EXECUTION COPY
325,000 SHARES
SEMCO ENERGY, INC.
5% SERIES B CONVERTIBLE CUMULATIVE PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT
March 15, 2005
Credit Suisse First Boston LLC
UBS Securities LLC
c/o Credit Suisse First Boston LLC
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
SEMCO Energy, Inc., a Michigan corporation (the "COMPANY"), proposes to
issue and sell to Credit Suisse First Boston LLC and UBS Securities LLC
(collectively, the "INITIAL PURCHASERS"), upon the terms set forth in a purchase
agreement dated as of March 9, 2005 (the "PURCHASE AGREEMENT"), up to 3 25,000
shares of its 5% Series B Convertible Cumulative Preferred Stock, par value $1
(liquidation preference of $200 per share) (the "INITIAL SECURITIES"). The
Initial Securities will be convertible into shares of common stock, par value $1
per share, of the Company (the "COMMON STOCK") at the conversion price set forth
in the Offering Circular dated March 9, 2005. The Initial Securities will be
issued pursuant to a Certificate of Designation, of even date herewith (the
"CERTIFICATE OF DESIGNATION") of the Company. As an inducement to the Initial
Purchasers to enter into the Purchase Agreement, the Company agrees with the
Initial Purchasers, for the benefit of (i) the Initial Purchasers and (ii) the
holders of the Initial Securities and the Common Stock issuable upon conversion
of the Initial Securities (collectively, the "SECURITIES") from time to time
until such time as such Securities have been sold pursuant to a Shelf
Registration Statement (as defined below) (each of the forgoing a "HOLDER" and
collectively the "HOLDERS"), as follows:
1. Shelf Registration. (a) The Company shall, at its cost, prepare and, as
promptly as practicable (but in no event after June 13, 2005 file) with the
Securities and Exchange Commission (the "COMMISSION") and thereafter use its
commercially reasonable efforts to cause to be declared effective as soon as
practicable (but in no event after September 11, 2005 file) a registration
statement on Form S-3 (the "SHELF REGISTRATION STATEMENT" relating to the offer
and sale of the Transfer Restricted Securities (as defined in Section 5 hereof)
by the Holders thereof from time to time in accordance with the methods of
distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities Act of 1933, as amended
(the "SECURITIES ACT") (hereinafter, the "SHELF REGISTRATION"); provided,
however, that no Holder (other than an Initial Purchaser) shall be entitled to
have the Securities held by it covered by such Shelf Registration Statement
unless such Holder agrees in writing to be bound by all the provisions of this
Agreement applicable to such Holder.
(b) The Company shall use its commercially reasonable efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus included therein (the "PROSPECTUS") to be lawfully delivered by the
Holders of the relevant Securities, for a period of two years (or for such
longer period if extended pursuant to Section 2(h) below) from the date of its
effectiveness or such shorter period that will terminate when all the Securities
covered by the Shelf Registration Statement (i) have been sold pursuant thereto
or (ii) are no longer restricted securities (as defined in Rule 144(k) under the
Securities Act, or any successor rule thereof), assuming for this purpose that
the Holders thereof are not affiliates of the Company (in any such case, such
period being called the "SHELF REGISTRATION PERIOD"). The Company shall be
deemed not to have used its commercially reasonable efforts to keep the Shelf
Registration Statement effective during the requisite period if it voluntarily
takes any action that would result in Holders of Securities covered thereby not
being able to offer and sell such Securities during that period, unless such
action is (i) required by applicable law or (ii) taken by the Company in good
faith and contemplated by Section 2(b)(v) below, and the Company thereafter
complies with the requirements of Section 2(h).
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
Prospectus and any amendment or supplement thereto, as of the effective date of
the Shelf Registration Statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
2. Registration Procedures. In connection with the Shelf Registration
contemplated by Section 1 hereof, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to the
filing thereof with the Commission, a copy of the Shelf Registration Statement
and each amendment thereof and each supplement, if any, to the prospectus
included therein and, in the event that an Initial Purchaser (with respect to
any portion of an unsold allotment from the original offering) is participating
in the Shelf Registration Statement, shall use its best efforts to reflect in
each such document, when so filed with the Commission, such comments as such
Initial Purchaser reasonably may propose; and (ii) include the names of the
Holders who propose to sell Securities pursuant to the Shelf Registration
Statement as selling securityholders.
