Document:

Exhibit 4.6-Common Stock Purch. Warrant

Exhibit 4.6

THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF MARCH 19, 2004, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, REASONABLY SATISFACTORY TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT. 

 

 

	
Warrant No.1

Date of Issue: March 19, 2004
	
Right to Purchase 905,565 Shares of Common Stock, par value $1.00 per share

                                               

                                   

COMMON STOCK PURCHASE WARRANT
(Void after March 18, 2009)

THIS CERTIFIES THAT, for value received, K-1 GHM, LLLP (the "Holder") or its registered assigns, is entitled to purchase from SEMCO Energy, Inc., a Michigan corporation (the "Company"), at any time or from time to time during the period specified in Paragraph 2 hereof, Nine Hundred Five Thousand Five Hundred Sixty Five (905,565) [$6,000,000 divided by the Exercise Price] fully paid and nonassessable shares of the Company's common stock, par value $1.00 per share (the "Common Stock"), at an exercise price of $6.6257 [Tranche B-1 Conversion Price] per share (the "Exercise Price"). The term "Warrant Shares," as used herein, refers to the shares of Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price are subject to adjustment as provided in Paragraph 4 hereof. The term Warrants means this Warrant and the other warrants issued to the Holder and its affiliates pursuant to that certain Securities Purchase Agreement, dated March 19, 2004, by and among the Company and the Buyers listed on the execution page thereof (the "Purchase Agreement").

This Warrant is subject to the following terms, provisions, and conditions:

	 
	 	 	 
	

	 

 

1.   Manner of Exercise; Issuance of Certificates; Payment for Shares. Subject to the provisions hereof, this Warrant may be exercised by the Holder, in whole or in part, during the Exercise Period (as defined below), by the surrender of this Warrant, together with a completed exercise agreement in the form attached hereto (the "Exercise Agreement"), to the Company during normal business hours on any business day at the Company's principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder), and upon (i) payment to the Company in cash, by certified or official bank check or by wire transfer for the account of the Company of the Exercise Price for the Warrant Shares specified in the Exercise Agreement or (ii) if the resale of the Warrant Shares by the holder is not then registered pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "1933 Act"), in accordance with the Registration Rights Agreement, dated as of March 19, 2004, by and among the Company and the other signatories thereto (the "Registration Rights Agreement"), following the delivery by the Holder of a request for a Demand Registration (as that term is defined in the Registration Rights Agreement) after March 19, 2007, delivery to the Company of a written notice of an election to effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant Shares specified in the Exercise Agreement. The Warrant Shares so purchased shall be deemed to be issued to the Holder or such holder's designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered, the completed Exercise Agreement shall have been delivered, and payment shall have been made for such shares (or an election to effect a Cashless Exercise has been made) as set forth above. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the Holder within a reasonable time, not exceeding two (2) business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the Holder and shall be registered in the name of such holder or such other name as shall be designated by such holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised.

2.   Period of Exercise. This Warrant is exercisable at any time or from time to time on or after the date on which this Warrant is issued and delivered pursuant to the terms of the Purchase Agreement (the "Issue Date") and before 5:00 p.m., New York City time on the fifth (5th) anniversary of the Issue Date (the "Exercise Period").

3.   Certain Agreements of the Company. The Company hereby covenants and agrees as follows:

(a)   Shares to be Fully Paid. All Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued, fully paid, and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof.

(b)   Reservation of Shares. During the Exercise Period, the Company shall at all times have authorized, and reserved for the purpose of issuance upon exercise of this Warrant, a suf­ficient number of shares of Common Stock to provide for the exercise of this Warrant.

(c)   Listing. The Company shall promptly secure the listing of the shares of Common Stock issuable upon exercise of the Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system.

	 
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(d)   Certain Actions Prohibited. The Company will not, by amendment of its charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant. 

(e)   Successors and Assigns. This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition of all or substantially all the Company's assets.

4.   Antidilution Provisions. During the Exercise Period, the Exercise Price and the number of Warrant Shares shall be subject to adjustment from time to time as provided in this Paragraph 4.

In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up to the nearest cent.

(a)   Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares, then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately increased.

(b)   Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Paragraph 4, the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.

