to, the following: (i) the effects of weather and other natural phenomena; (ii)
the economic climate and growth in the geographical areas where we do business;
(iii) the capital intensive nature of our business; (iv) increased competition
within the energy industry as well as from alternative forms of energy; (v) the
timing and extent of changes in commodity prices for natural gas and propane;
(vi) the effects of changes in governmental and regulatory policies, including
income taxes, environmental compliance and authorized rates; (vii) our ability
to bid on and win construction, engineering and quality assurance contracts;
(viii) the impact of energy prices on the amount of projects and business
available to the engineering business; (ix) the nature, availability and
projected profitability of potential investments available to us; (x) our
ability to operate acquired businesses in accordance with our plans and (xi) our
ability to accomplish our financing objectives in a timely and cost-effective
manner, including our ability to accomplish our refinancing of the Enstar
Acquisition, in light of changing conditions in the capital markets and equity
markets.
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SEMCO ENERGY
SEMCO, together with its subsidiaries, is a diversified energy services and
infrastructure company with its principal offices at 405 Water Street, Port
Huron, Michigan 48060. SEMCO was founded in 1950 as Southeastern Michigan Gas
Company. We operate four business segments: gas distribution, engineering
services, pipeline construction services and propane, pipelines and storage.
GAS DISTRIBUTION
Our largest business segment is our gas distribution unit which distributes
and transports natural gas to approximately 250,000 customers within the State
of Michigan and approximately 102,000 customers in Alaska. Our Michigan gas
distribution business is operated through our subsidiary SEMCO Energy Gas
Company ("Gas Company"). On November 1, 1999, we acquired Enstar, the Alaskan
gas transmission and distribution business of Ocean Energy, Inc. See "Enstar --
Enstar Acquisition". Enstar's gas distribution business is now a division of
SEMCO. The Gas Company will also become a division of SEMCO. The Gas Company and
Enstar sold 32.2 Bcf and 23.0 Bcf of gas, respectively, and transported 23.8 Bcf
and 20.8 Bcf of gas to end users, respectively, for the year ended December 31,
1998.
SEMCO ENERGY GAS COMPANY
Customer Base
The Gas Company is a local distribution company that serves 250,000
customers through approximately 5,000 miles of gas main across the State of
Michigan. Our largest concentration of customers, approximately 100,000, is
located in Southeastern Michigan. We also serve other customers in the following
Michigan communities: Battle Creek, Albion, Holland, Three Rivers, Niles,
Marquette and Houghton. Our customer base is diverse and includes residential,
commercial and industrial customers. Our largest customers include power plants,
food production facilities, paper processing plants, furniture manufacturers and
a variety of other industries. The Gas Company added more than 7,000 new
customers in 1998 and has achieved a customer growth rate of approximately 3%
during the three years ended in 1998, surpassing the industry average of 1.3%.
This growth was due largely to our pursuit of customer attachments to our
existing gas lines. This strategy allows us to increase revenues with less
additional investment in capital assets. The number of gas customers of the Gas
Company for each of the four preceding years is set forth below:
AVERAGE NUMBER
CALENDAR YEAR OF CUSTOMERS
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1998.................................................. 244,175
1997.................................................. 236,794
1996.................................................. 228,953
1995.................................................. 222,448
Regulatory Matters
The Gas Company's operations are regulated by various regulatory bodies
including the Michigan Public Service Commission ("MPSC"). The MPSC authorizes
the rates charged to all of the Gas Company's customers other than those
customers located in Battle Creek, Michigan which are subject to the
jurisdiction of the City Commission of Battle Creek. In 1998 we established a
program authorized by the MPSC which allows the Gas Company the opportunity to
earn a profit on the sale of the gas commodity in addition to the gas delivery
charge while also reducing purchased gas costs for customers. Specifically, in
September 1998, the Gas Company received authority from the MPSC to: (1)
implement an experimental residential gas customer choice program; (2) suspend
its gas cost recovery ("GCR") clause; (3) roll into its base rates and freeze
for three years a gas charge of $3.24 per thousand cubic feet ("Mcf"); (4)
freeze distribution rate adjustments for the same three year period, with
exceptions; (5) suspend the income sharing mechanism adopted in October 1997 and
adopt a new income sharing
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mechanism for use during the 1999, 2000 and 2001 calendar years; and (6)
establish gas service performance criteria. The new rates took effect in April
1999 and generally extend through March 2002.
Pursuant to such authority, under the experimental residential gas
customer-choice program and a similar program in Battle Creek up to 25,000
residential customers, 10% of the Gas Company's residential customer base, will
be allowed to choose their own gas supplier by March 2001. The Gas Company
delivers the customer-choice gas under a tariff similar to its existing tariff
used to provide such service to its commercial and industrial customers. The
program has not, and is not expected to, significantly affect the Gas Company's
income because the Gas Company's approved rates for transportation service are
designed to recover all costs other than the cost of gas and provide a return in
approximately the same amounts as such costs are recovered from residential
customers for whom the Gas Company is the supplier.
Several aspects of the MPSC order are interrelated. The $3.24 GCR rate
represents a reduction of approximately $.33 per Mcf from the Gas Company's
rates prior to April, 1999. The suspension of the GCR clause means that the Gas
Company will not be able to recover any amounts by which its gas costs exceed a
weighted average cost of gas in excess of the $3.24 GCR for the three year
period. If the Gas Company is able to reduce its gas costs below the $3.24
level, it will retain all or a portion of the savings depending on the return on
equity achieved under the income sharing mechanism described below. The Gas
Company was able to offer this GCR suspension mainly as a result of agreements
reached with TransCanada Gas Services Inc. ("TransCanada"), under which
TransCanada will provide the Gas Company's natural gas requirements and manage
the Gas Company's natural gas supply and the supply aspects of transportation
and storage operations for the three year period. See "SEMCO Energy Gas
Company -- Supply Contract".
There are two exceptions to the three year distribution rate freeze: first,
the income sharing mechanism described in the following paragraph, and second,
rate revisions arising in response to unanticipated legislative or accounting
actions. The MPSC order is applicable only in the geographic areas subject to
the regulatory jurisdiction of the MPSC, and, therefore, does not govern rates
regulated by the City of Battle Creek. However, the Gas Company is voluntarily
reducing its Battle Creek GCR rate to the $3.24 level to correspond with its GCR
under the MPSC order.
The new income sharing mechanism substantially matches mechanisms approved
by the MPSC for two other major natural gas utilities in Michigan and provides
for a higher threshold than was previously applicable (i.e., 12.75% return on
equity) before triggering profit sharing with customers. Under the mechanism, if
the Gas Company's return on equity for its natural gas utility business exceeds
12.75%, amounts equal to 50% of the excess return between 12.76% and 16.75%,
plus amounts equal to 75% of the excess over 16.75% would be credited to
customers, i.e., would be reflected prospectively in reduced rates. Four safety
and reliability performance measures need to be met in order not to reduce the
return on equity threshold used in the income sharing mechanism.
Supply Contract
The Gas Company has a gas supply and storage agreement with TransCanada.
Under this Agreement, TransCanada provides the Gas Company's natural gas
requirements and manages the Gas Company's natural gas supply and the supply
aspects of transportation and storage operations for a three year period that
began April 1, 1999. TransCanada is currently managing approximately 118 million
cubic feet of gas transportation daily for the Gas Company on four pipelines
feeding into our distribution system and approximately 15 billion cubic feet of
underground gas storage.
ENSTAR
Enstar Acquisition
SEMCO entered into a purchase agreement on July 15, 1999 to acquire the
assets and certain liabilities of Enstar Natural Gas Company ("ENG") and the
outstanding stock of Alaska Pipeline
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Company ("APC") (APC together with ENG known as "Enstar") from Ocean Energy, Inc
("Ocean"). ENG was a division of Ocean and APC a wholly owned subsidiary of
Ocean. On October 21, 1999, we received an order from the Regulatory Commission
of Alaska ("RCA") approving the joint application of SEMCO and Ocean for the
transfer of the Certificate of Public Convenience and Necessity held by ENG and
for a transfer of controlling interest in APC. The RCA's order contained certain
conditions, including the obligation to file by July 1, 2000 certain revenue
requirement and cost of service information and the prohibition from encumbering
Enstar's assets for financing of non-utility business activities. On November 1,
1999, we completed our acquisition of Enstar (the "Enstar Acquisition") for
approximately $290,000,000 in cash which included the purchase of approximately
$58,700,000 of Enstar debt, all of which was owed to Ocean. The Enstar
Acquisition will be accounted for using the purchase method of accounting. ENG
is now a division of SEMCO. The success of the Enstar Acquisition is, in part,
dependent on the synergies obtained in combining Enstar with our current
operations, our ability to operate Enstar in accordance with our plans and our
ability to timely repay our short term financing incurred in connection with the
Enstar Acquisition.
Enstar's Customer Base
Enstar has two types of customers: gas sales and transportation. Gas sales
customers are primarily residential and commercial. Enstar provides
transportation service to power plant sites, a liquified natural gas plant, an
ammonia plant, and hundreds of commercial locations on behalf of gas producers
and gas marketers. The number of gas customers of Enstar for each of the four
preceding years is set forth below:
CALENDAR YEAR AVERAGE NUMBER OF CUSTOMERS
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1998......................................... 98,114
1997......................................... 95,269
1996......................................... 92,847
1995......................................... 90,894
Enstar Natural Gas Company
ENG is a natural gas local distribution company that serves Anchorage,
Alaska and its surrounding communities. ENG distributes natural gas through
approximately 2,265 miles of gas main to approximately 102,000 residential,
commercial, industrial and electric power generation customers in and around
Anchorage, Alaska, including one municipal utility, an electric co-op and two
military bases. Additional communities served in Alaska include Big Lake, Bird
Creek, Butte, Chugiak, Eagle River, Eklutna, Girdwood, Houston, Indian, Kenai,
Knik, Nikiski, Palmer, Peters Creek, Portage, Sterling, Soldotna, Wasilla and
Whittier. ENG is currently serving more than 90% of Anchorage's residences with
natural gas, with the remaining being served by electricity and other energy
sources. ENG is the sole distributor of natural gas to the greater Anchorage
metropolitan area, and its service area encompasses approximately 50% of the
population of the State of Alaska. During 1998, ENG added approximately 3,000
new customers, representing a 3% increase over 1997.
Alaska Pipeline Company
APC engages in the intrastate transmission of natural gas in Southcentral
Alaska. APC owns and operates the only natural gas transmission lines in its
service area that are operated for utility purposes. ENG is APC's only customer.
The pipeline transmission system, which delivers natural gas from producing
fields in Southcentral Alaska to ENG's Anchorage base gas distribution system,
is comprised of approximately 394 miles of pipeline. The system's present design
delivery capacity is approximately 410 million cubic feet per day.
Regulatory Matters
The RCA has jurisdiction as to rates and charges for gas sales,
construction of new facilities, extensions and abandonments of service and
certain other matters. Rates are generally designed to meet
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the recovery of the cost of providing service, including purchased gas costs,
and return on investment in plant. As Enstar operations are wholly intrastate,
Enstar is not subject to regulation by the Federal Energy Regulatory Commission.
As a regulated company under RCA jurisdiction, Enstar may apply to the RCA for
rate increases if higher costs or other factors warrant such action. It is
Enstar's experience that such rates typically go into effect, subject to refund
and pending final RCA determination, 45 days after the rates have been filed
unless such rates are suspended. The RCA normally suspends general rate
increases filed to recover costs, other than purchased gas costs, for at least a
six month period. All gas sales rates are adjusted annually to reflect changes
in Enstar's cost of purchased gas based on estimated costs for the upcoming
12-month period. The gas cost adjustment ("GCA") may be adjusted quarterly if it
is determined that there are significant variances from the estimates used in
the annual determination. Any purchased gas cost difference between actual costs
incurred and the RCA's approved rate adjustment is deferred and included with
applicable carrying charges in the next GCA.
Gas cost increases that may result from new gas supply contracts may be
recovered only upon approval of the RCA for inclusion in the GCA tariff or by
application for a general rate increase. The RCA has given overall approval of
and has approved recovery of gas costs attributable to the Beluga Contract and
to the Marathon Contract, discussed below.
Supply Contracts
Enstar currently purchases all of its natural gas under the following
long-term contracts. Enstar has an RCA approved gas purchase contract with
Marathon Oil Company (the "Marathon Contract"), that is a "requirements"
contract with no specific daily delivery or annual take or pay quantities.
Enstar has agreed to purchase and Marathon has agreed to deliver all of Enstar's
gas requirements in excess of those provided for in other existing gas supply
contracts, subject to certain exceptions until the commitments have been
exhausted and without limit as to time. However, Marathon's delivery obligation
is subject to certain specified limitations after 2001.
Enstar also has RCA approved gas purchase contracts with the municipality
of Anchorage, Chevron and ARCO (collectively the "Beluga Contract") which
provides for the delivery of up to 220 Bcf of gas through the year 2009 from the
Beluga field. Enstar is actively pursuing additional gas supply and negotiating
with several potential providers and believes that adequate supplies of gas will
be available to it.
ENGINEERING SERVICES
The pipeline/underground infrastructure engineering services industry is a
large, highly fragmented industry with a small group of major companies and a
significant number of smaller regional and local companies. We entered this
business in December, 1997 with the acquisition of Maverick Pipeline Services,
Inc., and added to the business with the acquisitions of Oilfield Materials
Consultants, Inc. in November, 1998, Drafting Services, Inc. in September, 1999
and Pinpoint Locators, Inc. in October, 1999. Drafting Services specializes in
survey/drafting services to interstate pipeline companies and will be operated
as a division of Maverick Pipeline Services. Pinpoint Locators is an engineering
field services company that performs conventional and global positioning system
("GPS") surveys of both interstate pipelines and fiber optic communications
routes. Pinpoint will operate as a division of Maverick Pipeline Services. Our
array of service offerings in this segment include engineering design, project
management, field surveying, inspection, testing, pipeline-mill quality
assurance and full engineering and construction turnkey service. Our engineering
services segment has offices in New Jersey, Michigan, Louisiana and Texas. Our
focus in this segment is on: marketing our services to new customers, not only
in the gas industry but also telecommunications and other industries; expanding
our geographic scope in North America and select foreign countries; and
aggressively pursuing full turnkey projects. Our strategic objective is to build
a sizable underground facilities engineering business that provides a wide array
of services to utilities and other companies installing underground pipe, cable
and facilities in North America.
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PIPELINE CONSTRUCTION SERVICES
The natural gas construction service industry is an $8.5 billion market
with a highly fragmented group of companies focused on regional or local markets
catering to utilities and other companies requiring underground pipeline and
cable facilities. Our Pipeline Construction Services segment provides primary
pipeline construction services in Georgia, Iowa, Kansas, Michigan, Missouri,
Nebraska, Tennessee, Texas and Virginia. This segment is comprised of the
following companies which we have acquired since 1997: Subsurface Construction
Co., King Energy & Construction Co., K & B Construction, Inc., Iowa Pipeline
Associates, Inc., Flint Construction Company and Long's Underground
Technologies, Inc. Subsurface Construction provides underground pipeline
construction services in Michigan. King Energy provides underground pipeline
construction services in Tennessee, Georgia and Virgina. K&B Construction
provides underground pipeline construction services in Kansas and Missouri. Iowa
Pipeline Associates builds underground natural pipelines and local gas
distribution networks for customers in Iowa, Kansas, Missouri and Nebraska.
