<PAGE> 1
As Filed with the Securities and
Exchange Commission on April 16, 1998
File Number 70-9155
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
- -------------------------------------------------------------------------------
AMENDMENT NO. 2 TO
FORM U-1 APPLICATION/DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
- -------------------------------------------------------------------------------
CONECTIV
800 King Street
Wilmington DE 19899
(Name of company filing this statement and
address of principal executive office)
- -------------------------------------------------------------------------------
Conectiv
(Name of top registered holding company parent)
- -------------------------------------------------------------------------------
Louis M. Walters
Treasurer
Conectiv
800 King Street
Wilmington, DE 19899
(Name and address of agents for service)
---------------------------------------------------------------
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application/Declaration to:
<TABLE>
<S> <C>
Peter F. Clark, Esq. Joyce Koria Hayes, Esq.
Conectiv 7 Graham Court
800 King Street Newark, DE 19711
Wilmington, DE 19899
</TABLE>
<PAGE> 2
The Application-Declaration as previously filed and amended is hereby further
amended as follows:
Item 1.
The following is added at the end of Item 1:
"The filing of this Amendment No. 2 completes the file in this matter.
Conectiv requests that the Commission issue its Order as expeditiously as
possible."
Item 2. Fees, Commissions and Expenses
(a) State (1) the fees, commissions and expenses paid or incurred, or to be
paid or incurred, directly or indirectly, in connection with the proposed
transaction by the applicant or declarant or any associate company thereof, and
(2) if the proposed transaction involves the sale of securities at competitive
bidding, the fees and expenses to be paid to counsel selected by applicant or
declarant to act for the successful bidder.
It is estimated that the fees, commissions and expenses ascertainable at
this time to be incurred by THE COMPANY in connection with the implementation
of the proposed transactions are as follows:
<TABLE>
<S> <C>
Fees for Outside Counsel $ 79,000
Printing and Mailing Costs 25,000
Miscellaneous Expenses 5,000
-----
Total $109,000
</TABLE>
Item 6. Exhibits
The following exhibits are made a part of this statement:
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C>
A-3.1 Form of Certificate of Designation for the Series 1 Preferred Stock.
A-3.2 Form of Certificate of Designation for the Series 2 Preferred Stock.
F-1 Opinion of counsel.
</TABLE>
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this statement to be signed on
its behalf by the undersigned thereunto duly authorized.
CONECTIV
By: /s/ Louis M. Walters
------------------------------
Title: Treasurer
Date: April 16, 1998
<PAGE> 4
EXHIBIT INDEX
A-3.1 Form of Certificate of Designation for the Series 1 Preferred Stock
A-3.2 Form of Certificate of Designation for the Series 2 Preferred Stck
F-1 Opinion of Counsel
<PAGE> 1
Exhibit A-3.1
FORM OF CERTIFICATE OF DESIGNATION
OF
SERIES 1 JUNIOR PREFERRED
STOCK OF CONECTIV
------------------------
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
-------------------------
Conectiv, a corporation duly organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY:
that, pursuant to authority conferred upon the Board of Directors of
the Corporation by its Restated Certificate of Incorporation, and, pursuant to
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors, at a duly called meeting held on [
], at which a quorum was present and acted throughout, adopted
the following resolutions, which resolutions remain in full force and effect on
the date hereof creating a class of [ ] shares of Preferred Stock having a
par value of $.01 per share, designated as Series 1 Junior Preferred Stock.
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Restated Certificate of
Incorporation of the Corporation, the Board of Directors does hereby create,
authorize and provide for the issuance of a series of preferred stock, par
value $.01 per share, of the Corporation, designated as Series 1 Junior
Preferred Stock having the voting powers, designation, relative, participating,
optional and other special rights, preferences, and qualifications, limitations
and restrictions thereof that are set forth as follows:
Section 1. Designation and Amount. The shares of such class shall be
designated as "Series 1 Junior Preferred Stock" (the "Series 1 Preferred
Stock") and the number of shares constituting such class shall be [ ].