	 
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(c)   Consolidation, Merger or Sale. In case of any consolidation of the Company with, or merger of the Company into any other corporation, or in case of any sale or conveyance of all or substantially all of the assets of the Company other than in connection with a plan of complete liquidation of the Company, then as a condition of such consolidation, merger or sale or conveyance, adequate provision will be made whereby the holder of this Warrant will have the right to acquire and receive upon exercise of this Warrant in lieu of the shares of Common Stock immediately theretofore acquirable upon the exercise of this Warrant, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon exercise of this Warrant had such consolidation, merger or sale or conveyance not taken place. In any such case, the Company will make appropriate provision to insure that the provisions of this Paragraph 4 hereof will thereafter be applicable as nearly as may be in relation to any shares of stock or securities thereafter deliverable upon the exercise of this Warrant. The Company will not effect any consolidation, merger or sale or conveyance unless prior to the consummation thereof, the successor or acquiring entity (if other than the Company) and, if an entity different from the successor or acquiring entity, the entity whose capital stock or assets the holders of the Common Stock of the Company are entitled to receive as a result of such consolidation, merger or sale or conveyance assumes by written instrument the obligations under this Paragraph 4 and the obligations to deliver to the holder of this Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, the holder may be entitled to acquire.

(d)   Distribution of Assets. In case the Company shall declare or make any distribution of its assets (including cash) to holders of Common Stock as a partial liquidating dividend, by way of return of capital or otherwise, then, after the date of record for determining stockholders entitled to such distribution, but prior to the date of distribution, the holder of this Warrant shall be entitled upon exercise of this Warrant for the purchase of any or all of the shares of Common Stock subject hereto, to receive the amount of such assets which would have been payable to the holder had such holder been the holder of such shares of Common Stock on the record date for the determination of stockholders entitled to such distribution.

(e)   Notice of Adjustment. Upon the occurrence of any event which requires any adjustment of the Exercise Price, then, and in each such case, the Company shall give notice thereof to the holder of this Warrant, which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease in the number of Warrant Shares purchasable at such price upon exercise, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by the chief financial officer of the Company.

(f)   Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

(g)   No Fractional Shares. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant. If the exercise of this Warrant would result in a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon exercise of the Warrant shall be the next higher number of shares. 

	 
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(h)   Other Notices. In case at any time:

(i)   the Company shall take any actions as provided in Section 4(a);

(ii)   there shall be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger of the Company with or into, or sale of all or substantially all its assets to, another corporation or entity; or

(iii)   there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then, in each such case, the Company shall give to the holder of this Warrant (a) notice of the date on which the books of the Company shall close or a record shall be taken for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights or for determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable approximation thereof by the Company) when the same shall take place. Such notice shall also specify the date on which the holders of Common Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be given at least 20 days prior to the record date or the date on which the Company's books are closed in respect thereto. Failure to give any such notice or any defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii) and (iii) above.

(i)   Certain Events. If any event occurs of the type contemplated by the adjustment provisions of this Paragraph 4 but not expressly provided for by such provisions, the Company will give notice of such event as provided in Paragraph 4(e) hereof, and the Company's Board of Directors will make an appropriate adjustment in the Exercise Price and the number of shares of Common Stock acquirable upon exercise of this Warrant so that the rights of the Holder shall be neither enhanced nor diminished by such event.

(j)   Certain Definitions.

	 
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(i)   "Market Price," as of any date, (i) means the average of the last reported sale prices for the shares of Common Stock on the New York Stock Exchange (the "NYSE") for the five (5) trading days immediately preceding such date as reported by Bloomberg Financial Markets or an equivalent reliable reporting service mutually acceptable to and hereafter designated by the holder of this Warrant and the Company ("Bloomberg"), or (ii) if the NYSE is not the principal trading market for the shares of Common Stock, the average of the last reported sale prices on the principal trading market for the Common Stock during the same period as reported by Bloomberg, or (iii) if market value cannot be calculated as of such date on any of the foregoing bases, the Market Price shall be the fair market value as reasonably determined in good faith by (a) the Board of Directors of the Company or, at the option of a majority-in-interest of the holders of the outstanding Warrants by (b) an independent investment bank of nationally recognized standing in the valuation of businesses similar to the business of the Company. The manner of determining the Market Price of the Common Stock set forth in the foregoing definition shall apply with respect to any other security in respect of which a determination as to market value must be made hereunder.

(ii)   "Common Stock," for purposes of this Paragraph 4, includes the Common Stock, par value $1.00 per share, and any additional class of stock of the Company having no preference as to dividends or distributions on liquidation, provided that the shares purchasable pursuant to this Warrant shall include only shares of Common Stock, par value $1.00 per share, in respect of which this Warrant is exercisable, or shares resulting from any subdivision or combination of such Common Stock, or in the case of any reorganization, reclassification, consolidation, merger, or sale of the character referred to in Paragraph 4(c) hereof, the stock or other securities or property provided for in such Paragraph.

5.   Issue Tax. The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the holder of this Warrant or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the holder of this Warrant.