Flint Construction Company provides specialized construction services for
natural gas distribution companies and interstate pipeline companies in the
southeastern areas of the United States. Long's Underground Technologies
provides construction services to natural gas distribution companies and to
telecommunications companies in Texas. We believe there are significant
opportunities for growth in the pipeline construction industry, as customer
preference appears to be shifting from smaller construction companies to much
larger contractors. We plan to expand our construction services' market share
significantly by acquiring established companies that have a strong customer
base.
PROPANE, PIPELINES AND STORAGE
Our propane, pipelines and storage segment supplies approximately 5 million
gallons of propane annually to over 7,500 retail customers in Michigan's Upper
Peninsula and northeast Wisconsin, and operates natural gas transmission,
gathering and storage facilities in Michigan. We entered the propane
distribution business with our acquisition of Hot Flame Gas, Inc. in March,
1998. Hot Flame is currently the largest provider of propane in the Upper
Peninsula of Michigan.
We believe that the gas pipelines and storage operations could experience
opportunities for growth with the increased deregulation of gas markets. As gas
markets continue to expand, we believe that the quantity of gas within the Great
Lakes Region will increase, therefore creating additional pipeline and storage
opportunities.
BUSINESS STRATEGY
SEMCO's business strategy is to expand significantly both its gas
distribution and diversified businesses through normal market growth and
acquisitions that meet pre-determined financial criteria and provide incremental
revenue, cost synergies, additional business opportunities and ultimately higher
shareholder value. Management has experience in operating non-contiguous gas
distribution properties based on operating its Michigan properties. As such, we
will continue to evaluate acquisition opportunities throughout the United
States. With respect to the diversified business segments, SEMCO's vision is to
become one of the largest engineering and construction companies in the United
States in the pipeline/underground infrastructure business. The key to SEMCO's
business strategy is the acquisition of a number of companies which provide
engineering and construction services to companies in the natural gas,
telecommunications, water and electric industries. The Company desires to
consolidate these acquisitions to achieve the synergies and lower administrative
and financing costs usually present in a large firm, while maintaining the
entrepreneurial spirit of a small company. A cornerstone of SEMCO's strategy is
to build complementary businesses capable of providing a large menu of
engineering and construction services in the pipeline/underground infrastructure
industry which can be packaged in full turnkey services for higher profit
potential. Other major benefits of SEMCO's consolidation strategy is the
development of greater depth and overall strength of management, more
sophisticated systems, enhanced purchasing capabilities, and better utilization
of equipment and resources. These benefits, plus our ability to provide these
turnkey construction and engineering services to new and existing customers,
should result in enhanced profitability to SEMCO. We anticipate that this group
of diversified businesses could contribute
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an increasing share of SEMCO's consolidated net income. In addition to this
increased contribution, such engineering and construction businesses provide a
counter-seasonal earnings pattern to our traditional gas distribution business.
These engineering and construction businesses tend to have higher earnings in
the spring through fall months. The gas distribution business has higher
earnings in the late fall and winter that is associated with colder weather.
THE TRUSTS
We created three Delaware business trusts pursuant to three trust
agreements executed by us as sponsor for each trust, appointed trustees for each
trust and filed a certificate of trust for each trust with the Delaware
Secretary of State. The trusts are named SEMCO Capital Trust I, SEMCO Capital
Trust II and SEMCO Capital Trust III, which we refer to herein as, collectively,
the "trusts" and, individually, each a "trust." The amended and restated trust
agreement for each trust, (as so amended and restated, the "trust agreement")
which is filed as an exhibit to the registration statement of which this
prospectus forms a part, states the terms and conditions for each trust to issue
and sell its trust preferred securities and trust common securities, which we
refer to herein, together with the trust preferred securities, as the trust
securities.
Each trust will exist solely to:
- issue and sell its trust securities;
- use the proceeds from the sale of its trust securities to purchase and
hold a series of our debt securities;
- maintain its status as a grantor trust for federal income tax purposes;
and
- engage in other activities that are necessary or incidental to these
purposes.
We will purchase all of the trust common securities of each trust. The
trust common securities will represent an aggregate liquidation amount equal to
at least 3% of each trust's total capitalization. The trust common securities
will have terms substantially identical to, and will rank equal in priority of
payment with, the trust preferred securities. However, if we default on the
subordinated debt securities, then cash distributions and liquidation,
redemption and other amounts payable on the trust common securities will be
subordinate to the trust preferred securities in priority of payment.
We will guarantee the trust preferred securities as described later in this
prospectus.
The trust's business and affairs will be conducted by the trustees (the
"Trustees") appointed by us, as holder of the trust common securities. The
duties and obligations of the trustees will be governed by the trust agreement.
Pursuant to each trust agreement, the number of trustees will initially be four.
Two of the trustees (the "Administrative Trustees") will be persons who are our
employees or officers of or affiliated with us. The third Trustee will be a
corporation which maintains a principal place of business in the State of
Delaware that will serve for the sole purpose of complying with certain Delaware
laws (the "Delaware Trustee"). The fourth trustee will be a financial
institution unaffiliated with us which will serve as property trustee under each
trust agreement and as indenture trustee for purposes of the Trust Indenture Act
(the "Property Trustee"). Bank One Delaware, Inc. will act as the Delaware
Trustee and Bank One Trust Company NA as the Property Trustee, in each case
until removed or replaced by the holder of the trust common securities. The
Property Trustee will also act as indenture trustee under the indenture and
guarantee trustee under the Trust Guarantee (the "Guarantee Trustee"). See
"Description of the Trust Guarantee." We, as the holder of all the trust common
securities, will have the right to appoint, remove or replace any trustee and to
increase the number of trustees, provided that the number of trustees will be at
least three, two of which will be the Administrative Trustees.
The Property Trustee will hold title to the subordinated debt securities
for the benefit of the holders of the trust securities, and will have the power
to exercise all rights, powers and privileges as the holder of the subordinated
debt securities under the indenture pursuant to which the subordinated debt
securities are
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issued. In addition, the Property Trustee will maintain exclusive control of a
segregated non-interest bearing bank account to hold all payments made in
respect of the subordinated debt securities for the benefit of the holders of
the trust securities. The Property Trustee will make payments of distributions
and payments on liquidation, redemption and otherwise to the holders of the
trust securities out of funds from the property account. The Guarantee Trustee
will hold the guarantee by us of the trust securities for the benefit of the
holders of the trust preferred securities.
In addition, unless the Property Trustee maintains a principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law, another trustee of each trust, the Delaware trustee, will either
be a natural person who is a resident of the State of Delaware or an entity
which has its principal place of business or resides in the State of Delaware.
We have appointed Bank One Delaware, Inc., as Delaware trustee. We will pay all
fees and expenses related to each trust and each offering of the related trust
preferred securities and will pay all ongoing costs and expenses of each trust,
except such trust's obligations under the related trust securities.
The rights of the holders of the trust preferred securities, including
economic rights, rights to information and voting rights, are set forth in each
trust's trust agreement and the Delaware Business Trust Act, as amended, and the
Trust Indenture Act. The principal place of business of the trusts is c/o SEMCO
Energy, Inc., 405 Water Street, Port Huron, Michigan 48060, and their telephone
number is 810-987-2200.
USE OF PROCEEDS
Except as may otherwise be described in the prospectus supplement relating
to an offering of securities, the net proceeds from the sale of the securities
will be used to finance acquisitions, repay our short-term borrowings and for
other general corporate purposes. A significant portion of the proceeds will be
used to repay the debt incurred for the Enstar Acquisition under a short term
credit facility that matures on October 30, 2000. Interest rates under that
facility vary. Prior to such uses, the net proceeds from the sale of securities
may be invested in certificates of deposit or other highly liquid investments
with short-term maturities. Any specific allocation of the net proceeds of an
offering of securities to a specific purpose will be determined at the time of
such offering and will be described in the related prospectus supplement.
ACCOUNTING TREATMENT RELATING TO TRUST SECURITIES
The financial statements of each trust that has issued trust securities
will be consolidated with our financial statements, with the trust preferred
securities of each trust shown on our consolidated financial statements as our
obligated mandatory redemption preferred securities of a consolidated trust. Our
financial statements will include a footnote that discloses, among other things,
that the sole asset of each trust included therein consists of our subordinated
deferrable interest debentures and will specify the designation, principal
amount, interest rate and maturity date of such subordinated deferrable interest
debentures.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratios of earnings to fixed
charges for SEMCO and its subsidiaries for the years and period indicated:
12 MONTHS ENDING YEARS ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
RATIO OF EARNINGS TO: 1999 1998 1997 1996 1995 1994
- --------------------- ---------------- ---- ---- ---- ---- ----
Fixed Charges(1)......................... 2.47 2.17 2.42(3) (2) 2.21 2.17
- ---------------
(1) In January 1998, SEMCO, through a subsidiary of SEMCO Energy Ventures, SEMCO
Arkansas Pipeline Company, sold is 32.07% partnership interest in NOARK
Pipeline System L.P. ("NOARK"). NOARK had been generating losses since it
was placed in service in 1992. Earnings
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reflect a share of NOARK's operating losses and fixed charges include a
share of NOARK's interest expense equal to SEMCO's percentage interest in
NOARK.
For purposes of calculating the ratios, "earnings" represent the sum of (a)
pretax income from continuing operations (excluding extraordinary charges
from the early retirement of debt in 1994 and 1998) and (b) fixed charges.
"Fixed charges" represent the sum of (i) interest incurred by SEMCO and its
subsidiaries plus their share of interest on debt to outsiders incurred by
less-than-fifty-percent-owned persons, (ii) amortization of debt expense and
(iii) the preferred stock dividend requirements of SEMCO's subsidiaries,
increased to an amount representing the pretax earnings required to cover
such dividend requirement.
(2) For the year ended December 31, 1996, fixed charges exceeded earnings by
$20.0 million. Earnings as defined include a $32.3 million non-cash pretax
write-down of the NOARK (1) investment. Excluding the NOARK write-down the
ratios of earnings to fixed charges would have been 1.84.
(3) Restated to account for a 1998 acquisition as a pooling of interests. Years
prior to 1996 were not restated for the pooling of interests as the effects
were not material.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 40,000,000 shares of common stock,
$1.00 par value ("common stock"), 500,000 shares of cumulative preferred stock,
$1.00 par value ("preferred stock"), and 3,000,000 shares of preference stock,
$1.00 par value ("preference stock"). At November 22, 1999, there were
outstanding 17,903,977 shares of common stock and no shares of preferred stock.
2,000,000 shares of the preference stock are reserved for issuance pursuant to a
Shareholder Rights Plan described below; no preference stock is outstanding.
The following description of our common stock and preferred stock is not
complete. You should look at our restated articles of incorporation which are
filed as an exhibit to the Registration Statement for a complete description.
The following summary is subject in all respects to the provisions of our
restated articles of incorporation and does not relate to or give effect to the
provisions of the statutory or common law of the State of Michigan. The summary
given below is qualified in its entirety by reference to our restated articles
of incorporation and the laws of the State of Michigan.
COMMON STOCK
Dividend Rights. The holders of common stock are entitled to dividends
when, as and if, declared by the Board of Directors out of our surplus after
full cumulative dividends on the preferred stock and preference stock, if any,
shall have been paid or set apart for payment and any sinking fund obligations
with respect to the preferred stock and preference stock, if any, have been
satisfied.
We have long-term debt agreements which contain restrictive financial
covenants including, among others, limits on the payment of dividends beyond
certain levels. We are currently in compliance with all of the covenants in
these agreements. With respect to the payment of dividends or any other
distributions in respect of our capital stock, such agreements provide that we
may not declare and pay any dividends (except dividends or other distributions
payable in shares of our capital stock), redeem or retire our capital stock (or
any warrants, rights, or options to purchase or acquire our capital stock), or
make other distributions with respect to our capital stock (such declarations or
payments of dividends, purchases, redemptions or retirements of capital stock
and warrants, rights or options and all such other payments or distributions
being collectively referred to as "Restricted Payments") if, after giving effect
thereto, (i) any event of default under such agreements exists; (ii) the
aggregate amount of Restrictive Payments since January 1, 1994 would exceed our
consolidated net income for the same period plus an adjustment factor of
$14,171,000; or (iii) would cause our consolidated net worth to be less than
$80,000,000.
After December 31, 1999, the adjustment factor of $14,171,000 is reduced
each quarter by $625,000 until the adjustment factor equals $11,000,000. Under
the most restrictive terms, as of September 30, 1999, $7,036,000 is available
for dividends.
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Voting Rights. The holders of Common Stock are entitled to one vote for
each share on all matters voted upon by our shareholders and, subject to any
voting rights of the holders of the preferred stock and preference stock
described below, the holders of such shares currently possess all voting power.
Our Articles of Incorporation provide for cumulative voting for the election of
our directors.
Preemptive Rights. No holder of common stock has any preemptive right to
subscribe to any additional securities which we may issue.
Liquidation Rights. Subject to the preferential rights of holders of the
preferred stock and preference stock, upon our liquidation the holders of the
common stock are entitled to share on a pro rata basis in our net assets which
remain after satisfaction of all liabilities.
PREFERRED STOCK
The Board of Directors is authorized, without further action by
shareholders, to issue preferred stock, in one or more series, from time to
time, with such rights and preferences as may be provided in a resolution
adopted by the Board of Directors. The authority of the Board includes, but is
not limited to, the determination or fixing of the following with respect to
shares of such class or any series thereof: (i) the rate of dividends and the
extent of further participation in dividend distribution, if any; (ii) the price
at and the terms and conditions on which the shares are redeemable; (iii) the
amount payable upon shares in event of voluntary or involuntary liquidation;
(iv) sinking fund provisions for the redemption or purchase of shares; and (v)
the terms and conditions on which shares are convertible.
The terms of each series of preferred stock will be described in any
prospectus supplement related to such series of preferred stock and may include
the following:
(1) the title and stated value of such preferred stock;
(2) the number of shares of such preferred stock offered and the offering
price and liquidation preference per share of such preferred stock;
(3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to such preferred stock;
(4) the date from which dividends on such preferred stock shall accumulate,
if applicable;
(5) the provision for a sinking fund, if any, for such preferred stock;
(6) the provision for redemption, if applicable, of such preferred stock;
(7) any listing of such preferred stock on any securities exchange;
(8) a discussion of federal tax considerations applicable to such preferred
stock;
(9) any voting rights of holders of such preferred stock;
(10) any other specific terms, preferences, rights, limitations or
restrictions of such preferred stock;
(11) the relative ranking and preference of such preferred stock as to
dividend rights and rights upon liquidation, dissolution or winding up of our
affairs;
(12) any limitations on issuance of any series of preferred stock ranking
senior to or on a parity with such series of preferred stock as to dividend
rights and rights upon liquidation, dissolution or winding up of our affairs;
and
(13) the terms and condition. if applicable, upon which such preferred
stock will be convertible into or participate in dividends, if any, paid on the
common stock, including the conversion price (or manner of calculation thereof).
In the event of our liquidation or dissolution, the holders of preferred
stock are entitled to receive a fixed amount for each series before any
distribution is made to the holders of common stock. As long as
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any preferred stock remains outstanding, we may not purchase any shares of our
common stock or redeem any preference stock.
As long as any preferred stock remains outstanding, we may not without the
consent of the holders of at least two-thirds of the outstanding preferred stock
authorize any class of stock having a priority or preference over or ranking on
a parity with the preferred stock as to dividends or distribution of assets.
If at any time we fail to declare and pay or set apart for payment in full
eight quarterly dividends (whether or not consecutive) on all of the outstanding
preferred stock, then the holders of the outstanding preferred stock shall have
the right, voting as a single class irrespective of series, to elect such number
of our directors as shall constitute one less than the smallest number of
directors necessary to constitute a majority of the full Board of Directors, and
such right shall continue (and may be exercised at any annual or other meeting
of shareholders for the election of directors) until we shall have paid or
declared and set apart for payment all accrued dividends on the preferred stock
for all past quarterly dividend periods.