Such number of shares may be
<PAGE> 2
increased or decreased by resolution of the Board of Directors, provided that
no such decrease shall reduce the number of shares of the Series 1 Preferred
Stock to a number less than the number of shares then outstanding, plus the
number reserved for issuance upon the exercise of options, rights or warrants,
or upon conversion of any outstanding securities issued by the Corporation
convertible into Series 1 Preferred Stock. All capitalized terms used herein
have the meanings ascribed to them in the Restated Certificate of Incorporation
of the Corporation (the "Certificate"), unless otherwise defined herein.
Section 2. Dividends and Distributions. (A) Subject to the
prior and superior rights of the holders of any shares of any other class or
series of Preferred Stock of the Corporation ranking prior and superior to the
shares of Series 1 Preferred Stock with respect to dividends, each holder of a
share (a "Share") of Series 1 Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for that purpose, (i) quarterly dividends payable in cash on the last
day of March, June, September, and December in each year (each such date being
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of such Share of Series 1
Preferred Stock, in an amount per Share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends declared on shares of the Company Common Stock since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of a Share of Series
1 Preferred Stock, and (ii) subject to the provision for adjustment hereinafter
set forth, quarterly distributions (payable in kind) on each Quarterly Dividend
Payment Date in an amount per Share equal to 100 times the aggregate per share
amount of all non-cash dividends or other distributions (other than a dividend
payable in shares of Company Common Stock or a subdivision of the outstanding
shares of Company Common Stock, by reclassification or otherwise) declared on
shares of Company Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or with respect to the first Quarterly Dividend Payment
Date, since the first issuance of a Share of Series 1 Preferred Stock. In the
event that the Corporation shall at any time after [ ] (the "Rights
Declaration Date") (i) declare any dividend on outstanding shares of Company
Common Stock payable in shares of Company Common Stock, (ii) subdivide
outstanding shares of Company Common Stock or (iii) combine outstanding shares
of Company Common Stock into a smaller number of shares, then in each such case
the amount to which the holder of a Share of Series 1 Preferred Stock was
entitled immediately prior to such event pursuant to the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which shall be the number of shares of Company Common Stock that are
outstanding immediately after such event and the denominator of which shall be
the number of shares of Company Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on
Shares of Series 1 Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or
2
<PAGE> 3
distribution on the shares of Company Common Stock (other than a dividend or
distribution payable in shares of Company Common Stock); provided, however,
that in the event no dividend or distribution shall have been declared on the
Company Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Date, a dividend of $1.00 per
Share on the Series 1 Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on
each outstanding Share of Series 1 Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of such Share of Series 1
Preferred Stock, unless the date of issuance of such Share is prior to the
record date for the first Quarterly Dividend Payment Date, in which case,
dividends on such Share shall begin to accrue from the date of issuance of such
Share, or unless the date of issuance is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of Shares of
Series 1 Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
Shares of Series 1 Preferred Stock in an amount less than the aggregate amount
of all such dividends at the time accrued and payable on such Shares shall be
allocated pro rata on a share-by-share basis among all Shares of Series 1
Preferred Stock at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of Shares of Series 1 Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of Shares of Series 1
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each Share of Series 1 Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the holders of Company Common Stock
of the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on outstanding shares of
Company Common Stock payable in shares of Company Common Stock, (ii) subdivide
outstanding shares of Company Common Stock or (iii) combine the outstanding
shares of Company Common Stock into a small number of shares, then in each
such case the number of votes per Share to which holders of Shares of Series 1
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which shall be the
number of shares of Company Common Stock outstanding immediately after such
event and the denominator of which shall be the number of shares of Company
Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or in any other
Certificate of Designation creating a series of preferred stock, or any similar
stock, or by law, the holders of Shares of Series 1 Preferred Stock, the
holders of shares of Company Common
3
<PAGE> 4
Stock, and the holders of any other class or series of capital stock of the
Corporation entitled to vote generally, together with the Company Common Stock,
shall vote together as one class on all matters submitted to a vote of the
holders of such stock.