(b) The Company shall give written notice to the Initial Purchasers and
the Holders of the Securities (which notice pursuant to clauses (ii)-(v) hereof
shall be accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made):
2
(i) when the Shelf Registration Statement or any amendment thereto
has been filed with the Commission and when the Shelf Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to the Shelf Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to make
changes in the Shelf Registration Statement or the Prospectus in order
that the Shelf Registration Statement or the Prospectus does not contain
an untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in light of the circumstances under which
they were made) not misleading.
(c) The Company shall use best efforts to obtain the withdrawal at the
earliest possible time, of any order suspending the effectiveness of the Shelf
Registration Statement.
(d) The Company shall furnish to each Holder of Securities included within
the coverage of the Shelf Registration, without charge, at least one copy of the
Shelf Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits thereto (including those, if any, incorporated by reference).
(e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the Prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by the Prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.
(f) Prior to any public offering of the Securities pursuant to the Shelf
Registration Statement, the Company shall use its commercially reasonable
efforts to register or qualify or cooperate with the Holders of the Securities
included therein and their respective counsel in connection with the
registration or qualification of the Securities for offer and sale under the
securities or "blue sky" laws of such states of the United States as any Holder
of the Securities reasonably requests in writing and do any and all other acts
or things reasonably necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such
3
Registration Statement; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified or (ii) take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not then so
subject.
(g) The Company shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing the
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to the Shelf Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraphs (ii) through (v)
of Section 2(b) above during the period for which the Company is required to
maintain an effective Shelf Registration Statement, the Company shall promptly
prepare and file a post-effective amendment to the Shelf Registration Statement
or an amendment or supplement to the Prospectus and any other required document
so that, as thereafter delivered to Holders or purchasers of the Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding anything else to the contrary contained herein,
after the effectiveness of the Shelf Registration Statement, the Company may
suspend the availability of the Shelf Registration Statement and the use of any
prospectus by written notice to the holders for a period or periods not to
exceed an aggregate of 30 calendar days in any 45 calendar day period, and not
to exceed 60 calendar days in any twelve month period without incurring any
Additional Dividends if (i) an event occurs and is continuing as a result of
which the Shelf Registration Statement or any related prospectus would, in the
Company's good faith judgment, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading and (ii) the disclosure otherwise relates to a pending material
business transaction of the Company that has not yet been publicly disclosed. If
the Company notifies the Initial Purchasers and the Holders in accordance with
paragraphs (ii) through (v) of Section 2(b) above to suspend the use of the
Prospectus until the requisite changes to the Prospectus have been made, then
the Initial Purchasers and the Holders shall suspend use of such prospectus, and
the period of effectiveness of the Shelf Registration Statement provided for in
Section 1(b) above shall be extended by the number of days from and including
the date of the giving of such notice to and including the date when the Initial
Purchasers and the Holders shall have received such amended or supplemented
prospectus pursuant to this Section 2(h).
(i) Not later than the effective date of the Shelf Registration Statement,
the Company will provide CUSIP numbers for the Initial Securities and the Common
Stock registered under the Shelf Registration Statement, and provide the Trustee
with printed certificates for the Initial Securities, in a form eligible for
deposit with The Depository Trust Company.
(j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the
4
effective date of the Shelf Registration Statement, which statement shall cover
such 12-month period.
(k) The Company may require each Holder of Securities to be sold pursuant
to the Shelf Registration Statement to furnish to the Company such information
regarding the Holder and the distribution of the Securities as the Company may
from time to time reasonably require for inclusion in the Shelf Registration
Statement, and the Company may exclude from such registration the Securities of
any Holder that unreasonably fails to furnish such information within a
reasonable time after receiving such request.