At November 22, 1999, no shares of preferred stock were outstanding.
PREFERENCE STOCK
The Board of Directors has the authority to divide the 3,000,000 shares of
preference stock into series and, within the limitations set forth in the laws
of the State of Michigan and in the Articles of Incorporation, to fix and
determine the relative rights and preferences of the shares of any series so
established. The preference stock ranks junior to all series of preferred stock
as to the payment of dividends and the distribution of assets, except to the
extent that a specific series of preferred stock provides otherwise.
SERIES A PREFERENCE STOCK
In January, 1997, the Board of Directors created a series of preference
stock designated as Series A preference stock with the number of shares
constituting such series set at 2,000,000. No shares of preference stock are
outstanding.
If Series A preference stock was outstanding, dividends would accrue and be
cumulative in an amount per share per quarter equal to the greater of (i) $10.00
or (ii) the Adjustment Number (as defined below) times the per share amount of
all cash dividends, and the Adjustment Number times the per share amount
(payable in kind) of all non-cash dividends or other distributions (other than a
dividend payable in shares of common stock or a subdivision of the shares of
common stock), declared on the common stock since the preceding quarterly
dividend payment date, or, if later, since the issuance or such Series A
preference stock. Upon our liquidation or dissolution the holders of Series A
preference stock are entitled to receive $100 per share plus all accrued and
unpaid dividends. The Series A preference stock is not redeemable and ranks
junior to all series of preferred stock as to the payment of dividends and the
distribution of assets, unless the terms of any series provides otherwise. If
Series A preference stock was outstanding, a holder of Series A preference stock
would be entitled to the number of votes equal to the Adjustment Number times
the number of votes to which a holder of common stock is entitled. Except as
otherwise provided below or by law, Series A preference stock and common stock
shall vote together as one class on all matters submitted to a vote of the
holders of common stock. If any dividends on Series A preference stock shall be
in arrears for six or more quarterly dividends, a "default period" shall begin.
The default period shall end when all accrued dividends shall have been paid or
set apart for payment. During a default period, Series A preference stock shall
have the right to elect two directors. This vote shall be as a class for all
series of preference stock entitled to vote.
The Articles of Incorporation initially set the Adjustment Number at 100.
If we shall (i) pay any dividend on common stock in shares of common stock, (ii)
subdivide the common stock, or (iii) combine the common stock into a smaller
number of shares, the Adjustment Number shall be modified by multiplying it by a
fraction, the numerator of which is the number of shares of common stock
outstanding
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immediately after such event and the denominator of which is the number of
shares of common stock outstanding immediately prior to such event.
DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN
We sponsor a direct stock purchase and dividend reinvestment plan under
which investors may purchase shares of common stock without paying brokerage
fees and other expenses. Under the plan, common stock may be purchased at the
average of the over-the-counter closing ask prices for the three trading days
prior to the fifth day of each month as quoted in the NASDAQ System. We
initially reserved 2,000,000 shares of common stock for issuance under the plan.
As of November 22, 1999, 1,202,040 shares were available for issuance under the
plan.
OTHER PROVISIONS
Articles of Incorporation. The following provisions of our Articles of
Incorporation may delay, defer or prevent a person from acquiring us or changing
control of the Board of Directors. Our Articles of Incorporation divide the
Board into three classes with staggered terms; each director is elected for a
three year term. Approximately one-third of the Board positions are filled by a
shareholder vote each year. Directors may be removed but only for cause, at an
annual meeting of shareholders and by the affirmative vote of a majority of the
shares then entitled to vote for the election of directors. In addition to
requirements imposed under Section 7A of the Michigan Business Corporation Act
(the "MBCA"), our Articles of Incorporation provide that a business combination
cannot occur unless a written opinion is obtained from an independent investment
banker that the consideration to be paid to our shareholders is fair and
reasonable; provided, however, the directors may waive this requirement. Our
Articles of Incorporation also contain provisions limiting the personal
liability of directors.
Anti-Takeover Statutes. We are subject to Chapter 7A of the MBCA, which
provides that business combinations subject to Chapter 7A between a Michigan
corporation and a beneficial owner of shares entitled to 10% or more of the
voting power of such corporation generally require the affirmative vote of 90%
of the votes of each class of stock entitled to vote, and not less than 2/3 of
each class of stock entitled to vote (excluding voting shares owned by such 10%
owner), voting as a separate class. Such requirements do not apply if (i) the
corporation's board of directors approves the transaction prior to the time the
10% owner becomes such or (ii) the transaction satisfies certain fairness
standards, certain other conditions are met and the 10% owner has been such for
at least five years.
We are also subject to Chapter 7B of the MBCA which provides that, unless a
corporation's articles of incorporation or bylaws provide that Chapter 7B does
not apply, "control shares" of a corporation acquired in a control share
acquisition have no voting rights except as granted by the stockholders of the
corporation. "Control shares" are shares which, when added to shares previously
owned by a stockholder, increase such stockholder's ownership of voting stock to
more than 20% but less than 33 1/3%, more than 33 1/3% but less than a majority,
or more than a majority, of the votes to which all of the capital stock of the
corporation is entitled. Voting rights of control shares must be approved by the
affirmative vote of a majority of all shares entitled to vote excluding voting
shares owned by the acquirer and certain officers and directors. However, no
such approval is required for gifts or other transactions not involving
consideration, for a merger to which the corporation is a party or certain other
transactions described in Chapter 7B.
Rights to Purchase Preference Stock. In January 1997, we adopted a
Shareholder's Rights Plan pursuant to which 2,000,000 shares of Series A
preference stock are reserved under the plan for sale to holders of common
stock. The common stock currently trades with a right to purchase such Series A
preference stock. The right is intended to protect shareholders in the event of
an unsolicited attempt to acquire us and becomes exercisable upon the occurrence
of certain triggering events. The right is transferred automatically with the
transfer of the common stock until separate rights certificates are distributed
upon the occurrence of certain events. The right could have the effect of
delaying, deferring or preventing a person from acquiring us or accomplishing a
change in control of the board of directors.
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Registration Rights. In connection with certain of our acquisitions, we
agreed, among other things, to file with the Commission registration statements
for shares of common stock received by the shareholders of such companies. As of
November 22, 1999, approximately 1,096,728 shares of our common stock in the
aggregate are subject to such agreements.
Transfer Agent. We are currently our own transfer agent and registrar for
our common stock. Effective as of December 1, 1999, Norwest Bank Minnesota, N.A.
will be our transfer agent and registrar for our common stock.
The common stock is traded in the over-the-counter market and is quoted on
the NASDAQ National Market System under the symbol SMGS.
DESCRIPTION OF DEBT SECURITIES
GENERAL
Our senior debt securities and subordinated debt securities (collectively,
for purposes of this section of the Prospectus, the "Debt Securities"),
consisting of notes, debentures and other evidence of indebtedness may be issued
from time to time in one or more series, in the case of the Senior Debt
Securities, under an indenture, dated as of October 23, 1998, as supplemented
from time to time (the "Senior Indenture") between us and NBD Bank, as trustee
(the "Senior Indenture Trustee"), and in the case of the Subordinated
Debentures, under an indenture as supplemented from time to time (the
"Subordinated Indenture"), between us and Bank One, Michigan, as trustee (the
"Subordinated Indenture Trustee"). The term "Indenture Trustee," as used herein,
shall refer to the Senior Indenture Trustee or the Subordinated Indenture
Trustee, as appropriate. The form of Senior Indenture and the form of the
Subordinated Indenture being sometimes referred to herein collectively as the
"Indentures" and individually as an "Indenture" are filed, along with the form
of Supplemental Indenture in the case of the Subordinated Indenture, as exhibits
to the Registration Statement to which this Prospectus is a part and, upon
execution and delivery, will be available for inspection at the corporate trust
offices of the Senior Indenture Trustee and the Subordinated Indenture Trustee,
or as described under "Available Information." The Indentures are subject to and
governed by the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act" or "TIA"). The following statements relating to the Debt Securities and the
Indentures are summaries of the provisions thereof and do not purport to be
complete and are qualified in their entirety by reference to the Indentures and
the Debt Securities. All Section references herein are to sections of the
Indentures, and capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indentures and the Debt Securities. The
Subordinated Debentures are further described under "Additional Description of
Subordinated Debentures to be Issued to Trust" below.
TERMS
The Debt Securities will be our direct, unsecured obligations. The
indebtedness represented by the Senior Debt will rank on a parity with all our
other unsecured and unsubordinated indebtedness. The indebtedness represented by
the Subordinated Debentures will be subordinated in right of payment to the
prior payment in full of all our existing and future Senior Indebtedness, as
described below under "Subordination." Each Indenture provides that the Debt
Securities may be issued without limit as to aggregate principal amount, in one
or more series, in each case as established from time to time by our Board of
Directors or as established in one or more indentures supplemental to such
Indenture. Debt Securities may be issued with terms different from those of Debt
Securities previously issued. All Debt Securities of one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series (Section 301
of each Indenture).
Each Indenture provides that there may be more than one Indenture Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Indenture Trustee under either Indenture may resign or be removed with respect
to one or more series of Debt Securities, and a successor Indenture Trustee
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may be appointed to act with respect to such series (Section 608 of each
Indenture). In the event that two or more persons are acting as Indenture
Trustee with respect to different series of Debt Securities, each such Indenture
Trustee shall be an Indenture Trustee of a trust under the applicable Indenture
separate and apart from the trust administered by any other Indenture Trustee
(Section 609 of each Indenture), and, except as otherwise indicated herein, any
action described herein to be taken by an Indenture Trustee may be taken by each
such Indenture Trustee with respect to, and only with respect to, the one or
more series of Debt Securities of which it is Indenture Trustee under the
applicable Indenture.
The Prospectus Supplement relating to the series of Debt Securities being
offered will contain the specific terms thereof, including, without limitation:
(1) The title and any series of such Debt Securities and whether such Debt
Securities are Senior Debt or Subordinated Debentures;
(2) The aggregate principal amount of such Debt Securities and any limit on
such principal amount;
(3) The percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the portion of
the principal amount thereof payable upon declaration of acceleration of the
maturity thereof;
(4) The date or dates, or the method for determining such date or dates, on
which the principal of such Debt Securities will be payable and the amount of
principal payable thereon;
(5) The rate or rates (which may be fixed or variable) at which such Debt
Securities will bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates, or the method for determining such date
or dates, from which any such interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment dates, or
the method by which such dates shall be determined, the persons to whom such
interest shall be payable, and the basis upon which interest shall be calculated
if other than that of a 360-day year of twelve 30-day months;
(6) The place or places where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, where such Debt
Securities may be surrendered for registration of transfer or exchange and where
notices or demands to or upon us in respect of such Debt Securities and the
applicable Indenture may be served;
(7) If applicable, whether the interest payment periods may be extended by
us and, if so, the terms of any such extension;
(8) The period or periods within which, the price or prices at which, and
other terms and conditions upon which such Debt Securities may be redeemed, as a
whole or in part, at our option, if we are to have such an option;
(9) Our obligation, if any, to redeem, repay or purchase such Debt
Securities pursuant to any sinking fund or analogous provision or at the option
of a holder thereof, and the period or periods within which or the date or dates
on which, the price or prices at which, and other terms and conditions upon
which such Debt Securities will be redeemed, repaid or purchased, as a whole or
in part, pursuant to such obligation;
(10) Whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with reference to
an index, formula or other method and the manner in which such amounts shall be
determined;
(11) Provisions, if any, granting special rights to the holders of such
Debt Securities upon the occurrence of such events as may be specified;
(12) Any deletions from, modifications of or additions to the Events of
Default or our covenants with respect to such Debt Securities, whether or not
such Events of Default or covenants are consistent with the Events of Default or
covenants set forth in the applicable Indenture;
(13) Whether such Debt Securities will be issued in certificated or
book-entry form;
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(14) Whether such Debt Securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000 and any
integral multiple thereof and, if in bearer form, the denominations thereof and
terms and conditions relating thereto;
(15) The applicability if any, of the defeasance and covenant defeasance
provisions described herein, or any modification thereof;
(16) Whether and under what circumstances we will pay any Additional
Amounts as defined and contemplated in the applicable Indenture on such Debt
Securities in respect of any tax, assessment or governmental charge and, if so,
whether we will have the option to redeem such Debt Securities in lieu of making
such payment; and
(17) Any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture (Section 301 of each Indenture).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special U.S. federal income tax,
accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Except as set forth below under "Certain Covenants" and as may be set forth
in any Prospectus Supplement, the Indentures will not contain any provisions
that would limit our ability to incur indebtedness or that would afford holders
of Debt Securities protection in the event of a highly leveraged or similar
transaction involving us or in the event of a change of control. You should
refer to the applicable Prospectus Supplement for information with respect to
any deletions from, modifications of, or additions to the events of default or
covenants of us that are described below, including any addition of a covenant
or other provision providing event risk or similar protection.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series issued in registered form will be issuable in
denominations of $1,000 and integral multiples thereof. Unless otherwise
specified in the applicable Prospectus Supplement, the Debt Securities of any
series issued in bearer form will be issuable in denominations of $5,000
(Section 302 of each Indenture).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium if any) and interest on any series of Senior Debt will
be payable at the corporate trust office of the Senior Indenture Trustee, and
the principal of (and premium, if any) and interest on any series of
Subordinated Debentures will be payable at the corporate trust office of the
Subordinated Indenture Trustee; provided that, at our option, payment of
interest on any series of Debt Securities may be made by check mailed to the
address of the Person entitled thereto as it appears in the applicable register
for such Debt Securities or by wire transfer of funds to such person at an
account maintained within the United States (Sections 301, 307 and 1002 of each
Indenture).
Any interest not punctually paid or duly provided for on any interest
payment date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the holder on the applicable Regular Record
Date and may either be paid to the Person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Indenture Trustee, notice whereof shall be given to the holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be paid
at any time in any other lawful manner, all as more completely described in the
applicable Indenture (Section 307 of each Indenture).
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Indenture
Trustee referred to above. In addition,
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subject to certain limitations imposed upon Debt Securities issued in book-entry
form, the Debt Securities of any series may be surrendered for registration of
transfer or exchange thereof at the corporate trust office of the applicable
Indenture Trustee. Every Debt Security surrendered for registration of transfer
or exchange must be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but we may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith
(Section 305 of each Indenture). If the applicable Prospectus Supplement refers
to any transfer agent (in addition to the applicable Indenture Trustee)
initially designated by us with respect to any series of Debt Securities, we may
at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that
the trust will be required to maintain a transfer agent in each place of payment
for such series. We may at any time designate additional transfer agents with
respect to any series of Debt Securities (Section 1002 of each Indenture).
Neither we nor any Indenture Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
that has been surrendered for repayment at the option of the holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305 of each
Indenture).
MERGER, CONSOLIDATION OR SALE
The Senior Indenture provides that we will be permitted to consolidate
with, or sell, lease or convey all or substantially all of our assets to, or
merge with or into, any other entity provided that (a) either we shall be the
continuing entity, or the successor entity (if other than us) formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of such assets shall expressly assume payment of the principal of (and
premium, if any) and interest on all of the Senior Debt and the due and punctual
performance and observance of all of the covenants and conditions contained in
the Senior Indenture; (b) immediately after giving effect to such transaction
and treating any indebtedness that becomes an obligation of us or any Subsidiary
as a result thereof as having been incurred by us or such Subsidiary at the time
of such transaction, no Event of Default under the Senior Indenture, and no
event which, after notice or the lapse of time, or both, would become such an
Event of Default, shall have occurred and be continuing; and (c) an officer's
certificate and legal opinion covering such conditions shall be delivered to the
Indenture Trustee (Sections 801 and 803 of the Senior Indenture). The provisions
of the Subordinated Indenture regarding merger, consolidation and sale are
discussed in "Additional Description of Subordinated Debentures to be Issued to
Trust -- Consolidation, Merger and Sale" below.