6.   No Rights or Liabilities as a Shareholder. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Company. No provision of this Warrant, in the absence of affirmative action by the Holder to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of such holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

7.   Transfer, Exchange, and Replacement of Warrant.

(a)   Restriction on Transfer. Subject to the provisions of subsection 7(f) below, this Warrant and the rights granted to the Holder are transferable, in whole or in part, upon surrender of this Warrant, together with a properly executed assignment in the form attached hereto, at the office or agency of the Company referred to in Paragraph 7(e) below, provided, however, that any transfer or assignment shall be subject to the conditions set forth in Paragraph 7(f) hereof and to the applicable provisions of the Purchase Agreement. Until due presentment for registration of transfer on the books of the Company, the Company may treat the registered Holder as the owner and Holder for all purposes, and the Company shall not be affected by any notice to the contrary. Notwithstanding anything to the contrary contained herein, the registration rights described in Paragraph 8 are assignable only in accordance with the provisions of the Registration Rights Agreement.

	 
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(b)   Warrant Exchangeable for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the Holder at the office or agency of the Company referred to in Paragraph 7(e) below, for new Warrants of like tenor representing in the aggregate the right to purchase the number of shares of Common Stock which may be purchased hereunder, each of such new Warrants to represent the right to purchase such number of shares as shall be designated by the Holder at the time of such surrender.

(c)   Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

(d)   Cancellation; Payment of Expenses. Upon the surrender of this Warrant in connection with any transfer, exchange, or replacement as provided in this Paragraph 7, this Warrant shall be promptly canceled by the Company. The Company shall pay all taxes (other than securities transfer taxes) and all other expenses (other than legal expenses, if any, incurred by the Holder or transferees) and charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Paragraph 7.

(e)   Register. The Company shall maintain, at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee and each prior owner of this Warrant.

(f)   Transfer or Re-sale. The transfer or re-sale of this Warrant or the Warrant Shares issuable hereby are subject to the conditions set forth in Section 5(b) of the Purchase Agreement.

8.   Registration Rights. The Holder of this Warrant (and certain permitted assignees thereof) is entitled to the benefit of such registration rights in respect of the Warrant Shares as are set forth in Section 2 of the Registration Rights Agreement.

9.   Notices. All notices, requests, and other communications required or permitted to be given or delivered hereunder to the holder of this Warrant shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid and addressed, to such holder at the address shown for such holder on the books of the Company, or at such other address as shall have been furnished to the Company by notice from such holder. All notices, requests, and other communications required or permitted to be given or delivered hereunder to the Company shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid and addressed, to the office of the Company at 28470 13 Mile Road, Suite 300, Farmington, Michigan 48334, Attention: Chief Financial Officer, or at such other address as shall have been furnished to the holder of this Warrant by notice from the Company. Any such notice, request, or other communication may be sent by facsimile, but shall in such case be subsequently confirmed by a writing personally delivered or sent by certified or registered mail or by recognized overnight mail courier as provided above. All notices, requests, and other communications shall be deemed to have been given either at the time of the receipt thereof by the person entitled to receive such notice at the address of such person for purposes of this Paragraph 9, or, if mailed by registered or certified mail or with a recognized overnight mail courier upon deposit with the United States Post Office or such overnight mail courier, if postage is prepaid and the mailing is properly addressed, as the case may be.

	 
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10.   Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF MICHIGAN (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS). BOTH PARTIES IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS AND THE STATE COURTS LOCATED IN MICHIGAN WITH RESPECT TO ANY SUIT OR PROCEEDING BASED ON OR ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AND IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH SUIT OR PROCEEDING MAY BE DETERMINED IN SUCH COURTS. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. 

11.   Miscellaneous.

(a)   Amendments. This Warrant is one of a series of Warrants issued by the Company, all dated the date hereof and of like tenor, except as to the number of shares of Common Stock subject thereto (collectively, the “Company Warrants”). Any term of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the holders of Company Warrants representing at least 75% of the number of shares of Common Stock then subject to outstanding Company Warrants. Notwithstanding the foregoing, (a) this Warrant may be amended and the observance of any term hereunder may be waived without the written consent of the Holder only in a manner which applies to all Company Warrants in the same fashion and (b) the number of Warrant Shares subject to this Warrant and the Exercise Price of this Warrant may not be amended, and the right to exercise this Warrant may not be waived, without the written consent of the Holder (it being agreed that an amendment of the number of Warrant Shares or the Exercise Price). The Company shall give prompt written notice to the Holder of any amendment hereof or waiver hereunder that was effected without the Holder’s written consent. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

	 
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(b)   Descriptive Headings. The descriptive headings of the several paragraphs of this Warrant are inserted for purposes of reference only, and shall not affect the meaning or construction of any of the provisions hereof.