(l) The Company shall enter into such customary agreements (including, if
requested by a majority in number of the Holders of the Transfer Restricted
Securities, an underwriting agreement in customary form) and take all such other
actions, if any, as any Holder shall reasonably request in order to facilitate
the disposition of the Securities pursuant to the Shelf Registration.
(m) The Company shall (i) make reasonably available for inspection by the
Holders, any underwriter participating in any disposition pursuant to the Shelf
Registration Statement and any attorney, accountant or other agent retained by
the Holders or any such underwriter, all relevant financial and other records,
pertinent corporate documents and properties of the Company and (ii) cause the
Company's officers, directors, employees, accountants and auditors to supply all
relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with the Shelf
Registration Statement, in each case, as shall be reasonably necessary to enable
such persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by you and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in Section 3
hereof; provided, further, that such parties shall first agree in writing with
the Company that any information that is reasonably and in good faith designated
by the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such persons, unless (i) disclosure of
such information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to federal securities laws in connection with the filing of the Registration
Statement or the use of any Prospectus), (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard such information by such persons, or (iv) such information
becomes available to such persons from a source other than the Company and its
subsidiaries and such source is not known by such person to be bound by a
confidentiality agreement.
(n) The Company, if requested by any Holder of Securities covered by the
Shelf Registration Statement, shall cause (i) its counsel to deliver an opinion
and updates thereof relating to the Securities in customary form addressed to
such Holders and the managing underwriters, if any, thereof, and dated, in the
case of the initial opinion, the effective date of such Shelf Registration
Statement (it being agreed that the matters to be covered by such opinion shall
include, without limitation, the due incorporation and good standing of the
Company and its subsidiaries; the qualification of the Company and its
subsidiaries to transact business as foreign corporations; the due
authorization, execution and delivery of the relevant agreement of the type
5
referred to in Section 2(m) hereof; the due authorization, execution,
authentication and issuance, and the validity and enforceability, of the
Securities; the absence of material legal or governmental proceedings involving
the Company and its subsidiaries; the absence of governmental approvals required
to be obtained in connection with the Shelf Registration Statement, the offering
and sale of the Securities, or any agreement of the type referred to in Section
2(m) hereof; the compliance as to form of the Shelf Registration Statement and
any documents incorporated by reference therein; and, as of the date of the
opinion and as of the effective date of the Shelf Registration Statement or most
recent post-effective amendment thereto, as the case may be, the absence from
the Shelf Registration Statement and the prospectus included therein, as then
amended or supplemented, and from any documents incorporated by reference
therein of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of any such documents, in the
light of the circumstances existing at the time that such documents were filed
with the Commission under the Exchange Act of 1934, as amended (the "EXCHANGE
ACT")); (ii) its officers to execute and deliver all customary documents and
certificates and updates thereof requested by any underwriters of the Securities
and (iii) its independent public accountants and the independent public
accountants with respect to any other entity for which financial information is
provided in the Shelf Registration Statement to provide to the selling Holders
of the applicable Securities and any underwriter therefor a comfort letter in
customary form and covering matters of the type customarily covered in comfort
letters in connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(o) In the event that any broker-dealer registered under the Exchange Act
shall underwrite any Securities or participate as a member of an underwriting
syndicate or selling group or "assist in the distribution" (within the meaning
of the Conduct Rules (the "RULES") of the National Association of Securities
Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company will assist such broker-dealer in complying
with the requirements of such Rules, including, without limitation, by (i) if
such Rules, including Rule 2720, shall so require, engaging a "qualified
independent underwriter" (as defined in Rule 2720) to participate in the
preparation of the Shelf Registration Statement relating to such Securities, to
exercise usual standards of due diligence in respect thereto and, if any portion
of the offering contemplated by such Registration Statement is an underwritten
offering or is made through a placement or sales agent, to recommend the yield
of such Securities, (ii) indemnifying any such qualified independent underwriter
to the extent of the indemnification of underwriters provided in Section 4
hereof and (iii) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements of the
Rules.