(C) (i) If at any time dividends on any Shares of Series 1
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, then during the period (a "default period") from the
occurrence of such event until such time as all accrued and unpaid dividends
for all previous quarterly dividend periods and for the current quarterly
dividend period on all Shares of Series 1 Preferred Stock then outstanding
shall have been declared and paid or set apart for payment, the holders of the
outstanding Shares of Series 1 Preferred Stock, together with the holders of
outstanding shares of any one or more other classes or series of stock of the
Corporation upon which like voting rights have been conferred and are
exercisable (voting together as a class), shall have the right to elect two
Directors to the Board of Directors of the Corporation at the Corporation's
next annual meeting of stockholders, and so long as such default period
continues, shall have the right to elect a successor to each of the two
Directors so elected upon the expiration of their respective terms, such right
to be exercised at the subsequent annual meeting or meetings at which the
respective terms of such Directors expire. Any Director who shall have been so
elected pursuant to this paragraph may be removed only for cause. If the
office of any Director elected by the holders of Shares of Series 1 Preferred
Stock pursuant to this paragraph becomes vacant for any reason, the remaining
Director elected pursuant to this paragraph may choose a successor who shall
hold office for the unexpired term in respect of which such vacancy occurred,
and if the offices of both such Directors elected by the holders of Shares of
Series 1 Preferred Stock pursuant to this paragraph become vacant for any
reason, such vacancies may be filled for the unexpired term in respect of which
such vacancy occurred only by the affirmative vote of the holders of the
outstanding Shares of Series 1 Preferred Stock, together with the holders of
the outstanding shares of any other class or series of stock upon which like
voting rights have been conferred and are exercisable (voting together as a
class).
(ii) The voting rights vested pursuant to paragraph (C)(i)
hereof in the holders of the outstanding Shares of Series 1 Preferred Stock,
together with the holders of outstanding shares of any one or more other
classes or series of stock of the Corporation upon which like voting rights
have been conferred and are exercisable (voting together as a class), may not
be exercised at any annual meeting unless one-third of the outstanding shares
of stock of the corporation upon which such voting rights have been conferred
shall be present at such meeting in person or by proxy. The absence of a
quorum of the holders of Company Common and Class A Common Stock shall not
affect the exercise by the holders of Shares of Series 1 Preferred Stock of
such rights. In connection with the election of Directors pursuant to
paragraph (C)(i) hereof, each holder of Shares of Series 1 Preferred Stock
shall be entitled to one vote for each one one-hundredth of a Share held (the
holders of shares of any other class or series of preferred stock having like
voting rights being entitled to such number of votes, if any, for each share of
such stock held as may be granted to them).
4
<PAGE> 5
(iii) During any default period, the holders of shares of
Company Common Stock, Class A Common Stock, and Shares of Series 1 Preferred
Stock, and other classes or series of stock of the Corporation, if applicable,
shall continue to be entitled to elect (voting together as a class) all the
Directors other than the two Directors to be elected pursuant to paragraph
(C)(i) hereof by the holders of the outstanding shares of Series 1 Preferred
Stock, together with the holders of outstanding shares of any one or more other
classes or series of stock of the Corporation upon which like voting rights
have been conferred and are exercisable (voting together as a class).
(iv) Immediately upon the expiration of a default period, (x)
the right of the holders of Shares of Series 1 Preferred Stock to elect
Directors pursuant to paragraph (C)(i) hereof shall cease (subject to
re-vesting in the event of each and every subsequent default of the character
mentioned in paragraph (C)(i) above), and (y) the term of any Directors elected
by the holders of Shares of Series 1 Preferred Stock pursuant to paragraph
(C)(i) hereof shall terminate.