CERTAIN COVENANTS
Limitations on Liens. The Indentures provide that we shall not, and shall
not cause or permit any Subsidiary to, issue, assume or guarantee any Debt
secured by a Lien upon any of our property or assets (other than cash) or that
of such Subsidiary, as applicable, without effectively providing that the
outstanding Debt Securities (together with, if we so determine, any other
indebtedness or obligation then existing or thereafter created ranking equally
with such Debt Securities) shall be secured equally and ratably with (or prior
to) such Debt so long as such Debt shall be so secured. The foregoing
restriction on Liens will not, however, apply to:
(a) Liens in existence on the date of original issue of such Debt
Securities;
(b) (i) any Lien created or arising over any property which is
acquired, constructed or created by us, or any of our Subsidiaries, but
only if (A) such Lien secures only principal amounts (not exceeding the
cost of such acquisition, construction or creation) raised for the purposes
of such acquisition, construction or creation, together with any costs,
expenses, interest and fees incurred in
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relation thereto or a guarantee given in respect thereof, (B) such Lien is
created or arises on or before 90 days after the completion of such
acquisition, construction or creation and (C) such Lien is confined solely
to the property so acquired, constructed or created; or (ii) any Lien to
secure our Debt or the Debt of a Subsidiary incurred in connection with a
specifically identifiable project where the Lien relates to and is confined
to a property or properties (including, without limitation, shares or other
rights of ownership in the entities which own such property or project)
involved in such project and acquired by us or a Subsidiary after the date
of original issue of the Debt Securities of any series and the recourse of
the creditors in respect of such Debt is limited to any or all of such
project and property (including as aforesaid);
(c) any Lien securing amounts not more than 90 days overdue or
otherwise being contested in good faith;
(d) (i) rights of financial institutions to offset credit balances in
connection with the operation of cash management programs established for
our benefit or the benefit of a Subsidiary or in connection with the
issuance of letters of credit for the benefit of the us or a Subsidiary;
(ii) any Lien securing our Debt or the Debt of a Subsidiary incurred in
connection with the financing of accounts receivable; (iii) any Lien
incurred or deposits made in the ordinary course of business, including,
but not limited to, (A) any mechanics', materialmens', carriers',
workmens', vendors' or other like Liens and (B) any Liens securing amounts
in connection with workers' compensation, unemployment insurance and other
types of social security; (iv) any Lien upon specific items of inventory or
other goods and proceeds of us or a Subsidiary securing obligations of us
or a Subsidiary in respect of bankers' acceptances issued or created for
the account of such person to facilitate the purchase, shipment or storage
of such inventory or other goods; (v) any Lien incurred or deposits made
securing the performance of tenders, bids, leases, trade contracts (other
than for borrowed money), statutory obligations, surety bonds, appeal
bonds, government contracts, performance bonds, return-of-money bonds and
other obligations of like nature incurred in the ordinary course of
business; (vi) any Lien constituted by a right of set off or right over a
margin call account or any form of cash or cash collateral or any similar
arrangement for obligations incurred in respect of the hedging or
management of risks under transactions involving any currency or interest
rate swap, cap or collar arrangements, forward exchange transaction,
option, warrant, forward rate agreement, futures contract or other
derivative instrument of any kind; (vii) any Lien arising out of title
retention or like provisions in connection with the purchase of goods and
equipment in the ordinary course of business; and (viii) any Lien securing
reimbursement obligations under letters of credit, guaranties and other
forms of credit enhancement given in connection with the purchase of goods
and equipment in the ordinary course of business;
(e) Liens in favor of us or a Subsidiary;
(f) (i) Liens on any property or assets acquired from a corporation
which is merged with or into us or a Subsidiary, or any Liens on the
property or assets of any corporation or other entity existing at the time
such corporation or other entity becomes a Subsidiary of us and, in either
such case, is not created in anticipation of any such transaction (unless
such Lien is created to secure or provide for the payment of any part of
the purchase price of such corporation); (ii) any Lien on any property or
assets existing at the time of acquisition thereof and which is not created
in anticipation of such acquisition (unless such Lien was created to secure
or provide for the payment of any part of the purchase price of such
property or assets); and (iii) any Lien created or outstanding on or over
any asset of any Person which becomes a Subsidiary on or after the date of
the issuance of such Debt Securities when such Lien is created prior to the
date on which such Person becomes a Subsidiary;
(g) (i) Liens required by any contract or statute in order to permit
us or a Subsidiary to perform any contract or subcontract made by us or it
with or at the request of a governmental entity or any department, agency
or instrumentality thereof, or to secure partial, progress, advance or any
other payments by us or a Subsidiary to such governmental unit pursuant to
the provisions of any contract or statute; (ii) any Lien securing
industrial revenue, development or similar bonds issued by
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or for the benefit of us or a Subsidiary, provided that such industrial
revenue, development or similar bonds are nonrecourse to us or such
Subsidiary; and (iii) any Lien securing taxes or assessments or other
applicable governmental charges or levies;
(h) (i) any Lien which arises pursuant to any order of attachment,
distrait or similar legal process arising in connection with court
proceedings and any Lien which secures the reimbursement obligation for any
bond obtained in connection with an appeal taken in any court proceeding,
so long as the execution or other enforcement of such Lien arising pursuant
to such legal process is effectively stayed and the claims secured thereby
are being contested in good faith and, if appropriate, by appropriate legal
proceedings, or any Lien in favor of a plaintiff or defendant in any action
before a court or tribunal as security for costs and/or other expenses; or
(ii) any Lien arising by operation of law or by order of a court or
tribunal or any Lien arising by an agreement of similar effect, including,
without limitation, judgment liens; or
(i) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, or any Liens referred to
in the foregoing clauses, for amounts not exceeding the principal amount of
the Debt secured by the Lien so extended, renewed or replaced, provided
that such extension, renewal or replacement Lien is limited to all or a
part of the same property or assets that were covered by the Lien extended,
renewed or replaced (plus improvements on such property or assets) (Section
1011 of each Indenture).
Limitations on Sale and Leaseback Transactions. The Indentures also provide
that we will not, and will not permit any Subsidiary to, enter into any
arrangement with any Person (other than us or a Subsidiary), providing for the
leasing to us or a Subsidiary of any assets which have been or are to be sold or
transferred by us or such Subsidiary to such Person (a "Sale and Lease-Back
Transaction") unless: (a) such transaction involves a lease for a temporary
period not to exceed three years; (b) such transaction is between us or a
Subsidiary and an affiliate of ours; (c) we would be entitled to incur debt
secured by a Lien on the assets or property involved in such transaction at
least equal in amount to the Attributable Debt with respect to such Sale and
Lease-Back Transaction, without equally and ratably securing the Debt
Securities, pursuant to the limitation on Liens described above; (d) such
transaction is entered into within 90 days after the initial acquisition by us
of the assets or property subject to such transaction; (e) after giving effect
thereto, the aggregate amount of all Attributable Debt with respect to all such
Sale and Lease-Back Transactions does not exceed 10% of Consolidated Net
Tangible Assets; or (f) we or a Subsidiary within the twelve months preceding
the sale or transfer or the twelve months following the sale or transfer,
regardless of whether such sale or transfer may have been made by us or such
Subsidiary, apply in the case of a sale or transfer for cash, an amount equal to
the net proceeds thereof and, in the case of a sale or transfer otherwise than
for cash, an amount equal to the fair value of the assets so leased at the time
of entering into such arrangement (as determined by our Board of Directors or
the Board of Directors of such Subsidiary), (i) to the retirement of debt,
incurred or assumed by us or a Subsidiary, which by its terms matures at, or is
extendible or renewable at the option of the obligor to, a date more than twelve
months after the date of incurring, assuming or guaranteeing such debt or (ii)
to investment in any of our assets or the assets of any Subsidiary (Section 1012
of each Indenture).
Existence. Except as permitted under "Merger, Consolidation or Sale," we
will be required to do or cause to be done all things necessary to preserve and
keep in full force and effect our existence, rights and franchises; provided,
however, that we shall not be required to preserve any right or franchise if we
determine that the preservation thereof is no longer desirable in the conduct of
our business (Section 1004 of each Indenture).
Maintenance of Properties. We will be required to cause all of our material
properties used or useful in the conduct of our business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in our
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judgment may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times (Section
1005 of each Indenture).
Insurance. We will be required to, and will be required to cause each of
our Subsidiaries to, keep all of our insurable properties insured against loss
or damage at least equal to their then full insurable value with insurers of
recognized responsibility and, if described in the applicable Prospectus
Supplement, having a specified rating from a recognized insurance rating service
(Section 1006 of each Indenture).
Payment of Taxes and Other Claims. We will be required to pay or discharge
or cause to be paid or discharged, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges levied or imposed upon us or any
Subsidiary or upon our income, profits or property or, that of any Subsidiary,
and (ii) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a material lien upon our property or that of any Subsidiary;
PROVIDED, HOWEVER, that we shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith (Section 1007 of each
Indenture).
Provision of Financial Information. Whether or not we are subject to
Section 13 or 15(d) of the Exchange Act, we will be required, within 15 days of
each of the respective dates by which we would have been required to file annual
reports, quarterly reports and other documents with the Commission if we were so
subject, to (i) transmit by mail to all holders of Debt Securities, as their
names and addresses appear in the applicable register for such Debt Securities,
without cost to such holders, copies of the annual reports, quarterly reports
and other documents that we would have been required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act if we were subject to such
sections, (ii) file with the applicable Indenture Trustee copies of the annual
reports, quarterly reports and other documents that we would have been required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
if we were subject to such Sections, and (iii) promptly upon written request and
payment of the reasonable cost of duplication and delivery, supply copies of
such documents to any prospective holder (Section 1008 of each Indenture).
Additional Covenants. Any of our additional covenants with respect to any
series of Debt Securities will be set forth in the Prospectus Supplement
relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (a)
default for 30 days in the payment of any installment of interest or Additional
Amounts, or Additional Interest, as applicable, payable on any Debt Security of
such series; (b) default in the payment of principal of (or premium, if any, on)
any Debt Security of such series at its maturity; (c) default in making any
sinking fund payment as required for any Debt Security of such series; (d)
default in the performance or breach of any other covenant or warranty of ours
contained in the Indenture (other than a covenant added to the Indenture solely
for the benefit of a series of Debt Securities issued thereunder other than such
series), continued for 60 days after written notice as provided in the
Indenture; (e) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by us (including obligations under leases
required to be capitalized on the balance sheet of the lessee under generally
accepted accounting principles but not including any indebtedness or obligations
for which recourse is limited to property purchased) in an aggregate principal
amount in excess of $5,000,000 or under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any indebtedness for money borrowed by us (including such leases, but not
including such indebtedness or obligations for which recourse is limited to
property purchased) in an aggregate principal amount in excess of $5,000,000,
whether such indebtedness now exists or shall hereafter be created which default
shall have resulted in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable or such obligations being accelerated, without such acceleration having
been rescinded or annulled; (f) certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver,
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liquidator or trustee of us or any Significant Subsidiary of ours; and (g) any
other event of default provided with respect to a particular series of Debt
Securities (Section 501 of each Indenture). The term "Significant Subsidiary"
means each of our significant subsidiaries (as defined in Regulation S-X
promulgated under the Securities Act).
If an Event of Default under either Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the Indenture Trustee or the holders of not less than 25% in
principal amount of the outstanding Debt Securities of that series will have the
right to declare the principal amount (or, if the Debt Securities of that series
are Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms thereof) of, and premium, if any, on all of the
Debt Securities of that series to be due and payable immediately by written
notice thereof to us (and to the Indenture Trustee if given by the holders).
However, at any time after such a declaration of acceleration with respect to
Debt Securities of such series (or of all Debt Securities then outstanding under
the applicable Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
Indenture Trustee, the holders of not less than a majority in principal amount
of outstanding Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) may rescind and
annul such declaration and its consequences if (a) we shall have deposited with
the applicable Indenture Trustee all required payments of the principal of (and
premium, if any) and interest, and any Additional Amounts, on the Debt
Securities of such series (or of all Debt Securities then outstanding under the
applicable Indenture, as the case may be), plus certain fees, expenses,
disbursements and advances of such Indenture Trustee and (b) all Events of
Default, other than the non-payment of accelerated principal (or specified
portion thereof and the premium, if any) or interest, with respect to Debt
Securities of such series (or of all Debt Securities then outstanding under the
applicable Indenture, as the case may be) have been cured or waived as provided
in the applicable Indenture (Section 502 of each Indenture). Each Indenture also
provides that the holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) may waive any
past default with respect to such series and its consequences, except a default
(x) in the payment of the principal of (or premium, if any) or interest or
Additional Amounts, or Additional Interest, as applicable, payable on any Debt
Security of such series or (y) in respect of a covenant or provision contained
in the applicable Indenture that cannot be modified or amended without the
consent of the holder of each outstanding Debt Security affected thereby
(Section 513 of each Indenture).
Each Indenture Trustee will be required to give notice to the holders of
Debt Securities within 90 days of a default under the applicable Indenture
unless such default shall have been cured or waived; PROVIDED, HOWEVER, that
such Indenture Trustee may withhold notice to the holders of any series of Debt
Securities of any default with respect to such series (except a default in the
payment of the principal of (or premium, if any) or interest or Additional
Amounts, or Additional Interest, as applicable, payable on any Debt Security of
such series or in the payment of any sinking fund installment in respect of any
Security of such series) if specified responsible officers of such Indenture
Trustee consider such withholding to be in the interest of such holders (Section
601 of each Indenture).
Each Indenture will provide that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the cases of failure of
the Indenture Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an event of default from the
holders of not less than 25% in principal amount of the outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507 of each Indenture). This provision will not
prevent, however, any holder of Debt Securities from instituting suit for the
enforcement of payment of the principal of (and premium, if any), interest on
and Additional Amounts, or Additional Interest, as applicable, payable with
respect to, such Debt Securities at the respective due dates thereof.
Subject to provisions in each Indenture relating to its duties in case of
default, each Indenture Trustee will not be under any obligation to exercise any
of its rights or powers under the applicable Indenture at
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the request or direction of any holders of any series of Debt Securities then
outstanding under such Indenture, unless such holders shall have offered to the
Indenture Trustee thereunder reasonable security or indemnity (Section 602 of
each Indenture). The holders of not less than a majority in principal amount of
the outstanding Debt Securities of any series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Indenture Trustee, or of exercising any trust or power
conferred upon such Indenture Trustee. However, an Indenture Trustee may refuse
to follow any direction which is in conflict with any law or the Indenture,
which may involve the Indenture Trustee in personal liability or which may be
unduly prejudicial to the holders of Debt Securities of such series not joining
therein (Section 512 of each Indenture).
Within 120 days after the close of each fiscal year, we will be required to
deliver to each Indenture Trustee a certificate, signed by one of our several
specified officers, stating whether or not such officer has knowledge of any
default under the applicable Indenture and, if so, specifying each such default
and the nature and status thereof (Section 1009 of each Indenture).
Additional provisions of the Subordinated Indenture regarding Events of
Default are discussed in "Additional Description of Subordinated Debentures to
be Issued to Trust -- Subordinated Indenture Additional Events of Default"
below.
