Document:

exv10w01

 

EXHIBIT 10.01

AIRCRAFT SALE AND AIRCRAFT LEASE

ASSIGNMENT, ASSUMPTION

AND AMENDMENT AGREEMENT

AIRCRAFT FINANCING FACILITY

(STEELCASE TRUST NO. 2000-1)

This AIRCRAFT SALE AND AIRCRAFT LEASE ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT is entered
into as of May 20, 2005 by and among Steelcase Financial Services Inc., as buyer and new lessor
(“Buyer”), Steelcase Inc., as Lessee (“Lessee”); Wells Fargo Bank Northwest, National Association
(formerly known as First Security Bank, National Association), not in its individual capacity
except as provided herein, but solely as Certificate Trustee (the “Certificate Trustee”); Wells
Fargo Bank National Association (successor to Wells Fargo Bank Nevada, National Association,
successor to First Security Trust Company of Nevada), not in its individual capacity except as
provided herein, but solely as Administrative Agent (the “Administrative Agent”); Hatteras Funding
Corporation, as CP Lender (the “CP Lender”); Scotiabanc Inc. and Banc of America Leasing & Capital,
LLC as Certificate Holders (the “Certificate Holders”); Fifth Third Bank (formerly known as Old
Kent Bank), The Northern Trust Company, The Bank of Nova Scotia and Bank of America, National
Association as Facility Lenders and Liquidity Banks (the “Facility Lenders and Liquidity Banks”);
and Bank of America, National Association, as Administrator (the “Administrator”). Capitalized
terms used, but not defined, herein shall have the respective meanings ascribed to such terms in
the Participation Agreement (as defined below).

WHEREAS, the Lessee, Certificate Trustee, the Administrative Agent, the CP Lender, the Certificate
Holders, the Facility Lenders and Liquidity Banks and the Administrator are party to that certain
Participation Agreement (Steelcase Trust No. 2000-1) dated as of May 26, 2000 (as heretofore
amended, modified or supplemented being the “Participation Agreement”) in respect of one (1) 1996
Dassault Aviation Falcon 2000 aircraft bearing manufacturer’s serial no. 24 and U.S. Registration
No. N876SC (formerly N376SC) (the “Falcon 2000”) and one (1) Dassault Aviation Falcon 900EX
aircraft bearing manufacturer’s serial no. 66 and U.S. Registration No. N377SC (the “Falcon 900EX”,
collectively, the “Aircraft”);

WHEREAS, pursuant to the terms of the Master Aircraft Lease Agreement (Steelcase Trust No. 2000-1)
dated as of May 26, 2000 (the “Master Lease”) among the Certificate Trustee, as lessor (the
“Lessor”), and the Lessee, as supplemented, in respect of the Falcon 2000, by that certain Lease
Supplement and Acceptance Certificate No. 1 (Steelcase Trust No. 2000-1) dated as of May 26, 2000
and as further supplemented, in respect of the Falcon 900EX, by that certain Lease Supplement and
Acceptance Certificate No. 2 (Steelcase Trust No. 2000-1) dated as of August 23, 2000, Lessee
leases each of the Aircraft from Lessor (the Master Lease as so supplemented and as otherwise
amended, modified or supplemented being the “Lease”);

WHEREAS, pursuant to Section 22.1 of the Master Lease, Lessee has the option to purchase one or
both of the Aircraft and by written notice dated January 28, 2005, Lessee has exercised this option
in respect of both Aircraft;

 

 

WHEREAS, in accordance with the provisions of the Lease, Lessee has designated May 20, 2005 (the
“Purchase Date”) as the purchase date for both Aircraft;

WHEREAS, Lessee wishes to assign all of its rights and obligations in respect of the exercised
option to purchase both Aircraft to Buyer and Buyer wishes to accept and assume all of such rights
and obligations, to purchase both Aircraft and to become the lessor of the Aircraft under the
Lease; and

WHEREAS, the parties hereto desire to set out the procedures for, and consequences of, Buyer’s
purchase of both Aircraft and its acceptance and assumption of all the rights and obligations of
Lessor under the Lease;

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration the
receipt and sufficiency of which hereby are acknowledged, the parties agree as follows:

1. Assignment of Purchase Right. Lessee hereby assigns and delegates to Buyer
all of the rights and obligations of Lessee to purchase both Aircraft pursuant to the exercise of
the purchase option referenced above. Buyer hereby accepts and assumes such rights and obligations
including, without limitation, the obligation to pay the Purchase Amount for each Aircraft to the
Lessor on the Purchase Date. The parties hereto acknowledge and consent to such assignment and
delegation.