(D) Except as set forth herein, holders of Shares of Series 1
Preferred Stock shall have no special voting rights and their consents shall
not be required (except to the extent they are entitled to vote with holders of
share of Company Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions. (A) Whenever quarterly dividends
or other dividends or distributions payable on Shares of Series 1 Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared, on
outstanding Shares of Series 1 Preferred Stock shall have been paid in full,
the Corporation shall not
(i) declare or pay dividends on, or make any other
distributions on, any shares of Junior Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of Parity Stock, except dividends paid
ratably on Shares of Series 1 Preferred Stock and shares of all such
Parity Stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of such Shares
and all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any Junior Stock, provided, however, that the
Corporation may at any time redeem, purchase or otherwise acquire
shares of any such Junior Stock in exchange for shares of any Junior
Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any Shares of Series 1 Preferred Stock, or any Parity
Stock except in accordance with a purchase offer made in writing or by
publication (as determined by
5
<PAGE> 6
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates, and other relative rights and preferences of
the respective series and classes, shall determine in good faith, will
result in fair an equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any Shares of Series 1 Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock, par value $.01 per share, and may be reissued as part of a
new series of Preferred Stock, subject to the conditions and restrictions on
issuance set forth herein, in the Certificate, or in any other Certificate of
Designation creating series of Preferred Stock, per value $.01 per share, or
any similar stock, or as otherwise restricted by law.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation no distribution shall be made (i) to the holders of shares of
Junior Stock unless the holders of Shares of Series 1 Preferred Stock shall
have received, subject to adjustment as hereinafter provided in paragraph (B),
the greater of either (a) $1.00 per Share plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not earned or declared,
to the date of such payment, or (b) the amount equal to 100 times the aggregate
per share amount to be distributed to holders of shares of Company Common
Stock, or (ii) to the holders of shares of Parity Stock, unless simultaneously
therewith distributions are made ratably on Shares of Series 1 Preferred Stock
and all other shares of such Parity Stock in proportion to the total amounts to
which the holders of Shares of Series 1 Preferred Stock are entitled under
clause (i)(a) of this sentence and to which the holders of shares of such
Parity Stock are entitled, in each case upon such liquidation, dissolution or
winding up.
(B) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on outstanding shares of
Company Common Stock payable in shares of Company Common Stock, (ii) subdivide
outstanding shares of Company Common Stock, or (iii) combine outstanding shares
of Company Common Stock into a smaller number of shares, then in each such case
the aggregate amount to which holders of Shares of Series 1 Preferred Stock
were entitled immediately prior to such event pursuant to clause (i)(b) of
paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by
a fraction the numerator of which shall be the number of shares of Company
Common Stock that are outstanding immediately after such event and the
6
<PAGE> 7
denominator of which shall be the number of shares of Company Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination, or other transaction in
which the shares of Company Common Stock are exchanged for or converted into
other stock, securities, cash, and/or any other property, then in any such case
Shares of Series 1 Preferred Stock shall at the same time be similarly
exchanged for or converted into an amount per Share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount
of stock, securities, cash, and/or other property (payable in kind), as the
case may be, into which or for which each share of Company Common Stock is
converted or exchanged. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on outstanding shares of
Company Common Stock payable in shares of Company Common Stock, (ii) subdivide
outstanding shares of Company Common Stock, or (iii) combine outstanding
Company Common Stock into a smaller number of shares, then in each such case
the amount set forth in the immediately preceding sentence with respect to the
exchange or conversion of Shares of Series 1 Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Company Common Stock that are outstanding immediately after
such event and the denominator of which shall be the number of shares of
Company Common Stock that were outstanding immediately prior to such event.
Section 8. Redemption. The Shares of Series 1 Preferred Stock shall
not be redeemable.