MODIFICATION OF THE INDENTURES
Modifications and amendments of either Indenture will be permitted to be
made only with the consent of the holders of not less than a majority in
principal amount of all outstanding Debt Securities issued under each Indenture
which are affected by such modification or amendment; PROVIDED, HOWEVER, that no
such modification or amendment may, without the consent of the holder of each
such Debt Security affected thereby, (a) change the stated maturity of the
principal of (or premium, if any), or any installment of principal of or
interest payable on, any such Debt Security; (b) reduce the principal amount of,
or the rate or amount of interest on, or any premium payable on redemption of,
or Additional Amounts, or Additional Interest, as applicable, payable with
respect to, any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon declaration
of acceleration of the maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the holder of any such Debt Security;
(c) change the place of payment, or currency, for payment of principal of (and
premium, if any), or interest on, or any Additional Amounts, or Additional
Interest, as applicable, payable with respect to, any such Debt Security; (d)
impair the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security; (e) reduce the above-stated percentage of
outstanding Debt Securities of any series necessary to modify or amend the
applicable Indenture, to waive compliance with certain provisions thereof or
certain defaults and consequences thereunder or to reduce the quorum or voting
requirements set forth in the Indenture; or (f) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the required percentage to
effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the holder of such Debt Security
(Section 902 of each Indenture).
The holders of not less than a majority in principal amount of outstanding
Debt Securities issued under either Indenture will have the right to waive
compliance by us with certain covenants in such Indenture (Section 1013 of each
Indenture).
Modifications and amendments of each Indenture will be permitted to be made
by us and the applicable Indenture Trustee thereunder without the consent of any
holder of Debt Securities for any of the following purposes: (i) to evidence the
succession of another person to us as obligor under the applicable Indenture;
(ii) to add to our covenants for the benefit of the holders of all or any series
of Debt Securities or to surrender a right or power conferred upon us in the
applicable Indenture; (iii) to add events of default for the benefit of the
holders of all or any series of Debt Securities; (iv) to add or change any
provisions of the applicable Indenture to facilitate the issuance of, or to
liberalize certain terms of,
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Debt Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, PROVIDED that such action shall not adversely
affect the interests of the holders of the Debt Securities of any series in any
material aspect; (v) to change or eliminate any provisions of the applicable
Indenture, PROVIDED that any such change or elimination shall become effective
only when there are no Debt Securities outstanding of any series created prior
thereto which are entitled to the benefit of such provision; (vi) to secure the
Debt Securities; (vii) to establish the form or terms of Debt Securities of any
series; (viii) to provide for the acceptance of appointment by a successor
Indenture Trustee or facilitate the administration of the trusts imposed under
the applicable Indenture by more than one Indenture Trustee; (ix) to cure any
ambiguity, defect or inconsistency in the applicable Indenture, PROVIDED that
such action shall not adversely affect the interests of holders of Debt
Securities of any series issued under such Indenture in any material respect; or
(x) to supplement any of the provisions of such Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of such
Debt Securities, PROVIDED that such action shall not adversely affect the
interests of the holders of the Debt Securities of any series in any material
respect (Section 901 of each Indenture).
Each Indenture will provide that in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, and (ii) Debt Securities
owned by us or any other obligor upon the Debt Securities or any affiliate of us
or of such other obligor shall be disregarded (Section 104 of each Indenture).
Each Indenture will contain provisions for convening meetings of the
holders of Debt Securities of a series (Section 1501 of each Indenture). A
meeting will be permitted to be called at any time by the applicable Indenture
Trustee, and also, upon request, by us or the holders of at least 10% in
principal amount of the outstanding Debt Securities of such series, in any such
case upon notice given as provided in the applicable Indenture (Section 1502 of
each Indenture). Except for any consent that must be given by the holder of each
Debt Security affected by certain modifications and amendments of the applicable
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; PROVIDED, HOWEVER, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting or adjourned meeting duly reconvened at which a
quorum is present by the affirmative vote of the holders of such specified
percentage in principal amount of the outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of holders of
Debt Securities of any series duly held in accordance with the applicable
Indenture will be binding on all holders of Debt Securities of that series. The
quorum at any meeting called to adopt a resolution, and at an reconvened
meeting, will be persons holding or representing a majority in principal amount
of the outstanding Debt Securities of a series; PROVIDED, HOWEVER, that if any
action is to be taken at such meeting with respect to a consent or waiver which
may be given by the holders of not less than a specified percentage in principal
amount of the outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
Debt Securities of such series will constitute a quorum (Section 1504 of each
Indenture).
Notwithstanding the foregoing provisions, each Indenture will provide that
if any action is to be taken at a meeting of holders of Debt Securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver and other action that the Indenture expressly provides may be
made, given or taken by the holders of a specified percentage in principal
amount of all outstanding Debt Securities affected thereby, or of the holders of
such series and one or more additional series: (i) there shall be no minimum
quorum requirement for such meeting, and (ii) the principal amount of the
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outstanding Debt Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under the Indenture (Section 1504 of each Indenture).
SUBORDINATION
Upon any distribution to our creditors in a liquidation, dissolution or
reorganization, the payment of the principal of and interest on the Subordinated
Debentures will be subordinated to the extent provided in the Subordinated
Indenture in right of payment to the prior payment in full of all Senior
Indebtedness defined below (Sections 1601 and 1602 of the Subordinated
Indenture), but our obligation to make payment of the principal and interest on
the Subordinated Debentures will not otherwise be affected (Section 1606 of the
Subordinated Indenture). No payment of principal or interest may be made on the
Subordinated Debentures at any time if (i) any Senior Indebtedness is not paid
when due and any applicable grace period has ended or such default has not been
waived; (ii) a default on Senior Indebtedness exists that permits the holders of
such Senior Indebtedness to accelerate its maturity or (iii) notice has been
given of the exercise of an option to require repayment or prepayment of Senior
Indebtedness (Section 1603 of the Subordinated Indenture). After all Senior
Indebtedness is paid in full and until the Subordinated Debentures are paid in
full, holders will be subrogated to the rights of holders of Senior Indebtedness
to the extent that distributions otherwise payable to holders have been applied
to the payment of Senior Indebtedness (Section 1605 of the Subordinated
Indenture). By reason of such subordination, in the event of a distribution of
assets upon insolvency, certain of our general creditors may recover more,
ratably, than holders of the Subordinated Debentures.
Senior Indebtedness is defined in the Subordinated Indenture as, (i) any
payment due in respect of indebtedness of a Person, whether outstanding at the
date of execution of the Subordinated Indenture or thereafter incurred, created
or assumed, (a) in respect of money borrowed (including any financial
derivative, hedging or futures contract or similar instrument) and (b) evidenced
by securities, debentures, bonds, notes or other similar instruments issued by
such Person which, by their terms, are senior or senior subordinated debt
securities including, without limitation, all obligations under its indentures
with various trustees; (ii) all capital lease obligations; (iii) all obligations
issued or assumed as the deferred purchase price of property, all conditional
sale obligations and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business and long-term purchase obligations); (iv) all obligations for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type referred
to in clauses (i) through (iv) above of other Persons the payment of which such
Person is responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
Persons secured by any lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Subordinated Debentures and (2) any unsecured indebtedness between or among such
Person or its Affiliates. At November 22, 1999, Senior Indebtedness aggregated
approximately $536,000,000. There are no restrictions in the Subordinated
Indenture upon the creation of additional Senior Indebtedness.
Upon payment in full of all amounts due on the Senior Indebtedness then
outstanding, the rights of the holders of the Subordinated Debentures will be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions applicable to such Senior Indebtedness until all
amounts owing on the Subordinated Debentures are paid in full.
In addition, because we are a holding company our right, and hence the
right of our creditors (including any holder of Subordinated Debentures), to
participate in any distribution of the assets of any subsidiary upon its
liquidation or recognition or otherwise is necessarily subject to the prior
claims of creditors of such subsidiary, except to the extent that our claims as
a creditor of such subsidiary may be recognized. There is no restriction in the
Subordinated Indenture against our subsidiaries incurring secured or unsecured
indebtedness or issuing secured or unsecured securities. Our ability to make
payments of
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principal and interest on the Subordinated Debentures will be dependent upon the
payment to it by its subsidiaries of dividends, loans or advances.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Under each Indenture, we may discharge certain obligations to holders of
any series of Debt Securities issued thereunder that have not already been
delivered to the applicable Indenture Trustee for cancellation and that either
have become due and payable or will become due and payable within one year (or
scheduled for redemption within one year) by irrevocably depositing with the
applicable Indenture Trustee, in trust, funds in an amount sufficient to pay the
entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest and any Additional Amounts, or Additional
Interest, as applicable, payable to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or redemption
date, as the case may be (Section 401 of each Indenture).
Each Indenture will provide that, if the provisions of Article Fourteen
thereof are made applicable to the Debt Securities of or within any series
pursuant to Section 301 of such Indenture, we may elect either (a) to defease
and be discharged from any and all obligations with respect to such Debt
Securities (except for the obligations to pay Additional Amounts, or Additional
Interest, as applicable, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on such Debt
Securities and the obligations to register the transfer or exchange of such Debt
Securities, to replace temporary or mutilated, destroyed, lost or stolen Debt
Securities, to maintain an office or agency in respect of such Debt Securities
and to hold moneys for payment in trust) ("defeasance") (Section 1402 of each
Indenture) or (b) to be released from our obligations with respect to such Debt
Securities under Sections 1004 to 1008, inclusive, and Sections 1011 and 1012
under such Indenture (being the restrictions described under "Certain
Covenants") or, if provided pursuant to such Indenture, our obligations with
respect to any other covenant, and any omission to comply with such obligations
shall not constitute an event of default with respect to such Debt Securities
("covenant defeasance") (Section 1403 of each Indenture), in either case upon
the irrevocable deposit by us with the applicable Indenture Trustee, in trust,
of an amount of money, or Government Obligations (as defined below), or both,
applicable to such Debt Securities which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and interest on
such Debt Securities, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor (Section 1404 of each Indenture).
Such a trust will only be permitted to be established if, among other
things, we have delivered to the applicable Indenture Trustee an opinion of
counsel (as specified in each Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such opinion of counsel, in the case of
defeasance, will be required to refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable United States federal income
tax law occurring after the date of such Indenture (Section 1404 of each
Indenture).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guarantee as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, PROVIDED that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
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interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101 of each Indenture).
In the event we effect covenant defeasance with respect to any Debt
Securities and such Debt Securities are declared due and payable because of the
occurrence of any Event of Default other than the Event of Default described in
clause (d) under "Events of Default, Notice and Waiver" with respect to Sections
1004 to 1008, inclusive, and Sections 1011 and 1012 of either Indenture (which
sections would no longer be applicable to such Debt Securities) or described in
clause (g) under "Events of Default, Notice and Waiver" with respect to any
other covenant as to which there has been covenant defeasance, the amount in
which such Debt Securities are payable, and Government Obligations on deposit
with the applicable Indenture Trustee, will be sufficient to pay amounts due on
such Debt Securities at the time of their stated maturity but may not be
sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such Event of Default. However, we would remain
liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series.
GOVERNING LAW
The Indentures, each Supplemental Indenture thereto, the Senior Debt and
the Subordinated Debentures will be governed by the laws of the State of New
York.
DESCRIPTION OF TRUST PREFERRED SECURITIES
Each trust may issue only one series of Trust Preferred Securities having
terms described in the prospectus supplement relating thereto. Each Trust
Agreement will be qualified as an indenture under the Trust Indenture Act and
will contain the terms of Trust Preferred Securities.
The Property Trustee will act as indenture trustee for purposes of the
Trust Indenture Act. The Trust Preferred Securities will have such terms,
including distributions, redemption, voting, liquidation rights and such other
preferred, deferred or other special rights or such restrictions as will be set
forth in the Trust Agreement or made part of the Trust Agreement by the Trust
Indenture Act and which will correspond to the terms of the Subordinated
Debentures held by the Trust and described in the Prospectus Supplement relating
thereto.
The Prospectus Supplement relating to the Trust Preferred Securities of a
trust will include the specific terms of the series of trust preferred
securities being issued, including:
(i) the distinctive designation of the Trust Preferred Securities;
(ii) the number of Trust Preferred Securities issuable by the Trust;
(iii) the annual distribution rate (or method of determining such
rate) for Trust Preferred Securities and the date or dates upon which such
distributions will be payable;
(iv) whether distributions on Trust Preferred Securities will be
cumulative, and, in the case of Trust Preferred Securities having such
cumulative distribution rights, the date or dates or method of
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determining the date or dates from which distributions on Trust Preferred
Securities will be cumulative;
(v) the amount or amounts which will be paid out of the assets of the
Trust to the holders of Trust Preferred Securities upon voluntary or
involuntary dissolution, winding-up or termination of the Trust;
(vi) the obligation, if any, of the Trust to purchase or redeem Trust
Preferred Securities and the price or prices at which, the period or
periods within which, and the terms and conditions upon which Trust
Preferred Securities will be purchased or redeemed, in whole or in part,
pursuant to such obligation;
(vii) the voting rights, if any, of holders of Trust Preferred
Securities in addition to those required by law, including the number of
votes per Trust Preferred Security and any requirement for approval by the
holders of such Trust Preferred Securities, as a condition to specified
action or amendments to the Trust Agreement;
(viii) the terms and conditions, if any, upon which the Subordinated
Debentures owned by the Trust may be distributed to holders of Trust
Preferred Securities;
(ix) if applicable, any securities exchange upon which the Trust
Preferred Securities will be listed; and
(x) any other relevant rights, preferences, privileges, limitations or
restrictions of Trust Preferred Securities not inconsistent with the Trust
Agreement or with applicable law.
We will guarantee distributions on Trust Preferred Securities to the extent
set forth below under "Description of the Trust Guarantee." Certain United
States federal income tax considerations applicable to Trust Preferred
Securities will be described in a Prospectus Supplement relating to the Trust
Preferred Securities.
Each Trust will issue a series of Trust Common Securities in connection
with the issuance of Trust Preferred Securities. Except for voting rights, the
terms of Trust Common Securities will be substantially identical to the terms of
Trust Preferred Securities. Trust Common Securities will rank pari passu with
Trust Preferred Securities except that, upon an event of default under the Trust
Agreement, the rights of holders of Trust Common Securities to payments will be
subordinated to the rights of holders of Trust Preferred Securities. The Trust
Common Securities will also carry the right to vote to appoint, remove or
replace any Trustee of the Trust. We will own all of the Trust Common
Securities.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an Event of Default as defined and provided in a Trust Agreement occurs
and is continuing, then the holders of Trust Preferred Securities of such Trust
would rely on the enforcement by the Property Trustee of such Trust of its
rights as a holder of the applicable series of Subordinated Debentures against
us. In addition, the holders of a majority in aggregate liquidation amount of
Trust Preferred Securities of such Trust will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to such
Property Trustee or to direct the exercise of any trust or power conferred upon
such Property Trustee under such Trust Agreement, including the right to direct
such Property Trustee to exercise the remedies available to it as a holder of
Subordinated Debentures provided that such direction shall not be in conflict
with any rule of law or with such Trust Agreement, and could not involve such
Property Trustee in personal liability in circumstances where reasonable
indemnity would not be adequate. If such Property Trustee fails to enforce its
rights under the Subordinated Debentures held by such Trust, a holder of Trust
Preferred Securities of such Trust may, to the extent permitted by law,
institute a legal proceeding directly against us to enforce such Property
Trustee's rights under such Trust Agreement without first instituting any legal
proceeding against such Property Trustee or any other entity or person,
including such Trust; it being understood and intended that no one or more of
such holders shall have any right in any manner whatsoever by virtue of, or by
availing of, any provision of such Trust Agreement to
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affect, disturb or prejudice the rights of any other of such holders or to
obtain or to seek to obtain priority or preference over any other of such
holders or to enforce any right under such Trust Agreement, except in the manner
herein provided and for the equal and ratable benefit of all such holders.