(c)   Cashless Exercise. Notwithstanding anything to the contrary contained in this Warrant, if the resale of the Warrant Shares by the holder is not then registered pursuant to an effective registration statement under the 1933 Act in accordance with the terms of the Registration Rights Agreement following the delivery by the Holder of a request for a Demand Registration after March 19, 2007, this Warrant may be exercised by presentation and surrender of this Warrant to the Company at its principal executive offices with a written notice of the holder's intention to effect a cashless exercise, including a calculation of the number of shares of Common Stock to be issued upon such exercise in accordance with the terms hereof (a "Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the holder shall surrender this Warrant for that number of shares of Common Stock determined by multiplying the number of Warrant Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between the then current Market Price per share of the Common Stock and the Exercise Price, and the denominator of which shall be the then current Market Price per share of Common Stock.

(d)   Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holder of this Warrant by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Warrant will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Warrant, that the holder of this Warrant shall be entitled, in addition to all other available remedies in law or in equity, to an injunction or injunctions to prevent or cure any breaches of the provisions of this Agreement and to enforce specifically the terms and provisions of this Warrant, without the necessity of showing economic loss and without any bond or other security being required.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer.

SEMCO ENERGY, INC.

By: John E. Schneider
Name: John E. Schneider
Title: Senior Vice President and CFO

Dated as of March 19, 2004.

	
 

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FORM OF EXERCISE AGREEMENT

Dated: ________ __, 200_

To: SEMCO ENERGY, INC. 

The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to purchase ________ shares of Common Stock covered by such Warrant, and makes payment herewith in full therefor at the price per share provided by such Warrant in cash or by certified or official bank check in the amount of, or, if the resale of such Common Stock by the undersigned is not currently registered pursuant to an effective registration statement under the Securities Act of 1933, as amended, by surrender of securities issued by the Company (including a portion of the Warrant) having a market value (in the case of a portion of this Warrant, determined in accordance with Section 11(c) of the Warrant) equal to $_________. Please issue a certificate or certificates for such shares of Common Stock in the name of and pay any cash for any fractional share to:

Name: _______________________________________________

Signature: ____________________________________________

Address:_____________________________________________

____________________________________________________

____________________________________________________

Note:   The above signature should correspond exactly with the name on the face of the within Warrant.

and, if said number of shares of Common Stock shall not be all the shares purchasable under the within Warrant and the Exercise Period has not expired, a new Warrant is to be issued in the name of said undersigned covering the balance of the shares purchasable thereunder less any fraction of a share paid in cash.

	
 

	 	 	 
	

	

FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights of the undersigned under the within Warrant, with respect to the number of shares of Common Stock covered thereby set forth hereinbelow, to:

	
Name of Assignee
	
Address
	
No of Shares

	

	

	

	
 
	
 
	
 

	
 
	
 
	
 

, and hereby irrevocably constitutes and appoints _____________ ________________________ as agent and attorney-in-fact to transfer said Warrant on the books of the within-named corporation, with full power of substitution in the premises.

Dated: ________ __, 200_

In the presence of:

_________________________

Name:____________________________________________

Signature:_________________________________________

Title of Signing Officer or Agent (if any): 

_________________________________________________

Address:__________________________________________

_________________________________________________

 

Note:  The above signature should correspond exactly
with the name on the face of the within Warrant.

Signature Guaranteed:

By:                    

The signature should be guaranteed by an eligible guarantor institution (bank, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.Exhibit 10.1-Empl. Agr. - G. Schreiber

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made and entered into as of March 9, 2004, by and between SEMCO Energy Inc., a Michigan corporation (“the Company”), and George A. Schreiber, Jr. (“Executive”).

WHEREAS, Executive desires to be employed by the Company as President and Chief Executive Officer and to serve on the Company’s Board of Directors (“Board of Directors”).

WHEREAS, the Company desires to employ Executive, on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the compensation and other benefits of Executive’s employment by the Company and the recitals, mutual covenants and agreements hereinafter set forth, Executive and the Company agree as follows:

1.   Employment Services and Membership on Board of Directors.

1.1.   Executive is hereby employed by the Company, and Executive hereby accepts such employment, upon the terms and conditions hereinafter set forth. Executive shall be employed by the Company as the President and Chief Executive Officer, reporting to the Board of Directors, with such authority, duties and responsibilities as are commensurate and consistent with such positions. 

1.2.   Executive agrees that throughout Executive’s employment with the Company, Executive will (i) faithfully render such services as may be delegated to Executive by the Company, (ii) devote Executive’s entire business time, good faith, best efforts, ability, skill and attention to the Company’s business, and (iii) follow and act in accordance with all of the rules, policies and procedures of the Company. Executive shall serve on a full-time basis, provided however, that it shall not be a violation of this Agreement for Executive to serve on corporate, civic or charitable boards or committees with consent of the Board of Directors and so long as such activities do not interfere with the performance of Executive’s responsibilities to the Company.

1.3.   After the Effective Date, the Board of Directors will take such actions as are appropriate and consistent with the law and the Company’s by-laws to add Executive to the Board of Directors. 