(p) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Securities covered by a Registration
Statement contemplated hereby.
3. Registration Expenses. (a) All expenses incident to the Company's
performance of and compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement is ever filed or becomes
effective, including without limitation;
(i) all registration and filing fees and expenses;
6
(ii) all fees and expenses of compliance with federal securities and
state "blue sky" or securities laws;
(iii) all expenses of printing (including printing certificates for
the Securities to be issued and printing of Prospectuses), messenger and
delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company;
(v) all application and filing fees in connection with listing the
Securities on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special audit
and comfort letters required by or incident to such performance).
The Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.
(b) In connection with the Shelf Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchasers and the Holders of
Securities covered by the Shelf Registration Statement, for the reasonable fees
and disbursements of not more than one counsel, designated by the Holders of a
majority in number of shares of the Initial Securities covered by the Shelf
Registration Statement (provided that Holders of Common Stock issued upon the
conversion of the Initial Securities shall be deemed to be Holders of the
aggregate number of shares of Initial Securities from which such Common Stock
was converted) to act as counsel for the Holders in connection therewith.
4. Indemnification. (a) The Company agrees to indemnify and hold harmless
each Holder and each person, if any, who controls such Holder within the meaning
of the Securities Act or the Exchange Act (each Holder, and such controlling
persons are referred to collectively as the "INDEMNIFIED Parties") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Shelf
Registration Statement or prospectus including any document incorporated by
reference therein, or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Shelf Registration, or arise out of, or
are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse, as incurred, the Indemnified Parties for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
7
omission or alleged omission made in the Shelf Registration Statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Shelf Registration in reliance upon and in conformity
with written information pertaining to such Holder and furnished to the Company
by or on behalf of such Holder specifically for inclusion therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to the Shelf Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a prospectus relating to such Securities was required to be
delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Securities to such person, a copy
of the final prospectus if the Company had previously furnished copies thereof
to such Holder; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.
(b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or prospectus or in any amendment
or supplement thereto or in any preliminary prospectus relating to the Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information pertaining to such Holder and furnished
to the Company by or on behalf of such Holder specifically for inclusion
therein; and, subject to the limitation set forth immediately preceding this
clause, shall reimburse, as incurred, the Company for any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in addition to any
liability which such Holder may otherwise have to the Company or any of its
controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 4 of
notice of the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 4, notify the
indemnifying party of the commencement thereof; but the failure to notify the
indemnifying party shall not relieve it from any liability that it may have
under subsection (a) or (b) above except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; provided further that the failure to notify the indemnifying
party shall not relieve it from any liability that it may have to an
8
indemnified party otherwise than under subsection (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action, and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 4 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above in such proportion as is appropriate to reflect the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or such Holder or such other indemnified party, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 4(d), the Holders shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to the Shelf Registration
Statement exceeds the amount of damages which such Holders have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls such indemnified party within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as such indemnified
party and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.
9
(e) The agreements contained in this Section 4 shall survive the sale of
the Securities pursuant to the Shelf Registration Statement and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
5. Additional Dividends Under Certain Circumstances. (a) Additional
dividends with respect to the Initial Securities shall be assessed as follows if
any of the following events occur (each such event in clauses (i) through (iii)
below being herein called a "REGISTRATION DEFAULT"):
(i) the Shelf Registration Statement has not been filed with the
Commission by June 13, 2005;
(ii) the Shelf Registration Statement has not been declared
effective by the Commission by September 11, 2005; or
(iii) the Shelf Registration Statement is declared effective by the
Commission but (A) the Shelf Registration Statement thereafter ceases to
be effective or (B) the Shelf Registration Statement or the Prospectus
ceases to be usable in connection with resales of Transfer Restricted
Securities (as defined below) during the periods specified herein because
either (1) any event occurs as a result of which the Prospectus forming
part of such Shelf Registration Statement would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or (2) it shall be necessary to amend
such Shelf Registration Statement or supplement the related prospectus, to
comply with the Securities Act or the Exchange Act or the respective rules
thereunder.