Notwithstanding the foregoing, a holder of Trust Preferred Securities of such
Trust may institute a proceeding directly against us without first instituting a
legal proceeding against or requesting that action be taken by such Property
Trustee or any other Person for enforcement of payment to such holder of the
principal of or interest on the Subordinated Debentures held by such Trust
having a principal amount equal to the aggregate stated liquidation amount of
such Trust Preferred Securities of such holder (a "Direct Action") on or after
the due dates specified or provided for in such Subordinated Debentures. In
connection with such Direct Action, we will be subrogated to the rights of such
holder of Trust Preferred Securities under the Trust Agreement to the extent of
any payment made by us to such holder of Trust Preferred Securities in such
Direct Action.
DESCRIPTION OF TRUST GUARANTEES
The following is a summary of information concerning the guarantees of the
trust preferred securities of each trust, which we refer to as the Trust
Guarantees. Each Trust Guarantee will be executed by us for the benefit of
holders of Trust Preferred Securities. Each Trust Guarantee will be qualified as
an indenture under the Trust Indenture Act. A Prospectus Supplement with respect
to the Trust Preferred Securities will identify the indenture trustee for
purposes of the Trust Indenture Act (the "Trust Guarantee Trustee").
The following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified by its entirety by reference to,
the form of Trust Guarantee, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Trust Guarantee will be
held by the Property Trustee for the benefit of holders of Trust Preferred
Securities.
GENERAL
To the extent set forth in the Trust Guarantee, we will agree to pay in
full the Guarantee Payments, described below, without duplication of amounts
theretofore paid by or on behalf of the Trust, as and when due regardless of
defense, right of set off or counter-claim which we may have. The following
payments or distributions are referred to herein as the Guarantee Payments and,
with respect to trust preferred securities issued by a trust, to the extent not
paid or made by such trust will be subject to the Trust Guarantee:
(i) any accrued and unpaid distributions on Trust Preferred
Securities, to the extent such Trust has funds legally and immediately
available therefor;
(ii) the redemption price (the "Redemption Price"), to the extent such
Trust has funds legally and immediately available therefor with respect to
Trust Preferred Securities called for redemption; and
(iii) upon voluntary or involuntary termination, dissolution or
winding up of such Trust (other than in connection with the distribution of
Subordinated Debentures to holders of Trust Preferred Securities or the
redemption of all Trust Preferred Securities), the lesser of:
(a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Trust Preferred Securities to the date of
payment, to the extent such Trust has funds legally and immediately
available therefor and
(b) the amount of assets of the Trust remaining available for
distribution to holders of Trust Preferred Securities in liquidation of
the Trust.
The redemption price and liquidation amount will be fixed at the time the
Trust Preferred Securities are issued. Our obligation to make a Guarantee
Payment may be satisfied by direct payment of the
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required amounts by us to the holders of such Trust Preferred Securities or by
causing the Trust to pay such amounts to such holders.
Each Trust Guarantee will not apply to any payment or distribution except
to the extent such Trust has funds legally available therefor. If we do not make
interest payments on the Subordinated Debentures purchased by a Trust, such
Trust will not pay distributions on such Trust Preferred Securities issued by
such Trust and will not have funds legally available therefor. The Trust
Guarantee, when taken together with our obligations under the Subordinated
Debentures, the Subordinated Indenture and the Trust Agreement, including our
obligation to pay costs, expenses, debt, and liabilities of such Trust (other
than with respect to the Trust Securities), will be a full and unconditional
guarantee, on a subordinated basis, by us of payments due on the Trust Preferred
Securities from the time of issuance, but will not apply to the payment of
distributions and other payments on the Trust Preferred Securities when the
Property Trustee does not have sufficient funds in the Property Account of the
Trust to make such distributions or other payments. If we do not make interest
payments on the Subordinated Debentures held by the Property Trustee, the Trust
will not make distributions on the Trust Preferred Securities and will not have
funds available therefor. See "Additional Description of the Subordinated
Debentures to be Issued to Trust -- Certain Covenants."
AMENDMENT OF TRUST GUARANTEE; ASSIGNMENT
Except for changes which do not materially adversely affect the rights of
holders of Trust Preferred Securities, each Trust Guarantee may be amended only
with the approval of not less than 66 2/3% in liquidation amount of Trust
Preferred Securities issued by the applicable Trust. The manner of obtaining any
such approval will be as set forth in Article Six of the applicable Trust
Agreement. The Trust Guarantee will bind the successors, assigns receivers,
trustees and representatives of us and continue to benefit the Trust Guarantee
Trustee and holders of Trust Preferred Securities. Except in connection with a
consolidation, merger, conveyance, transfer or lease involving us, permitted
under Article Eight of the Subordinated Indenture, we may not assign its rights
or delegate our obligations under the Trust Guarantee.
TERMINATION OF THE TRUST GUARANTEE
Each Trust Guarantee will terminate as to the Trust Preferred Securities
issued by the applicable Trust (a) upon full payment of the Redemption Price of
all Trust Preferred Securities of such trust, (b) upon distribution of
Subordinated Debentures held by such Trust to the holders of and in exchange for
Trust Preferred Securities or (c) upon full payment of amounts payable in
accordance with the Trust Agreement upon liquidation of such Trust. See "Status
of the Trust Guarantee" and "Additional Description of Subordinated Debentures
to be Issued to Trust -- Subordinated Indenture Additional Events of Default"
for a description of the events of default and enforcement rights of the holders
of Subordinated Debentures. The Trust Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of Trust
Preferred Securities must repay any sums paid to them under the Trust Preferred
Securities or Trust Guarantee.
EVENTS OF DEFAULT
An event of default under a Trust Guarantee will occur if we fail to make
the payments required by the Trust Guarantee.
The holders of a majority in liquidation amount of Trust Preferred
Securities relating to such Trust Guarantee have the right to direct the time,
method and place of conducting any proceeding for any remedy available to such
Trust Guarantee Trustee or to direct the exercise of any trust or power
conferred upon such Trust Guarantee Trustee under the Trust Guarantee. If the
Trust Guarantee Trustee fails to enforce such Trust Guarantee, any holder of
record of Trust Preferred Securities relating to such Trust Preferred Guarantee
may institute a legal proceeding directly against us to enforce the Trust
Guarantee Trustee's rights, without first instituting any other legal
proceeding.
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STATUS OF TRUST GUARANTEE
The Trust Guarantee will constitute our unsecured obligation and will rank:
(i) subordinate and junior in right of payment to all of our other
liabilities, including the Subordinated Debentures, except those made pari
passu or subordinate by their terms,
(ii) pari passu with the most senior preferred or preference stock
which may now or hereafter be issued or guaranteed by us; and
(iii) senior to our Common Stock.
The terms of the Trust Preferred Securities provide that each holder of
Trust Preferred Securities issued by such trust, by acceptance thereof, agrees
to the subordination provisions and other terms of the Trust Guarantee relating
thereto. Each Trust Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the guarantor to enforce its rights under such Trust Guarantee without
instituting a legal proceeding against any other person or entity). Each Trust
Guarantee will be deposited with the applicable Guarantee Trustee to be held for
the benefit of the holders of such Trust Preferred Securities. Except as
otherwise noted herein, the Guarantee Trustee has the right to enforce the Trust
Guarantee on behalf of the holders of the related Trust Preferred Securities.
Except as described under "Termination of the Trust Guarantee" above, the Trust
Guarantee will not be discharged except by payment of the Guarantee Payments in
full (without duplication of amounts theretofore paid by the Trust).
INFORMATION CONCERNING TRUST GUARANTEE TRUSTEE
The Trust Guarantee Trustee, prior to the occurrence of a default with
respect to the Trust Guarantee and after the curing of all such defaults that
may have occurred, undertakes to perform only such duties as are specifically
set forth in the Trust Guarantee and, during the continuance of any default,
will exercise the same degree of care as a prudent individual would exercise in
the conduct of such individual's own affairs. Subject to such provisions, the
Trust Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Guarantee at the request of any holder of Trust
Preferred Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby; but the foregoing
shall not relieve the Trust Guarantee Trustee, upon the occurrence of an Event
of Default under such Trust Guarantee, from exercising the rights and powers
vested in it by such Trust Guarantee. The Trust Guarantee Trustee also serves as
Property Trustee. We and our officers and directors have no material
relationship with the initial Trust Guarantee Trustee other than normal banking
relationships.
GOVERNING LAW
The Trust Guarantee will be governed by the laws of the State of New York.
THE AGREEMENT AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by us under the Trust Agreement, we will irrevocably and unconditionally
guarantee to each person or entity to whom the Trust becomes indebted or liable
the full payment of any indebtedness, expenses or liabilities of the Trust other
than obligations of the Trust to pay to the holders of the related Trust
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of such Trust Securities or such other similar interests,
as the case may be.
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ADDITIONAL DESCRIPTION OF SUBORDINATED DEBENTURES
TO BE ISSUED TO TRUST
Set forth below is a description of the terms of the Subordinated
Debentures which each Trust will hold as trust assets. The general provisions of
the Subordinated Debentures are set forth under "Description of Debt Securities"
above. The following description does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the Subordinated Indenture
(as defined in "Description of Debt Securities" above), as supplemented by the
Supplemental Indenture creating the Subordinated Debentures. The Subordinated
Indenture and the form of Supplemental Indenture are filed as exhibits to the
Registration Statement of which this Prospectus forms a part. The terms of the
Subordinated Debentures will include those stated in the Subordinated Indenture
and the related Supplemental Indenture and those made a part of the Subordinated
Indenture by reference to the Trust Indenture Act.
Upon a dissolution of a Trust, Subordinated Debentures held by such Trust
may be distributed to the holders of Trust Securities in liquidation of such
Trust.
If any Subordinated Debentures are distributed to holders of Trust
Preferred Securities, we will use our best efforts to have such Subordinated
Debentures traded on the same stock exchange as the related Trust Preferred
Securities are traded.
GENERAL
Subordinated Debentures will be issued in a principal amount equal to the
aggregate stated Liquidation Amount of Trust Preferred Securities plus our
investment in Trust Common Securities.
The entire principal amount of the Subordinated Debentures held by each
Trust will mature and become due and payable, together with any accrued and
unpaid interest thereon, including Additional Interest (as defined herein), if
any, on the date set forth in the applicable Prospectus Supplement.
The covenants contained in the Subordinated Debenture Indenture would not
necessarily afford protection to holders of the Subordinated Debentures in the
event of a decline in our credit quality resulting from takeovers,
recapitalizations or similar restructurings.
If Subordinated Debentures held by a Trust are distributed to holders of
Trust Preferred Securities of such Trust in liquidation of such holders'
interests in such Trust, such Subordinated Debentures will initially be issued
as a Global Security. Under certain limited circumstances, Subordinated
Debentures may be issued in certificated form in exchange for a Global Security.
In the event Subordinated Debentures are issued in certificated form, such
Subordinated Debentures will be in denominations as specified in the applicable
Prospectus Supplement and integral multiples thereof and may be transferred or
exchanged at the offices described therein. Payments on Subordinated Debentures
issued as a Global Security will be made to the Depositary for the Subordinated
Debentures. In the event Subordinated Debentures are issued in certificated
form, principal and interest will be payable, the transfer of the Subordinated
Debentures will be registrable and Subordinated Debentures will be exchangeable
for Subordinated Debentures of other denominations of a like aggregate principal
amount at the corporate trust office of the Debt Trustee in New York, New York;
provided, that payment of interest may be made at our option by check mailed to
the address of the persons entitled thereto.
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event we are involved in a highly
leveraged transaction.
CERTAIN COVENANTS
If (i) there has occurred any event that would constitute an Indenture
Event of Default or (ii) we are in default with respect to our payment of any
obligations under the Trust Guarantee, then (a) we may not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase or make
a liquidation payment with respect to, any of our capital stock (other than (i)
purchases or acquisitions of
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shares of our common stock in connection with the satisfaction by us of our
obligations under any employee benefit plans or any other contractual obligation
of ours (other than a contractual obligation ranking pari passu with or junior
to the Subordinated Debentures), (ii) as a result of a reclassification of our
capital stock or the exchange or conversion of one class or series of our
capital stock for another class or series of our capital stock, or (iii) the
purchase of fractional interests in shares of our capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), (b) we may not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by us which rank pari passu with or junior to the
Subordinated Debentures, and (c) we may not make any guarantee payments with
respect to the foregoing (other than pursuant to the Trust Guarantee).
We will covenant, as long as Trust Preferred Securities of a Trust remain
outstanding, (i) to maintain 100% ownership of Trust Common Securities of such
Trust, (ii) to not cause such Trust to terminate, except in connection with a
distribution of Subordinated Debentures and (iii) to use its reasonable efforts
to cause such Trust (a) to remain a statutory business trust, except in
connection with the distribution of Subordinated Debentures held by such Trust
to the holders of Trust Securities in liquidation of such Trust, the redemption
of all Trust Securities, or certain mergers, consolidations or amalgamations,
each as permitted by the Trust Agreement, and (b) to otherwise continue to be
classified as a grantor trust for United States federal income tax purposes.
OPTIONAL REDEMPTION
We will have the right to redeem the Subordinated Debentures, in whole or
in part, from time to time, without premium or penalty, on or after the date set
forth in the applicable Prospectus Supplement, upon not less than thirty (30) or
more than sixty (60) days' notice, at a redemption price equal to a percentage
of the principal amount to be redeemed plus any accrued and unpaid interest,
including Additional Interest (as defined herein), if any, to the Redemption
Date, as specified in the applicable Prospectus Supplement. If a partial
redemption of the Trust Preferred Securities resulting from a partial redemption
of the Subordinated Debentures held by a trust would result in the delisting of
the Trust Preferred Securities of such Trust, we may only redeem such
Subordinated Debentures held by such trust in whole. In addition, upon the
occurrence of a Special Event, we may, upon not less than thirty (30) or more
than (60) days notice, within ninety (90) days following the occurrence thereof
and subject to the terms and conditions of the Subordinated Indenture, redeem
such Subordinated Debentures, in whole, at a price equal to 100% of the
principal amount to be redeemed plus any accrued but unpaid interest (including
Additional Interest, if any) to the Redemption Date. In the event of redemption
of such Subordinated Debentures in part only, new Subordinated Debentures for
the unredeemed portion shall be issued in the name or names of the holders
thereof upon the surrender thereof.
INTEREST
Each Subordinated Debenture will bear interest at the rate set forth in the
applicable Prospectus Supplement from the original date of issuance, payable
quarterly in arrears on dates which will be specified in the Prospectus
Supplement (each, an "Interest Payment Date"), to the person in whose name such
Subordinated Debenture is registered, subject to certain exceptions, on the
record date specified in the applicable Prospectus Supplement.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
Except to the extent set forth in the applicable Prospectus Supplement, we
will have the right at any time to defer payments of interest on Subordinated
Debentures by extending the interest payment period for up to 20 consecutive
quarters. At the end of such an Extension Period, we will pay all interest then
accrued and unpaid (including any Additional Interest, together with interest
thereon at the rate specified and to the extent permitted by applicable law). We
covenant in the Supplemental Indenture for the benefit of the holders of a
series of Subordinated Debentures, that, subject to the next succeeding
sentence, (a) we shall not declare or pay any dividend on, or make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of our capital stock, and (b) we shall
not make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees other than the
Trust Guarantee) issued by us which rank pari passu with or junior to said
series of Subordinated Debentures (i) if at such time we shall have given notice
of our election to extend an interest payment period for a series of
Subordinated Debentures and such extension shall be continuing or (ii) if at
such time an Event of Default with respect to a series of Subordinated
Debentures shall have occurred and be continuing. The preceding sentence,
however, shall not restrict (A) any of the actions described in the preceding
sentence resulting from any reclassification of our capital stock or the
exchange or conversion of one class or series of our capital stock for another
class or series of our capital stock, (B) repurchases, redemptions or other
acquisitions of shares of our capital stock in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
employees, officers or directors or a stock purchase and dividend reinvestment
plan, and (C) dividends or distributions in our capital stock, or (D) the
purchase of fractional interests in shares of our capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged.