2.   Term of Employment. The term of this Agreement (“Employment Period”) shall commence on March 10, 2004 (“Effective Date”) and shall end on the third anniversary of the Effective Date (“Initial Term”), unless sooner terminated as provided in Section 4 hereof, provided, however, that commencing at the end of the Initial Term, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), the term of employment shall be automatically extended so as to terminate one year from such Renewal Date, unless at least 60 days prior to the Renewal Date either party shall give notice to the other party that the Employment Period shall not be so extended. 

	 
	 	 	 
	

	 

 

3.   Compensation. During the Employment Period:

3.1.   Base Salary. The Company shall initially pay Executive as compensation for his services an annual base salary (“Base Salary”) of $425,000, payable in accordance with the Company’s usual payroll practices. The amount of Executive’s Base Salary shall initially be $425,000, but the amount of the Base Salary shall be reviewed annually by the Board of Directors and may be increased, but not decreased. 

3.2.   Bonus. The Company shall pay Executive an annual target bonus. Subject to achieving 100% of the performance targets set forth in the Executive’s annual performance objectives as approved by the Board of Directors, the Company shall provide Executive a target bonus in an amount equal to 50% of his Base Salary for the first year of the Agreement, and in an amount equal to 60% of his Base Salary for each succeeding year of the Employment Period. 

3.3.   Options. Executive shall be granted a stock option to acquire 200,000 shares of the common stock of the Company. The option will be granted in accordance with the Company's Long-Term Incentive Plan which requires shareholder approval at the Company's annual meeting in May 2004.  If shareholder approval is not received, the stock option will be granted on a non-qualified basis. The option shall normally vest as to one-third of the shares on each of the first three anniversaries of the Effective Date. The option shall provide for an exercise price of 100% of the stock’s fair market value on the date of grant, and shall provide for automatic vesting (a) upon the occurrence of a Change in Control (as defined below), (b) upon the Company’s termination of Executive’s employment without Cause (as defined below), or (c) upon the Executive’s termination of his employment with Good Reason (as defined below). In addition, Executive may thereafter be considered for further awards at such times as other senior executives of the Company are considered with an exercise price and other terms no less favorable than provided for senior executives of the Company.

3.4.   Restricted Stock Units. Executive shall be granted 50,000 restricted stock units of the Company, which restricted stock units shall be granted as soon as practical after the Effective Date, in accordance with the restricted stock unit plan, that is being developed by the Company and will be approved by the Board of Directors. The restrictions with respect to 20,000 of the restricted stock units will lapse upon the first anniversary of the Effective Date, and the restrictions with respect to 15,000 of the restricted stock units will lapse on each of the second and third anniversaries of the Effective Date if Executive has met the performance targets, provided that the restrictions shall also lapse (a) upon the occurrence of a Change in Control as defined below), (b) upon the Company’s termination of Executive’s employment without Cause (as defined below), or (c) upon the Executive’s termination of his employment with Good Reason (as defined below). In no case will shares be delivered to Executive prior to the third anniversary of the Effective Date. In addition, Executive may thereafter be considered for further awards at such times as other senior executives of the Company are considered with terms no less favorable than provided for senior executives of the Company.

3.5.   Retirement Benefits. Executive shall participate in the Company’s Non-Union Retirement Plan. In addition, Executive shall be provided additional retirement benefits pursuant to the Company’s Supplemental Executive Retirement Plan (“SERP”). Under the SERP, after being employed by the Company for five years, Executive shall be granted an additional five years of credited service with the Company for purposes of such plan; provided that, if earlier, such additional five years of credited services shall be granted upon the occurrence of a Change in Control. 

	 
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3.6.   Welfare Benefits. The Company shall provide Executive all rights and benefits for which Executive may be eligible under any welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent generally applicable to other executives of the Company. 

3.7.   Expense Reimbursement. The Company shall promptly reimburse Executive for reasonable expenses (including entertainment expenses) incurred by Executive while working on the Company business, in accordance with the Company’s normal business expense reimbursement policies. 

3.8.   Other Perquisites. Executive shall be provided with the following perquisites: a Company-provided cell phone and home computer, reimbursement of the cost of an annual physical exam, payment of membership dues to professional organizations, reimbursement for annual tax preparation expenses in an amount not to exceed $5,000 per year and a car allowance in the amount of $1,200 per month. 

3.9.   Relocation Expenses. In connection with Executive’s relocation to Michigan, Executive shall be reimbursed, on an after-tax equivalent basis, for reasonable and customary relocation expenses in accordance with the Company’s Relocation Policy and for the reasonable costs of house hunting trips, realtor fees, ordinary and usual temporary living expenses and other normal and reasonably incurred expenses relating to his relocation. (For purposes of the preceding sentence, “an after-tax equivalent basis” shall mean that Executive will be reimbursed in amount which will provide him a reimbursement amount which after the payment of federal income tax would equal the amount he would have received if the reimbursement were not subject to federal income taxation when made.)