Each of the foregoing will constitute a Registration Default whatever the reason
for any such event and whether it is voluntary or involuntary or is beyond the
control of the Company or pursuant to operation of law or as a result of any
action or inaction by the Commission .
Additional Dividends shall accrue on the Initial Securities over and above
the dividends set forth in the title of the Initial Securities from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all such Registration Defaults have been cured, at a
dividend rate of 0.50% per annum (the "ADDITIONAL DIVIDENDS").
(b) A Registration Default referred to in Section 5(a)(iii) hereof shall
be deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to the Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement the
Shelf Registration Statement and related prospectus to describe such events as
required by paragraph 2(h) hereof; provided, however, that in any case if such
Registration Default occurs for a continuous period in excess of 30 days,
Additional Dividends shall be payable in accordance with
10
the above paragraph from the day such Registration Default occurs until such
Registration Default is cured.
(c) Any amounts of Additional Dividends due pursuant to Section 5(a) will
be payable in cash on the regular dividend payment dates with respect to the
Securities. The amount of Additional Dividends will be determined by multiplying
the applicable Additional Dividends by the aggregate liquidation preference of
the Securities, further multiplied by a fraction, the numerator of which is the
number of days such Additional Dividends were applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.
(d) "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the
date on which such Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (ii)
the date on which such Security is distributed to the public pursuant to Rule
144 under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.
6. Rules 144 and 144A. The Company shall use its best efforts to file the
reports required to be filed by it under the Securities Act and the Exchange Act
in a timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder, make publicly available other
information so long as necessary to permit sales of their securities pursuant to
Rules 144 and 144A. The Company covenants that it will take such further action
as any Holder may reasonably request, all to the extent required from time to
time to enable such Holder to sell Transfer Restricted Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).
The Company will provide a copy of this Agreement to prospective purchasers of
Securities identified to the Company by the Initial Purchasers upon request.
Upon the request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
7. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by the Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("MANAGING UNDERWRITERS") will be selected by
the holders of a majority in number of shares of such Transfer Restricted
Securities to be included in such offering (provided that holders of Common
Stock issued upon conversion of the Initial Securities shall not be deemed
holders of Common Stock, but shall be deemed to be holders of the aggregate
number of shares of Initial Securities from which such Common Stock was
converted) and such Managing Underwriters shall be reasonably satisfactory to
the Company.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
11
8. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Section 1 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Sections 1 and 2 hereof.
The Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the holders of a majority in number of shares of the Initial
Securities affected by such amendment, modification, supplement, waiver or
consents (provided that holders of Common Stock issued upon conversion of
Initial Securities shall not be deemed holders of Common Stock, but shall be
deemed to be holders of the aggregate number of shares of Initial Securities
from which such Common Stock was converted). Without the consent of the Holder
of each Initial Security, however, no modification may change the provisions
relating to the payment of Additional Dividends.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company.
(2) if to the Initial Purchasers;
Credit Suisse First Boston LLC
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Transactions Advisory Group
12
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
(3) if to the Company, at its address as follows:
SEMCO Energy, Inc.
0000 X. Xxx Xxxxxx Xxxx
Xxxxx 000
Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx
with a copy to:
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, XX
Xxxxx 0000
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.
(f) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
13
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
By the execution and delivery of this Agreement, the Company submits to
the nonexclusive jurisdiction of any federal or state court in the State of New
York.
(j) Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
(k) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of Securities is required hereunder,
Securities held by the Company or its affiliates (other than subsequent Holders
of Securities if such subsequent Holders are deemed to be affiliates solely by
reason of their holdings of such Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
SEMCO Energy, Inc.
by
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
14
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON LLC
By: CREDIT SUISSE FIRST BOSTON LLC
by
/s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
UBS SECURITIES LLC
By: UBS SECURITIES LLC
by
/s/ R. Xxxxx Xxxxxx
-----------------------
Name: R. Xxxxx Xxxxxx
Title: Director
/s/ Xxxx Xxxxx
-----------------------
Name: Xxxx Xxxxx
Title: Associate Director
15