Section 9. Ranking. Except as provided below, the Series 1 Preferred
Stock shall rank junior to all other series of Preferred Stock, par value $.01
per share, and to any other class of preferred stock that hereafter may be
issued by the Corporation as to the payment of dividends and the distribution
of assets, unless the terms of any such series or class shall provide
otherwise. The Series 1 Preferred Stock shall rank prior, as to dividends and
upon liquidation, dissolution, or winding up, to the Company Common Stock and
the Class A Common Stock. Notwithstanding anything to the contrary in this
Section 9, the Series 1 Preferred Stock shall rank on parity, as to dividends
and upon liquidation, dissolution, and winding up, with the Series 2 Junior
Preferred Stock.
Section 10. Amendment. Except as set forth in Section 1 hereof, the
Certificate, including, without limitation, this Certificate of Designation
shall not hereafter be amended, either directly or indirectly, or through
merger or consolidation with another corporation in any manner that would alter
or change the powers, preferences or special rights of the Series 1 Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two thirds of the outstanding Shares of Series 1 Preferred
Stock, voting separately as a class.
7
<PAGE> 8
Section 11. Fractional Shares. The Series 1 Preferred Stock may be
issued in fractions of one one-hundredth of a Share or other fractions of a
share, which fractions shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends, participate in
distributions, and to have the benefit of all other rights of holders of Series
1 Preferred Stock.
(A) The term "Company Common Stock" shall mean the class of stock
designated as the Common Stock, par value $.01 per share, of the Corporation at
the date hereof or any other class of stock resulting from successive changes
or reclassification of such Company Common Stock.
(B) The term "Class A Common Stock" shall mean the class of stock
designated as the Class A Common Stock, par value $.01 per share, of the
Corporation at the date hereof or any other class of stock resulting from
successive changes of reclassification of such Class A Common Stock.
(C) The term "Junior Stock" (i) as used in Section 4, shall mean
the Company Common Stock, the Class A Common Stock, and any other class or
series of capital stock of the Corporation hereafter authorized or issued over
which the Series 1 Preferred Stock has preference or priority as to the payment
of dividends and (ii) as used in Section 6, shall mean the Company Common
Stock, the Class A Common Stock, and any other class or series of capital stock
of the Corporation over which the Series 1 Preferred Stock has preference or
priority in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
(D) The term "Parity Stock" (i) as used in Section 4, shall mean
any class or series of stock of the Corporation hereafter authorized or issued
ranking pari passu with the Series 1 Preferred Stock as to the payment of
dividends, including the Series 2 Preferred Stock and (ii) as used in Section
6, shall mean any class or series of stock of the Corporation hereinafter
authorized or issued and ranking pari passu with the Series 1 Preferred Stock
as to the distribution of assets on any liquidation, dissolution, or winding up
of the Corporation, including the Series 2 Preferred Stock.
[SPACE INTENTIONALLY LEFT BLANK]
8
<PAGE> 9
IN WITNESS WHEREOF, Conectiv has caused this Certificate to be signed
by its Chairman and Chief Executive Officer this ___ day of ___________, 1998.
CONECTIV
By
--------------------------------
Howard E. Cosgrove
Chairman and Chief Executive
Officer
9
<PAGE> 1
Exhibit A-3.2
FORM OF CERTIFICATE OF DESIGNATION
OF
SERIES 2 JUNIOR PREFERRED
STOCK OF CONECTIV
------------------------
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
-------------------------
Conectiv, a corporation duly organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY:
that, pursuant to authority conferred upon the Board of Directors of
the Corporation by its Restated Certificate of Incorporation, and, pursuant to
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors, at a duly called meeting held on [
], at which a quorum was present and acted throughout, adopted
the following resolutions, which resolutions remain in full force and effect on
the date hereof creating a class of [ ] shares of Preferred Stock having a
par value of $.01 per share, designated as Series 2 Junior Preferred Stock.
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Restated Certificate of
Incorporation of the Corporation, the Board of Directors does hereby create,
authorize and provide for the issuance of a series of preferred stock, par
value $.01 per share, of the Corporation, designated as Series 2 Junior
Preferred Stock having the voting powers, designation, relative, participating,
optional and other special rights, preferences, and qualifications, limitations
and restrictions thereof that are set forth as follows:
Section 1. Designation and Amount. The shares of such class shall be
designated as "Series 2 Junior Preferred Stock" (the "Series 2 Preferred
Stock") and the number of shares constituting such class shall be [ ].