3.10.   Vacation. Executive shall be entitled to four (4) weeks of paid vacation in each calendar year. Unused vacation shall carry over from year-to-year during the Employment Period to a maximum of eight (8) weeks.

3.11.   Directors and Officers Insurance and Indemnification. Executive shall be covered under the Company’s directors and officers insurance policy and will have the indemnification benefits provided in the Company’s standard Directors and Officers Indemnification Agreement, which shall have the same terms as are provided to other officers and directors of the Company.

	 
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4.   Termination of Employment.

4.1.   This Agreement and Executive’s employment may be terminated by the Company as follows:

4.1.1.   Termination Due to Death. Executive’s employment will be terminated immediately upon the death of Executive.

4.1.2.   Termination Due to Disability. If the Company determines in good faith that the Disability of Executive has occurred during the Employment Period (pursuant to the definition of “Disability” set forth below), it may give Executive written notice of its intention to terminate Executive’s employment. In such event, Executive’s employment shall terminate effective on the 30th day after receipt of such notice by Executive (the “Disability Effective Date”), if , within the 30 days after such receipt, Executive shall not have returned to the full-time performance of his duties. For purposes of this Agreement, “Disability” shall mean the inability of Executive to perform a material portion of his duties with the Company for 180 consecutive days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company, based on the definition of disability utilized by the Company’s insurance carrier. 

4.1.3.   Termination for Cause. The Company may terminate Executive’s employment immediately at any time during the Employment Period for Cause. For the purposes of this Agreement, “Cause” shall mean:

4.1.3.1.       the continued failure or inability of Executive to perform material duties assigned to Executive (other than any such failure resulting from Disability) or failure to achieve the Executive’s performance targets after a written demand by the Chairman of the Board of Directors or other authorized representative of the Board identifying the manner in which it believes Executive has not performed his duties or achieved the targets and Executive’s subsequent failure to cure the identified problem(s) within thirty (30) days;

4.1.3.2.       a material breach of this Agreement by Executive; or

4.1.3.3.       the Executive’s commission of fraud against the Company or engaging in willful misconduct which is materially injurious to the Company; or

4.1.3.4.       the Executive’s willful misconduct involving a third party or conviction of a felony or guilty or nolo contendre plea by Executive with respect thereto.

4.1.4.   Termination for without Cause. The Company may terminate Executive’s employment during the Employment Period for any reason not amounting to Cause, including a notice pursuant to Section 2, upon not less than sixty (60) days prior written notice to Executive.

	 
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4.2.   This Agreement and Executive’s employment may be terminated by Executive as follows:

4.2.1.   Termination by Executive With Good Reason. Executive’s employment may be terminated by Executive at any time during the Employment Period for Good Reason. For the purposes of this Agreement, “Good Reason” shall mean:

4.2.1.1.       the assignment to Executive of any duties inconsistent in any respect with Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by this Agreement, or any other action by the Company which results in a diminution in Executive’s position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of notice thereof given by Executive; or

4.2.1.2.       a material breach of this Agreement by the Company; or

4.2.1.3.       the reduction by the Company of Executive’s Base Salary.

4.2.2.   Termination by Executive Without Good Reason. Executive’s employment may be terminated by Executive, for any reason not amounting to Good Reason, including a notice pursuant to Section 2, upon not less than sixty (60) days prior written notice to the Company.

4.3.   Notice of Termination. Any termination of Executive’s employment (other than by death) shall be communicated to the other party by Notice of Termination given in accordance with this Section. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date.

4.4.   Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of Executive or the Disability Effective Date, as the case may be; (ii) if Executive’s employment is terminated by the Company for Cause or by Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be; (iii) if Executive’s employment is terminated by the Company without Cause or is terminated by Executive without Good Reason, the Date of Termination shall be the date specified in the notice, which must be at least 30 or 60 days, respectively, after the notice is provided.