2. Purchase Amount. The parties hereby agree that the amount to be paid on the
Purchase Date as the Purchase Amount for the Falcon 2000 is $12,192,607.52 and as the Purchase
Amount for the Falcon 900EX is $34,920,447.37. Lessor hereby directs the Buyer to pay the Purchase
Amount for each Aircraft to such account as may be designated by Lessor in a written invoice to be
delivered to Buyer on or prior to the Purchase Date.

3. Consequences of Payment of Purchase Amounts. The parties hereto hereby agree
that upon payment by Buyer of the Purchase Amount for each Aircraft the following events shall be
deemed to occur simultaneously:

	 	(a)  	Lessor shall be deemed to have assigned, delegated and otherwise transferred
to Buyer all of Lessor’s right, title and interest in, to and under, and all of
Lessor’s duties, liabilities and obligations under or in respect of, the Lease and the
lease of such Aircraft thereunder and Buyer shall be deemed to have accepted all of
such right, title and interest and to have assumed all of such duties, liabilities and
obligations;
	 
	 	(b)  	each of the Security Agreement, Trust Agreement, Participation Agreement and
every other Operative Document in respect of such Aircraft (other than the Lease) shall
terminate and all rights, claims, liabilities and obligations of each party
thereunder shall be released and terminated except for such rights, if any, that
expressly survive such termination;
	 
	 	(c)  	the trust created by the Trust Agreement and the trust created by the Security
Agreement, in each case, in respect of such Aircraft shall terminate and all rights,

2

 

	 	   	claims, liabilities and obligations of each party thereunder shall be released and
terminated;
	 
	 	(d)  	the debt created under the Loan Agreement and evidenced by the Notes shall be
satisfied and discharged in full;
	 
	 	(e)  	Lessor shall transfer and convey to Buyer all of its right, title and interest
in and to such Aircraft, such transfer and conveyance to be evidenced by the execution
and delivery by Lessor to Buyer of a warranty bill of sale in respect of such Aircraft,
substantially in the form of Exhibit A hereto (the “Warranty Bill of Sale”);
	 
	 	(f)  	Section 22.1(a) of the Master Lease is hereby amended to delete the phrase
“provided that the Renewal Option shall not be available for any Aircraft at the end of
the second (2nd) Renewal Term of such Aircraft”;
	 
	 	(g)  	the Lease Term for each Aircraft shall be extended to May 26, 2006 as if
Lessee had exercised the Renewal Option for such extended term and Basic Rent shall
continue to be paid by Lessee to Buyer in the amounts and on the dates set forth in the
Lease immediately prior to the transactions contemplated hereby;
	 
	 	(h)  	all references in the Lease to “Lessor” shall be deemed references to Buyer as
though originally named therein in place of the Certificate Trustee; all references in
the Lease to “Administrative Agent” shall be deemed to be of no effect; and other
references to other parties in the Lease or to any other Operating Documents shall be
construed in a manner that is consistent with the intentions of this Agreement; and
	 
	 	(i)  	except as expressly modified hereby the Lease (including the provisions of
Appendix A of the Participation Agreement incorporated therein by reference) shall
remain in full force and effect.

4. Filing of Documents. Each of the parties hereto hereby agrees that upon
payment by Buyer of the Purchase Amount for each Aircraft the following actions shall be taken:

	 	(a)  	Lessor shall execute and deliver to Buyer the Warranty Bill of Sale for such
Aircraft;
	 
	 	(b)  	in respect of such Aircraft, Lessor shall cause to be filed with the FAA an
FAA Assignment and Assumption Agreement substantially in the form of Exhibit B hereto
and the Administrative Agent shall cause to be filed with the FAA an FAA form of
Aircraft Mortgage Release;
	 
	 	(c)  	Administrative Agent shall cause a UCC-3 termination statement in respect of
the Aircraft mortgage to be filed in the applicable recording office in the State of
Utah;
	 
	 	(d)  	Lessor and Buyer shall cause a UCC-3 assignment statement in respect of the
Lease to be filed in the applicable recording office in the State of Michigan; and

3

 

	 	(e)  	Buyer shall deliver to Lessor a resale certificate evidencing exemption from
Michigan sales tax.

5. Direction. Each of the Certificate Holders hereby directs the Certificate
Trustee to enter into this Agreement and to take the actions contemplated hereby. Each of the
Lenders hereby directs the Administrative Agent to enter into this Agreement and to take the
actions contemplated hereby.