Such number of shares may be
<PAGE> 2
increased or decreased by resolution of the Board of Directors, provided that
no such decrease shall reduce the number of shares of the Series 2 Preferred
Stock to a number less than the number of shares then outstanding, plus the
number reserved for issuance upon the exercise of options, rights or warrants,
or upon conversion of any outstanding securities issued by the Corporation
convertible into Series 2 Preferred Stock. All capitalized terms used herein
have the meanings ascribed to them in the Restated Certificate of Incorporation
of the Corporation (the "Certificate"), unless otherwise defined herein.
Section 2. Dividends and Distributions. (A) Subject to the
prior and superior rights of the holders of any shares of any other class or
series of Preferred Stock of the Corporation ranking prior and superior to the
shares of Series 2 Preferred Stock with respect to dividends, each holder of a
share (a "Share") of Series 2 Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for that purpose, (i) quarterly dividends payable in cash on the last
day of March, June, September, and December in each year (each such date being
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of such Share of Series 2
Preferred Stock, in an amount per Share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends declared on shares of the Class A Common Stock (other than a cash
dividend declared pursuant to subsection 4.1(A)(1)(a) of Section II of Article
IV of the Certificate) since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of a Share of Series 2 Preferred Stock, and (ii)
subject to the provision for adjustment hereinafter set forth, quarterly
distributions (payable in kind) on each Quarterly Dividend Payment Date in an
amount per Share equal to 100 times the aggregate per share amount of all
non-cash dividends or other distributions (other than (x) a dividend payable in
shares of Class A Common Stock, or a subdivision of the outstanding shares of
Class A Common Stock, by reclassification or otherwise, or (y) a dividend
declared pursuant to subsection 4.1(A)(1)(a) of Section II of Article IV of the
Certificate) declared on shares of Class A Common Stock since the immediately
preceding Quarterly Dividend Payment Date, or with respect to the first
Quarterly Dividend Payment Date, since the first issuance of a Share of Series
2 Preferred Stock. In the event that the Corporation shall at any time after [
] (the "Rights Declaration Date") (i) declare any dividend on outstanding
shares of Class A Common Stock payable in shares of Class A Common Stock, (ii)
subdivide outstanding shares of Class A Common Stock or (iii) combine
outstanding shares of Class A Common Stock into a smaller number of shares,
then in each such case the amount to which the holder of a Share of Series 2
Preferred Stock was entitled immediately prior to such event pursuant to the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which shall be the number of shares of Class A Common Stock
that are outstanding immediately after such event and the denominator of which
shall be the number of shares of Class A Common Stock that were outstanding
immediately prior to such event.
2
<PAGE> 3
(B) The Corporation shall declare a dividend or distribution on
Shares of Series 2 Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the shares of Class
A Common Stock (other than a dividend or distribution payable in shares of
Class A Common Stock or a dividend declared pursuant to subsection 4.1(A)(1)(a)
of Section II of Article IV of the Certificate); provided, however, that in the
event no dividend or distribution shall have been declared on the Class A
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Date, a dividend of $1.00 per Share on
the Series 2 Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on
each outstanding Share of Series 2 Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of such Share of Series 2
Preferred Stock, unless the date of issuance of such Share is prior to the
record date for the first Quarterly Dividend Payment Date, in which case,
dividends on such Share shall begin to accrue from the date of issuance of such
Share, or unless the date of issuance is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of Shares of
Series 2 Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
Shares of Series 2 Preferred Stock in an amount less than the aggregate amount
of all such dividends at the time accrued and payable on such Shares shall be
allocated pro rata on a share-by-share basis among all Shares of Series 2
Preferred Stock at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of Shares of Series 2 Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of Shares of Series 2
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each Share of Series 2 Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the holders of Class A Common
Stock of the Corporation. In the event that the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on outstanding
shares of Class A Common Stock payable in shares of Class A Common Stock, (ii)
subdivide outstanding shares of Class A Common Stock or (iii) combine the
outstanding shares of Class A Common Stock into a small number of shares, then
in each such case the number of votes per Share to which holders of Shares of
Series 2 Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which shall
be the number of shares of Class A Common Stock outstanding immediately after
such event and the
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<PAGE> 4
denominator of which shall be the number of shares of Class A Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or in any other
Certificate of Designation creating a series of preferred stock, or any similar
stock, or by law, the holders of Shares of Series 2 Preferred Stock, the
holders of shares of Class A Common Stock, and the holders of any other class
or series of capital stock of the Corporation entitled to vote generally,
together with the Class A Common Stock, shall vote together as one class on all
matters submitted to a vote of the holders of such stock.