4.5.   Obligations upon Termination. Upon termination of this Agreement, all rights and obligations of the parties hereunder shall cease, except:

	 
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4.5.1.   In any event, Executive shall be entitled to receive his annual Base Salary through the Date of Termination to the extent not theretofore paid, any accrued vacation pay, and to the extent not theretofore paid or provided, any other amounts or benefits required to be paid or provided under any plan, program, policy or agreement;

4.5.2.   If this Agreement is terminated pursuant to Section 4.1.4 or 4.2.1, then Executive shall thereafter receive (a) an amount equal to 2 times his then Base Salary, payable in accordance with the Company's usual payroll practices, or (b) in the event that a Change in Control has occurred within the twelve (12) months preceding termination pursuant to Section 4.1.4 or 4.2.1, an amount equal to 2.99 times the sum of (i) his then Base Salary plus (ii) the annual bonus paid to him pursuant to Section 3.2 for the preceding year, payable in a single lump sum within 60 days following the Date of Termination; provided that, the aggregate amount of any payment under this Section shall be reduced, to the extent necessary, so that the total of all payments to Executive under this Section and otherwise due to a Change in Control do not exceed 2.99 times the Executive's base amount, as such term is defined in Section 280G of the Internal Revenue Code and the regulations promulgated thereunder;

4.5.3.   If this Agreement is terminated pursuant to Section 4.1.4 or 4.2.1, then for two (2) years the Company shall continue benefits to Executive and/or Executive’s family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 3.6 as if Executive’s employment had not been terminated, provided, however, that if Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, then the medical and other welfare benefits described herein shall cease; and

4.5.4.   The termination of employment pursuant to this Section 4 or otherwise shall not terminate or otherwise affect the rights and obligations of the parties pursuant to Sections 5 through 15. 

4.6.   For purposes of this Section 4, the following definitions shall apply:

4.6.1.   “Change of Control” shall mean:

4.6.1.1.       the direct or indirect sale, lease, exchange or other transfer of all or substantially all of the assets of the Company to any Person or entity or group of Persons or entities acting in concert as a partnership or other group (a “Group of Persons”) (other than a Person described in clause (i) of the definition of Affiliate);

4.6.1.2.       the consummation of any consolidation or merger of the Company with or into another corporation with the effect that the stockholders of the Company immediately prior to the date of the consolidation or merger hold less than 51% of the combined voting power of the outstanding voting securities of the surviving entity of such merger or the corporation resulting from such consolidation ordinarily having the right to vote in the election of directors (apart from rights accruing under special circumstances) immediately after such merger or consolidation;

	 
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4.6.1.3.       the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company;

4.6.1.4.       a Person or Group of Persons acting in concert as a partnership, limited partnership, syndicate or other group shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, have become the direct or indirect beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Beneficial Owner”) of securities of the Company representing 30% or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of directors; or

4.6.1.5.       a Person or Group of Persons, together with any Affiliates thereof, shall succeed in having a sufficient number of its nominees elected to the Board of Directors such that such nominees, when added to any existing director remaining on the Board of Directors after such election who is an Affiliate of such Person or Group of Persons, will constitute a majority of the Board of Directors;

provided that the Person or Group of Persons referred to in clauses 4.6.1.1., 4.6.1.4. and 4.6.1.5. shall not mean K-1 USA Ventures, Inc. or any Group of Persons with respect to which K-1 USA Ventures, Inc. is an Affiliate. 

4.6.2.   “Affiliate” of any specified Person shall mean (i) any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such specified Person or (ii) any other Person who is a director or officer (A) of such specified Person, (B) of any subsidiary of such specified Person or (C) of any Person described in clause (i) above or (iii) any Person in which such Person has, directly or indirectly, a five (5) percent or greater voting or economic interest or the power to control. For the purposes of this definition, “control” of a Person means the power, direct or indirect, to direct or cause the direction of the management or policies of such Person whether through the ownership of voting securities, or by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

4.6.3.   “Person” shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.

4.6.4.   “Voting Power” shall mean the voting power of all securities of a Person then outstanding generally entitled to vote for the election of directors of the Person (or, where appropriate, for the election of persons performing similar functions).

	 
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5.   Confidential Information.

5.1.   Both during the Employment Period and following termination of his employment, Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company, its businesses and its strategic plans, which shall have been developed or obtained by Executive during his employment and which shall not be or have become public knowledge (other than in violation of this Agreement). 

5.2.   After termination of Executive’s employment with the Company, Executive shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company or those designated by it, except as required by law, provided that, in such case, Executive will provide the Company with prompt prior written notice of such legal requirement so that the Company may seek a protective order or other appropriate remedy to such disclosure.

6.   Post-Termination Restrictions. Executive recognizes that the Company has spent substantial money, time and effort over the years in developing its confidential information and strategic plans, and the Company is hereby agreeing to employ and pay Executive based upon Executive’s assurances and promises not to divert the Company’s goodwill or to put himself in a position following Executive’s employment with the Company in which the confidentiality of the Company’s confidential information or its ability to execute on its strategic plan might somehow be compromised. Accordingly, Executive agrees that during the Employment Period and for two (2) years (or one (1) year in the case of a termination pursuant to Section 4.1.4) following termination of employment, regardless of how Executive’s termination occurs and regardless of whether it is with or without cause, Executive will not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise):

6.1.   engage in, assist or have an interest in, or enter the employment of or act as an agent, advisor or consultant for, any person or entity which is engaged in a business which is competitive with any business in which the Company is engaged at the time of the Executive’s termination or which is, on that date, set forth in the Company’s strategic plan as approved by the Board of Directors (“Competitive Work”); or

6.2.   cause or attempt to cause any person or entity to divert, terminate, limit, modify or fail to enter into any existing or potential business relationship with the Company; or

6.3.   induce or attempt to induce any employee, consultant or advisor of the Company to leave his or her position with the Company or accept employment or an affiliation involving Competitive Work.