6. Further Assurances. Each of the parties hereto hereby agrees to execute such
documents (including any UCC termination statements) and to take such actions as Lessee may
reasonably request in order to implement this Agreement and the termination and release
contemplated hereby.

7. Expenses. Lessee shall pay the reasonable costs and expenses incurred by each
party in connection with this Termination and Release and the actions contemplated hereby.

8. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

4

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by a duly
authorized person as of the date first above written.

STEELCASE INC., as Lessee

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION

(formerly known as FIRST SECURITY BANK, NATIONAL ASSOCIATION),

not in its individual capacity except as expressly provided in

the Operative Documents, as Certificate Trustee and Lessor

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

WELLS FARGO BANK, NATIONAL ASSOCIATION

(successor to Wells Fargo Bank Nevada, National Association,

successor to First Security Trust Company of Nevada),

not in its individual capacity except as expressly provided in

the Operative Documents, as Administrative Agent

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

HATTERAS FUNDING CORPORATION, as CP Lender

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

FIFTH THIRD BANK (formerly known as Old Kent Bank),

as a Facility Lender

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

5

 

THE NORTHERN TRUST COMPANY, as a Facility Lender

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

THE BANK OF NOVA SCOTIA, as a Facility Lender

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

SCOTIABANC INC., as a Certificate Holder

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

BANK OF AMERICA, NATIONAL ASSOCIATION, as Administrator

and as Facility Lender

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

BANC OF AMERICA LEASING & CAPITAL, LLC, as Arranger

and as a Certificate Holder

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

6

 

STEELCASE FINANCIAL SERVICES INC., as Buyer

	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

7

 

EXHIBIT A

WARRANTY BILL OF SALE (N377SC)

KNOW ALL MEN BY THESE PRESENTS:

     THAT, WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (formerly known as FIRST SECURITY BANK,
NATIONAL ASSOCIATION), not in its individual capacity, but solely as Certificate Trustee (the
“Seller”) under that certain Trust Agreement (Steelcase Trust No. 2000-1) dated as of May 26, 2000
(the “Trust Agreement”), is the owner of good and marketable title to the following aircraft
equipment (herein referred to collectively as the “Aircraft”):

One (1) Dassault Aviation Falcon 900EX aircraft bearing
manufacturer’s serial number 66 and U.S. Registration No. N377SC,
together with three (3) AlliedSignal Model TFE 731-60 engines
installed thereon, bearing manufacturer’s serial numbers P112311,
P112312 and P112313, respectively, together in each case with all
parts, components, appliances, modules, instruments, appurtenances,
accessories, furnishings and other equipment relating to such
airframe or any such engine, and all log books, manuals, records
(including, but not limited to, inspection, maintenance and overhaul
records), and other data relating to such aircraft, engines or
parts;

     THAT, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller does on this date grant, convey, transfer, bargain and sell, deliver and set
over unto STEELCASE FINANCIAL SERVICES INC. (“Buyer”) and unto its successors and assigns forever
all of Seller’s right, title and interest in and to the above described Aircraft, in its “as-is,
where-is” and “with all faults” condition;

     THAT, Seller hereby warrants to Buyer, its successors and assigns that there is hereby
conveyed to Buyer on the date hereof good and marketable title to the aforesaid Aircraft, free and
clear of all liens, claims, charges, encumbrances and rights of others of any nature that is, in
each case, a Certificate Trustee Lien (as such term is defined in the Participation Agreement that
is referred to in the Trust Agreement), and that Seller will warrant and defend such title forever
against all claims and demands whatsoever;

     THAT, Seller hereby assigns to Buyer, its successors and assigns any and all warranties
received by Seller, directly or indirectly from any manufacturer or third party vendor, whether
under the original manufacturer’s purchase agreement or otherwise, with respect to all or any
portion of the Aircraft;

 

 

     THAT, Seller hereby represents to Buyer that Seller has the power to execute and deliver this
Bill of Sale, this Bill of Sale has been duly executed and delivered on behalf of Seller, this

Bill of Sale constitutes the valid and binding obligation of Seller and is enforceable in
accordance with its terms, and the Aircraft has not been modified for military purposes.

     EXCEPT AS OTHERWISE SET FORTH ABOVE, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, AND
EXPRESSLY DISCLAIMS, ANY AND ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION OR
MERCHANTABILITY THEREOF.

     THIS BILL OF SALE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.