Prior to the termination of any such Extension Period for a series of
Subordinated Debentures, we may further defer payments of interest on such
Subordinated Debentures, by extending the interest payment period, provided that
such Extension Period together with all such previous and further extensions
thereof for such series of Subordinated Debentures may not exceed 20 consecutive
quarters or extend beyond the maturity of such series of Subordinated
Debentures.
Upon the termination of any Extension Period for a series of Subordinated
Debentures, and the payment of all accrued and unpaid interest on the
Subordinated Debentures then due, we may select a new Extension Period for such
series of Subordinated Debentures, as if no Extension Period had previously been
declared, subject to the above requirements. No interest on a series of
Subordinated Debentures during an Extension Period, except at the end thereof,
will be due and payable on such series of Subordinated Debentures.
If the Property Trustee is the sole holder of the Subordinated Debentures,
we will give the Regular Trustees and the Property Trustee notice of our
selection of such Extension Period for such series of Subordinated Debentures
one Business Day prior to the earlier of (i) the next succeeding date on which
distributions on the related Trust Preferred Securities are payable or (ii) the
date a Trust is required to give notice to the NASDAQ or other applicable
self-regulatory organization or to holders of such Trust Preferred Securities on
the record date or the date such distribution is payable, but in any event not
less than one Business Day prior to such record date. The Regular Trustees shall
give notice of our selection of such Extension Period to the holders of such
Trust Preferred Securities. If the Property Trustee is not the sole holder of a
series of Subordinated Debentures, we will give the holders of such Subordinated
Debentures notice of our selection of such Extension Period ten Business Days
prior to the earlier of (i) the Interest Payment Date or (ii) the date we are
required to give notice to the NASDAQ or other applicable self-regulatory
organization or to holders of such Subordinated Debentures, but in any event at
least two Business Days before such record date.
We have no present intention to defer interest payments.
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ADDITIONAL INTEREST
If a Trust is required to pay any taxes, duties, assessments or other
governmental charges (other than withholding taxes) imposed by the United
States, or any other taxing authority, we will pay as additional interest
("Additional Interest") such additional amounts as shall be required so that the
net amounts received and retained by a Trust after paying any such charges will
be equal to the amount such Trust would have received had no such charge been
imposed.
SUBORDINATED INDENTURE ADDITIONAL EVENTS OF DEFAULT
In addition to the Events of Default described under "Description of Debt
Securities -- Events of Default," the following will be an additional Event of
Default:
(a) the voluntary or involuntary dissolution, winding up or
termination of a Trust except in connection with
(i) the distribution of Subordinated Debentures to holders of Trust
Securities in liquidation of a Trust,
(ii) the redemption of all outstanding Trust Securities of such
Trust, or
(iii) certain mergers or consolidations permitted by the Trust
Agreement.
The holders of not less than a majority in aggregate principal amount of
Subordinated Debentures may waive any past default, except (i) a default in
payment of principal, premium, interest or Additional Interest (unless such
default has been cured and a sum sufficient to pay all installments due
otherwise than by acceleration has been deposited with the Subordinated
Debenture Trustee) or (ii) a default in a covenant or provision which under
Article Nine of the Subordinated Indenture may not be modified or amended
without the consent or each holder of a Subordinate Debenture. The holders of
Trust Preferred Securities in certain circumstances have the right to direct the
Property Trustee to exercise its rights as holder of Subordinated Debentures.
PAYMENT AND PAYING AGENTS
Payment of principal and premium (if any) on Subordinated Debentures will
be made only if the holder of Subordinated Debentures surrenders them to the
Paying Agent of the Subordinated Debentures.
Principal of and any premium and interest, if any, on Subordinated
Debentures will be payable, subject to any applicable laws and regulations, at
the office of such Paying Agent or Paying Agents as we may designate from time
to time pursuant to the Subordinated Debenture Indenture. Payment of interest on
the Subordinated Debentures on any Interest Payment Date will be made to the
person in whose name the Subordinated Debenture (or predecessor security) is
registered at the close of business on the Regular Record Date for such interest
payment.
The Subordinated Indenture Trustee will act as Paying Agent with respect to
the Subordinated Debentures. We may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent or approve a change in the
office through which any Paying Agent acts, except that we will be required to
maintain a Paying Agent at the place of payment.
CONSOLIDATION, MERGER AND SALE
The Subordinated Indenture provides that we will be permitted to
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into, any other entity provided that (a) either we
shall be the continuing entity, or the successor entity (if other than us)
formed by or resulting from any such consolidation or merger or which shall have
received the transfer of such assets shall expressly assume our obligations
under the Trust Guarantee and the payment of the principal of (and premium, if
any) and interest on all of the Subordinated Debentures and the due and punctual
performance and observance of all of the covenants and conditions contained in
the Subordinated
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Indenture; (b) immediately after giving effect to such transaction and treating
any indebtedness that becomes an obligation ours or any Subsidiary as a result
thereof as having been incurred by us or such Subsidiary at the time of such
transaction, no Event of Default under the Subordinated Indenture or the Trust
Guarantee, and no event which, after notice or the lapse of time, or both, would
become such an Event of Default, shall have occurred and be continuing; and (c)
an officer's certificate and legal opinion covering such conditions shall be
delivered to the Indenture Trustee (Sections 801 and 803 of the Subordinated
Indenture).
INFORMATION CONCERNING SUBORDINATED DEBENTURE TRUSTEE
The Subordinated Indenture Trustee, prior to default and after the curing
of all defaults, if any, undertakes to perform only such duties as are
specifically set forth in the Subordinated Indenture and, after a default (that
has not been cured or waived), will exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the Subordinated Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Subordinated
Indenture at the request of any holder of Subordinated Indentures, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby; but the foregoing will not relieve
the Subordinated Indenture Trustee, upon the occurrence of an Indenture Event of
Default, from exercising the rights and powers vested in it by the Subordinated
Indenture. The Subordinated Indenture Trustee is not required to expend or risk
its own funds or otherwise incur personal financial liability in the performance
of its duties if the Subordinated Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
MISCELLANEOUS
We will have the right at all times to assign any of our rights or
obligations under the Subordinated Indenture to a direct or indirect
wholly-owned subsidiary of ours; provided that, in the event of any such
assignment, we will remain liable for all of such obligations. Subject to the
foregoing, the Subordinated Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and assigns. The
Subordinated Indenture provides that it may not otherwise be assigned by the
parties thereto.
EFFECT OF OBLIGATIONS UNDER SUBORDINATED DEBENTURES
AND TRUST PREFERRED SECURITIES GUARANTEE
As long as payments are made when due on Subordinated Debentures, the Trust
will have sufficient funds to be able to make all appropriate payments on Trust
Securities. This is primarily because (i) the aggregate principal amount of the
Subordinated Debentures will be equal to the sum of the aggregate stated
liquidation amount of such Trust Securities; (ii) the interest rate and interest
and other payment dates on the Subordinated Debentures will match the
distribution rate and distribution and other payment dates for the Trust
Securities; (iii) we will pay for all costs and expenses of each Trust; and (iv)
the Trust Agreement provides that the Trustees may not cause or permit the Trust
to, among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions and other payments due on the Trust Preferred
Securities (to the extent funds are available therefor) are guaranteed by us to
the extent set forth under "Description of the Trust Guarantee." If we do not
make interest payments on Subordinated Debentures, it is expected that the Trust
will not have sufficient funds to pay distributions on its Trust Preferred
Securities. The Trust Guarantee is a full and unconditional guarantee, but does
not apply to any payment unless the Trust has sufficient funds for such payment.
If we fail to make payments on Subordinated Debentures when due (taking
into account any Extension Period), the Trust Agreement will provide a mechanism
whereby holders of Trust Preferred Securities may direct the Property Trustee to
enforce its rights, including proceeding directly against us. If the Property
Trustee fails to enforce its rights, a holder of Trust Preferred Securities may
sue us directly to
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enforce those rights, without first instituting legal proceedings against the
Trust, the Property Trustee or any other person or entity.
If we fail to make payments under the Trust Guarantee, the Trust Guarantee
provides a mechanism whereby the holders of Trust Preferred Securities may
direct the Trust Guarantee Trustee to enforce its rights. If the Trust Guarantee
Trustee fails to enforce its rights, any holder of Trust Preferred Securities
may institute a legal proceeding against us directly to enforce those rights
without first instituting legal proceedings against the Trust, the Trust
Guarantee Trustee or any other person or entity.
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by the Company under the Trust Agreement, we will irrevocably and
unconditionally guarantee to each person or entity to whom the Trust becomes
indebted or liable the full payment of any indebtedness, expenses or liabilities
of the Trust other than obligations of the Trust to pay to the holders of the
related Trust Securities or other similar interests in the Trust the amounts due
such holders pursuant to the terms of such Trust Securities or such other
similar interests, as the case may be.
The above mechanisms and obligations, taken together, are equivalent to a
full and unconditional guarantee by us of payments due on Trust Preferred
Securities to the extent of funds available to the Trust.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and us to sell to the holders, a specified number
of shares of common stock at a future date or dates, which we refer to herein as
"stock purchase contract." The consideration per share of common stock may be
fixed at the time stock purchase contracts are issued or may be determined by
reference to a specific formula set forth in the stock purchase contracts. The
stock purchase contracts may be issued separately, or as part of units
consisting of a stock purchase contract and debt securities, trust preferred
securities or debt obligations of third parties, including U.S. treasury
securities, securing the holders' obligations to purchase the common stock under
the stock purchase contracts, which we refer to herein as "stock purchase
units." The stock purchase contracts may require us to make periodic payments to
the holders of the stock purchase units or vice versa, and such payments may be
unsecured or prefunded on some basis. The stock purchase contracts may require
holders to secure their obligations thereunder in a specified manner.
The applicable prospectus supplement will describe the terms of any stock
purchase contracts or stock purchase units. The description in the prospectus
supplement will not necessarily be complete, and reference will be made to the
stock purchase contract, and, if applicable, collateral or depositary
arrangements, relating to such stock purchase contracts or stock purchase units.
Material United States federal income tax considerations applicable to the stock
purchase units and the stock purchase contracts will be discussed in the
prospectus supplement relating thereto.
PLAN OF DISTRIBUTION
We and the trusts may sell securities in any of three ways: (1) through
underwriters or dealers; (2) directly to a limited number of institutional
purchasers or to a single purchaser; or (3) through agents. Any such dealer or
agent, in addition to any underwriter, may be deemed to be an underwriter within
the meaning of the Securities Act of 1933, as amended. The terms of the offering
of the securities with respect to which this prospectus is being delivered will
be set forth in the applicable prospectus supplement and will include:
- the name or names of any underwriters, dealers or agents;
- the purchase price of such securities and the proceeds to us from such
sale;
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- any underwriting discounts and other items constituting underwriters'
compensation;
- the public offering price; and
- any discounts or concessions which may be allowed or reallowed or paid to
dealers and any securities exchanges on which the securities may be
listed.
If underwriters are used in the sale of securities, such securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
underwriters acting alone. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to purchase the
securities described in the applicable prospectus supplement will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all such securities if any are so purchased by them. Any public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
The securities may be sold directly by us or the applicable trust or
through agents designated by us or the applicable trust from time to time. Any
agents involved in the offer or sale of the securities in respect of which this
prospectus is being delivered, and any commissions payable by us or the
applicable trust to such agents, will be set forth in the applicable prospectus
supplement. Unless otherwise indicated in the applicable prospectus supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment.
If dealers are utilized in the sale of any securities, we or the applicable
trust will sell the securities to the dealers, as principals. Any dealer may
resell the securities to the public at varying prices to be determined by the
dealer at the time of resale. The name of any dealer and the terms of the
transaction will be set forth in the prospectus supplement with respect to the
securities being offered.
Securities may also be offered and sold, if so indicated in the applicable
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms, which we refer to herein as the "remarketing firms,"
acting as principals for their own accounts or as our or a trust's agents, as
applicable. Any remarketing firm will be identified and the terms of its
agreement, if any, with us or the applicable trust and its compensation will be
described in the applicable prospectus supplement. Remarketing firms may be
deemed to be underwriters, as that term is defined in the Securities Act of
1933, as amended, in connection with the securities remarketed thereby.
If so indicated in the applicable prospectus supplement, we or the
applicable trust will authorize agents, underwriters or dealers to solicit
offers by certain specified institutions to purchase the securities to which
this prospectus and the applicable prospectus supplement relates from us or the
applicable trust at the public offering price set forth in the applicable
prospectus supplement, plus, if applicable, accrued interest, pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date in the future. Such contracts will be subject only to those conditions set
forth in the applicable prospectus supplement, and the applicable prospectus
supplement will set forth the commission payable for solicitation of such
contracts.
Underwriters will not be obligated to make a market in any securities. No
assurance can be given regarding the activity of trading in, or liquidity of,
any securities.
Agents, dealers, underwriters and remarketing firms may be entitled, under
agreements entered into with us or the applicable trust (or both), to
indemnification by us or the applicable trust (or both) against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribution to payments they may be required to make in respect thereof.
Agents, dealers, underwriters and remarketing firms may be customers of, engage
in transactions with, or perform services for, us and/or the applicable trust in
the ordinary course of business
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Each series of securities will be a new issue and, other than the common
stock, which is listed on NASDAQ, will have no established trading market. We
may elect to list any series of securities on an exchange, and in the case of
the common stock, on any additional exchange, but, unless otherwise specified in
the applicable prospectus supplement, we shall not be obligated to do so. No
assurance can be given as to the liquidity of the trading market for any of the
securities.
Agents, underwriters, dealers and remarketing firms may be customers of,
engage in transactions with, or perform services for, us and our subsidiaries in
the ordinary course of business.
LEGAL MATTERS
The validity of the securities offered here and certain related matters
will be passed upon for us, and certain United Stated federal income taxation
matters will be passed upon for us and the Trusts by Dickinson Wright PLLC,
Detroit, Michigan. Certain matters of Delaware law relating to the validity of
the Trust Preferred Securities will be passed upon on behalf of the Trusts by
Richards, Layton & Finger, P.A., Wilmington, Delaware. Certain legal matters
will be passed upon for the Underwriters by Dewey Ballantine LLP, New York, New
York.