(C) (i) If at any time dividends on any Shares of Series 2
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, then during the period (a "default period") from the
occurrence of such event until such time as all accrued and unpaid dividends
for all previous quarterly dividend periods and for the current quarterly
dividend period on all Shares of Series 2 Preferred Stock then outstanding
shall have been declared and paid or set apart for payment, the holders of the
outstanding Shares of Series 2 Preferred Stock, together with the holders of
outstanding shares of any one or more other classes or series of stock of the
Corporation upon which like voting rights have been conferred and are
exercisable (voting together as a class), shall have the right to elect two
Directors to the Board of Directors of the Corporation at the Corporation's
next annual meeting of stockholders, and so long as such default period
continues, shall have the right to elect a successor to each of the two
Directors so elected upon the expiration of their respective terms, such right
to be exercised at the subsequent annual meeting or meetings at which the
respective terms of such Directors expire. Any Director who shall have been so
elected pursuant to this paragraph may be removed only for cause. If the
office of any Director elected by the holders of Shares of Series 2 Preferred
Stock pursuant to this paragraph becomes vacant for any reason, the remaining
Director elected pursuant to this paragraph may choose a successor who shall
hold office for the unexpired term in respect of which such vacancy occurred,
and if the offices of both such Directors elected by the holders of Shares of
Series 2 Preferred Stock pursuant to this paragraph become
vacant for any reason, such vacancies may be filled for the unexpired term in
respect of which such vacancy occurred only by the affirmative vote of the
holders of the outstanding Shares of Series 2 Preferred Stock, together with
the holders of the outstanding shares of any other class or series of stock
upon which like voting rights have been conferred and are exercisable (voting
together as a class).
(ii) The voting rights vested pursuant to paragraph (C)(i)
hereof in the holders of the outstanding Shares of Series 2 Preferred Stock,
together with the holders of outstanding shares of any one or more other
classes or series of stock of the Corporation upon which like voting rights
have been conferred and are exercisable (voting together as a class), may not
be exercised at any annual meeting unless one-third of the outstanding shares
of stock of the Corporation upon which such voting rights have been conferred
shall be present at such meeting in person or by proxy. The absence of a
quorum of the holders of Company Common and Class A Common Stock shall not
affect the exercise by the
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<PAGE> 5
holders of Shares of Series 2 Preferred Stock of such rights. In connection
with the election of Directors pursuant to paragraph (C)(i) hereof, each holder
of Series 2 Preferred Stock shall be entitled to one vote for each one
one-hundredth of a Share held (the holders of shares of any other class or
series of preferred stock having like voting rights being entitled to such
number of votes, if any, for each share of such stock held as may be granted to
them).
(iii) During any default period, the holders of shares of
Company Common Stock, Class A Common Stock, and Shares of Series 2 Preferred
Stock, and other classes or series of stock of the Corporation, if applicable,
shall continue to be entitled to elect (voting together as a class) all the
Directors other than the two Directors to be elected pursuant to paragraph
(C)(i) hereof by the holders of the outstanding shares of Series 2 Preferred
Stock, together with the holders of outstanding shares of any one or more other
classes or series of stock of the Corporation upon which like voting rights
have been conferred and are exercisable (voting together as a class).