     IN WITNESS WHEREOF, Seller has caused this instrument to be executed in its name this 20th day
of May 2005.

	 	 	 	 	 	 	 
	 	 	WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (formerly known as FIRST SECURITY BANK, NATIONAL ASSOCIATION), not in its individual capacity but as Certificate Trustee
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	Title:	 	 	 	 
	 	 	 	 	 	 	 

 

 

EXHIBIT B

ASSIGNMENT AND ASSUMPTION AGREEMENT

(N377SC)

          This ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”) entered by and between Wells
Fargo Bank Northwest, National Association (formerly known as First Security Bank, National
Association), not in its individual capacity but solely as Certificate Trustee, as assignor (the
“Assignor”), and Steelcase Financial Services Inc., as assignee (the “Assignee”), dated the 20th
day of May, 2005.

          WHEREAS, the Assignor is a party to the Agreement, as more particularly described in Annex I
attached hereto (the “Assigned Agreement”);

          WHEREAS, the Assignor has agreed to assign, delegate and otherwise transfer and convey to the
Assignee all of its rights, interests, duties, obligations and liabilities in, to and under the
Assigned Agreement with respect to the Aircraft, as more particularly described in Annex I attached
hereto (the “Aircraft”); and

          WHEREAS, the Assignee desires to accept the assignment, delegation, transfer and conveyance of
all of the Assignor’s rights, interests, duties, obligations and liabilities in, to and under the
Assigned Agreement with respect to the Aircraft to the same extent as if the Assignee had executed
the Assigned Agreement.

          NOW, THEREFORE, in consideration of the foregoing and of other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

          1. Assignment of Assigned Agreement. The Assignor hereby assigns, delegates,
transfers and conveys to the Assignee all of its rights, interests, duties, obligations and
liabilities in, to and under the Assigned Agreement with respect to the Aircraft.

          2. Assumption of Assigned Agreement. The Assignee hereby accepts the assignment
contained in Section 1 and assumes all of the duties, obligations and liabilities of the Assignor
in, to and under the Assigned Agreement with respect to the Aircraft to the same extent as if the
Assignee had executed the Assigned Agreement. The Assignee hereby agrees to be bound by the terms
and provisions of the Assigned Agreement and accepts all of the Assignor’s rights, interests,
duties, obligations and liabilities thereunder.

          3. Governing Law. This Assignment shall in all respects be governed by, and construed
in accordance with, the internal laws of the State of New York, including all matters of
construction, validity or interpretation of this Assignment.

 

 

          4. Counterparts. This Assignment may be executed in several counterparts, each of
which shall be deemed an original, and all such counterparts shall constitute one and the same
instrument.

          5. Binding Nature. This Assignment shall be binding upon and inure to the benefit of
the parties hereto and their successors and assigns.

[signature page follows]

 

 

          IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment as of the date first
set forth above.

	 	 	 	 	 
	 	 	WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
(formerly known as FIRST SECURITY BANK, NATIONAL ASSOCIATION), not in its individual capacity but olely as Certificate Trustee
	 
	 	 	 	 
	

	 	By:	 	 
	 	 	 	 	 
	

	 	Title:	 	 
	 	 	 	 	 
	

	 	 	 	Assignor

	 	 	 	 	 
	 	 	STEELCASE FINANCIAL SERVICES INC.
	 
	 	 	 	 
	

	 	By:	 	 
	 	 	 	 	 
	

	 	Title:	 	 
	 	 	 	 	 
	

	 	 	 	Assignee

 

 

Annex I

to Assignment and Assumption Agreement

Description of Assigned Agreement

          Master Aircraft Lease Agreement (Steelcase Trust No. 2000-1) dated as of May 26, 2000 between
Wells Fargo Bank Northwest, National Association (formerly First Security Bank, National
Association), as certificate trustee, as lessor, and Steelcase Inc., as lessee, which was recorded
by the Federal Aviation Administration on July 17, 2000 and assigned Conveyance No. H099653, as
supplemented by the following described instruments:

	 	 	 	 	 	 	 
	 	 	Date of	 	FAA	 	FAA
	Instrument	 	Instrument	 	Recording Date	 	Conveyance No.
	Lease Supplement
and Acceptance
Certificate No. 1
(Steelcase Trust
No. 2000-1)

	 	as of

05/26/00
	 	07/17/00
	 	H099653
	 
	 	 	 	 	 	 
	Lease Supplement
and Acceptance
Certificate No. 2
(Steelcase Trust
No. 2000-1)

	 	as of

08/23/00
	 	08/25/00
	 	CC013412

Description of Aircraft

          One (1) Dassault Falcon 900 EX aircraft bearing manufacturer’s serial number 66 and U.S.
Registration No. N377SC and three (3) Allied Signal TFE731-60 aircraft engines bearing
manufacturer’s serial numbers P112311, P112312 and P112313.<PAGE>
                                                                     EXHIBIT 4.2

                     SPECIMEN OF PREFERRED STOCK CERTIFICATE

     THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY AND ANY SECURITY ISSUABLE UPON CONVERSION
THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.

     THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE CORPORATION THAT
(A) THIS SECURITY AND ANY SECURITY ISSUABLE UPON CONVERSION THEREOF MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE. IN ANY CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR
INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH REGARD TO THIS SECURITY
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT.

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OF
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF
DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE.

     IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS AND APPLICABLE LAW.

<PAGE>

                               SEMCO ENERGY, INC.

              5.00% SERIES B CONVERTIBLE CUMULATIVE PREFERRED STOCK

NO. 001                                              NUMBER OF SHARES
                                                     OF PREFERRED STOCK:_______
CUSIP NO._______

     SEMCO Energy, Inc., a corporation incorporated under the laws of the State
of Michigan (the "Corporation"), hereby certifies that Cede & Co. (the "Holder")
is the registered owner of ______ fully paid and non-assessable shares of
preferred stock of the Corporation designated the 5.00% Series B Convertible
Cumulative Preferred Stock (par value $1) (liquidation preference $200 per
share) (the "Preferred Stock"). The shares of Preferred Stock are transferable
on the books and records of the Transfer Agent, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Stock represented
hereby are issued and shall in all respects be subject to the provisions of the
Certificate of Designation dated ____ __, ____, as the same may be amended from
time to time (the "Certificate of Designation") and the Corporation's Restated
Articles of Incorporation (the "Articles of Incorporation"). Capitalized terms
used herein but not defined shall have the meaning given them in the Certificate
of Designation. The Corporation will provide a copy of the Certificate of
Designation and the Articles of Incorporation to a Holder without charge upon
written request to the Corporation at its principal place of business.

     Reference is hereby made to select provisions of the Preferred Stock set
forth on the reverse hereof, and to the Certificate of Designation, which select
provisions and the Certificate of Designation shall for all purposes have the
same effect as if set forth at this place.

     Upon receipt of this certificate, the Holder is bound by the Certificate of
Designation and Articles of Incorporation and is entitled to the benefits
thereunder.

     Unless the Transfer Agent's Certificate of Authentication hereon has been
properly executed, these shares of Preferred Stock shall not be entitled to any
benefit under the Certificate of Designation or be valid or obligatory for any
purpose.

          IN WITNESS WHEREOF, the Corporation has executed this certificate this
___day of _____, _____.

                                              SEMCO ENERGY, INC.

                                              By:__________
                                              Name:
                                              Title:

<PAGE>

                 TRANSFER AGENT'S CERTIFICATE OF AUTHENTICATION

     These are shares of the Preferred Stock referred to in the within-mentioned
Certificate of Designation.

         Dated:   _____________

                                                    NATIONAL CITY BANK, as
                                                    Transfer Agent,

                                                    By:  _______________________
                                                         Authorized Signatory

<PAGE>

                               REVERSE OF SECURITY

     Cash dividends on each share of Preferred Stock shall be payable at a rate
per annum set forth in the face hereof or as provided in the Certificate of
Designation.

     The shares of Preferred Stock shall be convertible into the Corporation's
Common Stock in the manner and according to the terms set forth in the
Certificate of Designation.

     The Corporation will furnish without charge to each holder who so requests
the powers, designations, preferences and relative, participating, optional or
other special rights of each class of stock and the qualifications, limitations
or restrictions of such preferences and/or rights.

<PAGE>

                                   ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of
Preferred Stock or evidenced hereby to:

     (Insert assignee's social security or tax identification number)

     (Insert address and zip code of assignee)

      and irrevocably appoints:

     agent to transfer the shares of Preferred Stock evidenced hereby on the
books of the Transfer Agent. The agent may substitute another to act for him or
her.

         Date:__________________________________

         Signature:_______________________________

     (Sign exactly as your name appears on the other side of this Preferred
Stock Certificate)

         Signature Guarantee(1):
_____________________________________________________________________

____________

(1) Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Transfer Agent, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Transfer
Agent in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

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