EXPERTS
The consolidated financial statements of SEMCO Energy, Inc. as of December
31, 1998 and 1997, and for the three years ended December 31, 1998, incorporated
by reference in this prospectus have been audited by Arthur Andersen LLP,
independent public accountants, and the pro forma statement of income for the
year ended December 31, 1998, incorporated by reference in this prospectus has
been examined by Arthur Andersen LLP, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of ENSTAR Natural Gas Company as of
December 31, 1998 and 1997, and for the three years ended December 31, 1998,
have been incorporated by reference in this prospectus in reliance upon the
report of KPMG LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
Our future Financial Statements and the reports thereon of Arthur Andersen
LLP also will be incorporated by reference in this prospectus in reliance upon
the authority of that firm as experts in giving those reports to the extent that
said firm has audited said Financial Statements and consented to the use of
their reports thereon.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the estimated amounts of expenses, other
than underwriting discounts and commissions, to be borne by the Company in
connection with the distribution of the securities offered hereby:
Securities and Exchange Commission Registration Fee......... $ 132,000
Printing Expenses........................................... 420,000
Accounting Fees and Expenses................................ 120,000
Legal Fees and Expenses..................................... 750,000
Trustee Fees and Expense.................................... 100,000
Miscellaneous Expenses...................................... 300,000
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Total Estimated Expenses.......................... $1,822,000
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ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Bylaws of the Company provide that directors and officers, former
directors and officers, their heirs, executors and administrators of the Company
are entitled to indemnification to the extent and under the circumstances
permitted by the Michigan Business Corporation Act ("MBCA") including, where
permitted and upon satisfaction of any undertaking required, advance of
expenses.
Through reference to the MBCA, the Company's Bylaws contain indemnification
provisions concerning third party actions as well as actions in the right of the
Company. The Bylaws, through reference to the MBCA, provide that the Company
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Company) by reason of the fact that he or she is or
was a director or officer of the Company, or is or was serving at the request of
the Company as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, whether for profit or not, against expenses (including
attorneys' fees), judgments, penalties, fees and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the Company
or its shareholders, and with respect to any criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful.
With respect to derivative actions, the Bylaws, through the reference to
the MBCA, provide that the Company shall indemnify any person who was or is a
party to or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that he or she is or was a director or
officer of the Company, or is or was serving at the request of the Company as a
director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection with the defense or settlement of such judgment or suit
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Company or its shareholders
and except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person has been found liable to the Company unless
and only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all relevant circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses, but such indemnification is
limited to reasonable expenses incurred.
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The MBCA provides for corporate power to purchase and maintain insurance on
behalf of directors and officers (including persons acting as a director,
officer, employee or agent of another business entity on behalf of the
corporation) against any liability due to such status, whether or not the
corporation would have power to indemnify such person against such liability.
The Company provides such insurance.
The Company's Articles of Incorporation provide that a director of the
Company shall not be personally liable to the Company or its shareholders for
monetary damages for breach of the director's fiduciary duty. However, it does
not eliminate or limit the liability of a director for any breach of a duty, act
or omission for which the elimination or limitation of liability is not
permitted by the MBCA, currently including, without limitation, the following:
(1) the amount of a financial benefit received by a director to which he or she
is not entitled; (2) intentional infliction of harm on the Company or its
shareholders; (3) illegal loans, distributions of dividends or assets, or stock
purchases as described in Section 551(1) of MBCA; and (4) an intentional
criminal act committed by the director.
The Trust Agreement provides that the Company shall indemnify the Trustees
against loss, damage, claim, liability or expense incurred without negligence,
willful misconduct or bad faith on their part, arising out of or in connection
with the acceptance or administration of the Trust Agreement, including the
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their power or duties
hereunder.
ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION OF DOCUMENT
- ----------- -----------------------
*1.1 -- Form of Underwriting Agreement relating to Debt Securities
*1.2 -- Form of Underwriting Agreement relating to Equity Securities
*1.3 -- Form of Underwriting Agreement relating to Trust Preferred
Securities
3.1 -- Restated Articles of Incorporation of SEMCO Energy(a)
3.2 -- Bylaws of SEMCO Energy(b)
4.1 -- Indenture for Senior Debt Securities(c)
4.2 -- Form of Senior Debt Security (included in Exhibit 4.1 above)
4.3 -- Form of Indenture for Subordinated Debt Securities
4.4 -- Form of Subordinated Debt Securities (included in Exhibit
4.3 above)
4.5 -- Certificate of Trust for SEMCO Capital Trust I
4.6 -- Certificate of Trust for SEMCO Capital Trust II
4.7 -- Certificate of Trust for SEMCO Capital Trust III
4.8 -- Trust Agreement for SEMCO Capital Trust I
4.9 -- Trust Agreement for SEMCO Capital Trust II
4.10 -- Trust Agreement for SEMCO Capital Trust III
4.11 -- Form of amended and restated Trust Agreement of SEMCO
Capital Trust I
4.12 -- Form of amended and restated Trust Agreement of SEMCO
Capital Trust II
4.13 -- Form of amended and restated Trust Agreement of SEMCO
Capital Trust III
4.14 -- Form of Trust Preferred Security (included in Exhibits 4.11,
4.12 and 4.13 above)
4.15 -- Form of Trust Guarantee Agreement for SEMCO Capital Trust I
4.16 -- Form of Trust Guarantee Agreement for SEMCO Capital Trust II
4.17 -- Form of Trust Guarantee Agreement for SEMCO Capital Trust
III
4.18 -- Specimen of Common Stock Certificate(d)
*4.19 -- Specimen of Preferred Stock Certificate
*4.20 -- Form of Stock Purchase Agreement
*4.21 -- Form of Stock Purchase Unit
4.22 -- Shareholder's Rights Agreement dated as of April 16, 1997(e)
5.1 -- Opinion of Dickinson Wright PLLC
5.2 -- Opinion of Richards, Layton & Finger, P.A. relating to SEMCO
Capital Trust I, SEMCO Capital Trust II, and SEMCO Capital
Trust III
12 -- Statement relating to computation of ratios
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EXHIBIT NO. DESCRIPTION OF DOCUMENT
- ----------- -----------------------
23.1 -- Consent of Dickinson Wright PLLC (included in Exhibit 5.1
above)
23.3 -- Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2 above)
23.4 -- Consent of Arthur Andersen LLP
23.5 -- Consent of KPMG LLP
24 -- Power of Attorney
25.1 -- Statement of Eligibility on Form T-1 Debt Securities
25.2 -- Statement of Eligibility on Form T-1 Guarantee of Preferred
Securities of SEMCO Capital Trust I
25.3 -- Statement of Eligibility on Form T-1 Guarantee of Preferred
Securities of SEMCO Capital Trust II
25.4 -- Statement of Eligibility on Form T-1 Guarantee of Preferred
Securities of SEMCO Capital Trust III
25.5 -- Statement of Eligibility on Form T-1 Preferred Securities of
SEMCO Capital Trust I
25.6 -- Statement of Eligibility on Form T-1 Preferred Securities of
SEMCO Capital Trust II
25.7 -- Statement of Eligibility on Form T-1 Preferred Securities of
SEMCO Capital Trust III
*27 -- Financial Data Schedule
- ---------------
* To be filed as an exhibit to a Current Report on Form 8-K and incorporated
into this Registration Statement by reference.
(a) Articles of Incorporation as restated June 25, 1999, filed with form 10-Q
for the quarter ended June 30, 1999, File No. 0-8503 and incorporated
herein by reference with the same effect as if filed with this Registration
Statement.
(b) Filed with Form 10-Q for the quarter ended September 30, 1999, File No.
0-8503, and incorporated herein by reference with the same effect as if
filed with this Registration Statement.
(c) Filed with SEMCO's Registration Statement on Form S-3, Exhibit 4.3,
registration number 333-58715.
(d) Filed with SEMCO's Registration Statement on Form S-3, Exhibit 4.13,
Registration Number 333-58715.
(e) Filed March 6, 1997 as part of 1997 Proxy Statement, dated March 7, 1997,
File No. O-8503, and incorporated herein by reference with the same effect
as if filed with this Registration Statement.
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ITEM 17. UNDERTAKINGS.
Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed with
or furnished to the Securities and Exchange Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 and incorporated by reference in this Registration Statement;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed with
or furnished to the Securities and Exchange Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 and incorporated by reference in this Registration Statement;
provided, however that any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of SEMCO Energy's Form 10-K pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) To provide to the underwriter (if any), at the closing of the sale of
Trust Preferred Securities, certificates representing Trust Preferred Securities
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(6) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
each Registrant pursuant to any charter provision, bylaw, contract, arrangement,
statute, or otherwise, each Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by a Registrant of expenses incurred or paid by a director, officer, or
controlling person of a Registrant in the successful defense of any such action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the affected Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent,
II-4
46
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(7) That, for the purposes of determining any liability under the
Securities Act of 1933:
(i) The information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(ii) Each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
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47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, SEMCO Energy,
Inc. certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this registration
statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Port Huron and State of Michigan, on
the 30th day of November, 1999.
SEMCO ENERGY, INC.
By: /s/ WILLIAM L. JOHNSON
----------------------------------
William L. Johnson
Chairman and C.E.O.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed below by the
following persons in the capacities indicated on November 30, 1999.
SIGNATURE TITLE
--------- -----
/s/ WILLIAM L. JOHNSON Chairman and CEO (Director and Principal
- ----------------------------------------------------- Executive Officer)
William L. Johnson
/s/ SEBASTIAN COPPOLA Senior Vice President (Principal Financial and
- ----------------------------------------------------- Accounting Officer)
Sebastian Coppola
/s/ DANIEL A. BURKHARDT* Director
- -----------------------------------------------------
Daniel A. Burkhardt
/s/ EDWARD J. CURTIS* Director
- -----------------------------------------------------
Edward J. Curtis
/s/ JOHN T. FERRIS* Director
- -----------------------------------------------------
John T. Ferris
/s/ MICHAEL O. FRAZER* Director
- -----------------------------------------------------
Michael O. Frazer
/s/ HARVEY I. KLEIN* Director
- -----------------------------------------------------
Harvey I. Klein
/s/ MARCUS JACKSON* Director
- -----------------------------------------------------
Marcus Jackson
/s/ FREDERICK S. MOORE* Director
- -----------------------------------------------------
Frederick S. Moore
/s/ EDITH A. STOTLER* Director
- -----------------------------------------------------
Edith A. Stotler
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48
SIGNATURE TITLE
--------- -----
/s/ DONALD W. THOMASON* Director
- -----------------------------------------------------
Donald W. Thomason
*By: /s/ WILLIAM L. JOHNSON
------------------------------------------------
William L. Johnson, Attorney-in-fact
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49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the SEMCO
Capital Trust I has duly caused this registration statement or amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Port Huron and State of Michigan, on the 30th day of November, 1999.
SEMCO CAPITAL TRUST I
By: SEMCO Energy, Inc., as Depositor
By: /s/ WILLIAM L. JOHNSON
--------------------------------------
William L. Johnson
Chairman and C.E.O.
By: /s/ SEBASTIAN COPPOLA
--------------------------------------
Sebastian Coppola
Senior Vice President and Chief
Financial Officer
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the SEMCO
Capital Trust II has duly caused this registration statement or amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Port Huron and State of Michigan, on the 30th day of November, 1999.
SEMCO CAPITAL TRUST II
By: SEMCO Energy, Inc., as Depositor
By: /s/ WILLIAM L. JOHNSON
--------------------------------------
William L. Johnson
Chairman and C.E.O.
By: /s/ SEBASTIAN COPPOLA
--------------------------------------
Sebastian Coppola
Senior Vice President and Chief
Financial Officer
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51
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the SEMCO
Capital Trust III has duly caused this registration statement or amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Port Huron and State of Michigan, on the 30th day of November, 1999.
SEMCO CAPITAL TRUST III
By SEMCO Energy, Inc., as Depositor
By: /s/ WILLIAM L. JOHNSON
----------------------------------
William L. Johnson
Chairman and C.E.O.
By: /s/ SEBASTIAN COPPOLA
----------------------------------
Sebastian Coppola
Senior Vice President and Chief
Financial Officer
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52
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF DOCUMENT
- ----------- -----------------------
*1.1 -- Form of Underwriting Agreement relating to Debt Securities
*1.2 -- Form of Underwriting Agreement relating to Equity Securities
*1.3 -- Form of Underwriting Agreement relating to Trust Preferred
Securities
3.1 -- Restated Articles of Incorporation of SEMCO Energy(a)
3.2 -- Bylaws of SEMCO Energy(b)
4.1 -- Indenture for Senior Debt Securities(c)
4.2 -- Form of Senior Debt Security (included in Exhibit 4.1 above)
4.3 -- Form of Indenture for Subordinated Debt Securities
4.4 -- Form of Subordinated Debt Securities (included in Exhibit
4.3 above)
4.5 -- Certificate of Trust for SEMCO Capital Trust I
4.6 -- Certificate of Trust for SEMCO Capital Trust II
4.7 -- Certificate of Trust for SEMCO Capital Trust III
4.8 -- Trust Agreement for SEMCO Capital Trust I
4.9 -- Trust Agreement for SEMCO Capital Trust II
4.10 -- Trust Agreement for SEMCO Capital Trust III
4.11 -- Form of amended and restated Trust Agreement of SEMCO
Capital Trust I
4.12 -- Form of amended and restated Trust Agreement of SEMCO
Capital Trust II
4.13 -- Form of amended and restated Trust Agreement of SEMCO
Capital Trust III
4.14 -- Form of Trust Preferred Security (included in Exhibits 4.11,
4.12 and 4.13 above)
4.15 -- Form of Trust Guarantee Agreement for SEMCO Capital Trust I
4.16 -- Form of Trust Guarantee Agreement for SEMCO Capital Trust II
4.17 -- Form of Trust Guarantee Agreement for SEMCO Capital Trust
III
4.18 -- Specimen of Common Stock Certificate(d)
*4.19 -- Specimen of Preferred Stock Certificate
*4.20 -- Form of Stock Purchase Agreement
*4.21 -- Form of Stock Purchase Unit
4.22 -- Shareholder's Rights Agreement dated as of April 16, 1997(e)
5.1 -- Opinion of Dickinson Wright PLLC
5.2 -- Opinion of Richards, Layton & Finger, P.A. relating to SEMCO
Capital Trust I, SEMCO Capital Trust II, and SEMCO Capital
Trust III
12 -- Statement relating to computation of ratios
23.1 -- Consent of Dickinson Wright PLLC (included in Exhibit 5.1
above)
23.3 -- Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2 above)
23.4 -- Consent of Arthur Andersen LLP
23.5 -- Consent of KPMG LLP
24 -- Power of Attorney
25.1 -- Statement of Eligibility on Form T-1 Debt Securities
25.2 -- Statement of Eligibility on Form T-1 Guarantee of Preferred
Securities of SEMCO Capital Trust I
25.3 -- Statement of Eligibility on Form T-1 Guarantee of Preferred
Securities of SEMCO Capital Trust II
25.4 -- Statement of Eligibility on Form T-1 Guarantee of Preferred
Securities of SEMCO Capital Trust III
25.5 -- Statement of Eligibility on Form T-1 Preferred Securities of
SEMCO Capital Trust I
25.6 -- Statement of Eligibility on Form T-1 Preferred Securities of
SEMCO Capital Trust II
25.7 -- Statement of Eligibility on Form T-1 Preferred Securities of
SEMCO Capital Trust III
*27 -- Financial Data Schedule
- ---------------
* To be filed as an exhibit to a Current Report on Form 8-K and incorporated
into this Registration Statement by reference.
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(a) Articles of Incorporation as restated June 25, 1999, filed with form 10-Q
for the quarter ended June 30, 1999, File No. 0-8503 and incorporated
herein by reference with the same effect as if filed with this Registration
Statement.
(b) Filed with Form 10-Q for the quarter ended September 30, 1999, File No.
0-8503, and incorporated herein by reference with the same effect as if
filed with this Registration Statement.
(c) Filed with SEMCO's Registration Statement on Form S-3, Exhibit 4.3,
registration number 333-58715.
(d) Filed with SEMCO's Registration Statement on Form S-3, Exhibit 4.13,
Registration Number 333-58715.
(e) Filed March 6, 1997 as part of 1997 Proxy Statement, dated March 7, 1997,
File No. O-8503, and incorporated herein by reference with the same effect
as if filed with this Registration Statement.
II-12