7.   Acknowledgment Regarding Restrictions. Executive recognizes and agrees that the restraints contained in Section 6 (both separately and in total) are reasonable and enforceable in view of the Company’s legitimate interests in protecting its confidential information, strategic plans and goodwill and the limited scope of the restrictions in Section 6.

	 
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8.   Non-Waiver of Rights. The Company’s failure to enforce at any time any of the provisions of this Agreement or to require at any time performance by Executive of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement, or any part hereof, or the right of the Company thereafter to enforce each and every provision in accordance with the terms of this Agreement.

9.   Company’s Right to Injunctive Relief, Tolling. In the event of a breach or threatened breach of any of Executive’s duties and obligations under the terms and provisions of Sections 5 or 6 hereof, the Company shall be entitled, in addition to any other legal or equitable remedies it may have in connection therewith (including any right to damages that it may suffer), to temporary, preliminary and permanent injunctive relief restraining such breach or threatened breach. Executive hereby expressly acknowledges that the harm which might result to the Company’s business as a result of any noncompliance by Executive with any of the provisions of Sections 5 or 6 would be largely irreparable. Executive specifically agrees that if there is a question as to the enforceability of any of the provisions of Sections 5 or 6 hereof, Executive will not engage in any conduct inconsistent with or contrary to such Sections until after the question has been resolved by a final judgment of a court of competent jurisdiction. Executive and the Company agree that the running of the periods set forth in Section 6 hereof shall be tolled during any period of time in which Executive violates that section.

10.   Judicial Enforcement. If any provision of this Agreement is adjudicated to be invalid or unenforceable under applicable law in any jurisdiction, the validity or enforceability of the remaining provisions thereof shall be unaffected as to such jurisdiction and such adjudication shall not affect the validity or enforceability of such provisions in any other jurisdiction. To the extent that any provision of this Agreement is adjudicated to be invalid or unenforceable because it is overbroad, that provision shall not be void but rather shall be limited only to the extent required by applicable law and enforced as so limited. The parties expressly acknowledge and agree that this Section is reasonable in view of the parties’ respective interests.

11.   Executive Representations. Executive represents that the execution and delivery of the Agreement and Executive’s employment with the Company do not violate any previous employment agreement or other contractual obligation of Executive. Executive further agrees to disclose, during the twenty-four month period following Executive’s employment with the Company, the terms of Sections 5 and 6 of this Agreement to any potential future employer, joint venturer, contractor or partner.

12.   Executive Covenant. Following his employment with the Company, Executive agrees to cooperate with the Company and its counsel in the contest or defense of, and to provide any testimony and access to his books and records in connection with, any action, arbitration, audit, hearing, investigation, litigation or suit involving or relating to any action, activity, circumstance, condition, conduct, event, fact, failure to act, incident, occurrence, plan, practice, situation, status or transaction involving the Company while he was employed by the Company or served as a member of the Board of Directors. The Company will reimburse reasonable and actual expenses incurred by Executive in connection with such cooperation.

	 
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13.   Amendments, Entire Agreement. No modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referring hereto, and signed by the parties hereto. This Agreement supersedes all prior agreements and understandings between Executive and the Company to the extent that any such agreements or understandings conflict with the terms of this Agreement.

14.   Assignments. This Agreement shall be freely assignable by the Company to and shall inure to the benefit of, and be binding upon, the Company, its successors and assigns and/or any other entity which shall succeed to the business presently being conducted by the Company. Being a contract for personal services, neither this Agreement nor any rights hereunder shall be assigned by Executive.

15.   Choice of Forum and Governing Law. The parties agree that: (i) any litigation involving any noncompliance with or breach of the Agreement, or regarding the interpretation, validity and/or enforceability of the Agreement, shall be filed and conducted in the state or federal courts in Michigan; and (ii) the Agreement shall be interpreted in accordance with and governed by the laws of the State of Michigan, without regard for any conflict of law principles.

16.   Headings. Section headings are provided in this Agreement for convenience only and shall not be deemed to substantively alter the content of such sections.

17.   Execution of Agreement. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

   

SEMCO ENERGY INC.

By:  John R. Hinton                   

Name:  John R. Hinton                   

Title:  Chairman                   

  George A. Schreiber, Jr.

George A. Schreiber, Jr.

	
 

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