(iv) Immediately upon the expiration of a default period, (x)
the right of the holders of Shares of Series 2 Preferred Stock to elect
Directors pursuant to paragraph (C)(i) hereof shall cease (subject to
re-vesting in the event of each and every subsequent default of the character
mentioned in paragraph (C)(i) above), and (y) the term of any Directors elected
by the holders of Shares of Series 2 Preferred Stock pursuant to paragraph
(C)(i) hereof shall terminate.
(D) Except as set forth herein, holders of Shares of Series 2
Preferred Stock shall have no special voting rights and their consents shall
not be required (except to the extent they are entitled to vote with holders of
share of Class A Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions. (A) Whenever quarterly dividends
or other dividends or distributions payable on Shares of Series 2 Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on outstanding
Shares of Series 2 Preferred Stock shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, or make any other
distributions on, any shares of Junior Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of Parity Stock, except dividends paid
ratably on Shares of Series 2 Preferred Stock and shares of all such
Parity Stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of such Shares
and all such shares are then entitled;
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<PAGE> 6
(iii) redeem or purchase or otherwise acquire for
consideration shares of any Junior Stock, provided, however, that the
Corporation may at any time redeem, purchase or otherwise acquire
shares of any such Junior Stock in exchange for shares of any Junior
Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any Shares of Series 2 Preferred Stock, or any Parity
Stock except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates, and other
relative rights and preferences of the respective series and classes,
shall determine in good faith, will result in fair an equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any Shares of Series 2 Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock, par value $.01 per share, and may be reissued as
part of a new series of Preferred Stock, subject to the conditions and
restrictions on issuance set forth herein, in the Certificate, or in any other
Certificate of Designation creating series of Preferred Stock, per value $.01
per share, or any similar stock, or as otherwise restricted by law.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation no distribution shall be made (i) to the holders of shares of
Junior Stock unless the holders of Shares of Series 2 Preferred Stock shall
have received, subject to adjustment as hereinafter provided in paragraph (B),
the greater of either (a) $1.00 per Share plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not earned or declared,
to the date of such payment, or (b) the amount equal to 100 times the aggregate
per share amount to be distributed to holders of shares of Class A Common
Stock, or (ii) to the holders of shares of Parity Stock, unless simultaneously
therewith distributions are made ratably on Shares of Series 2 Preferred Stock
and all other shares of such Parity Stock in proportion to the total amounts to
which the holders of Shares of Series 2 Preferred Stock are entitled under
clause (i)(a) of this sentence and to which the holders of shares of such
Parity Stock are entitled, in each case upon such liquidation, dissolution or
winding up.
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<PAGE> 7
(B) In the event that the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on outstanding shares of Class
A Common Stock payable in shares of Class A Common Stock, (ii) subdivide
outstanding shares of Class A Common Stock, or (iii) combine outstanding shares
of Class A Common Stock into a smaller number of shares, then in each such case
the aggregate amount to which holders of Shares of Series 2 Preferred Stock
were entitled immediately prior to such event pursuant to clause (i)(b) of
paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by
a fraction the numerator of which shall be the number of shares of Class A
Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Class A Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination, or other transaction (other
than a conversion of Class A Common Stock into other shares of any class or
series of capital stock of the Corporation pursuant to subsection 4, Section II
of Article IV of the Certificate) in which the shares of Class A Common Stock
are exchanged for or converted into other stock, securities, cash, and/or any
other property, then in any such case Shares of Series 2 Preferred Stock shall
at the same time be similarly exchanged for or converted into an amount per
Share (subject to the provision for adjustment hereinafter set forth) equal to
100 times the aggregate amount of stock, securities, cash, and/or other
property (payable in kind), as the case may be, into which or for which each
share of Class A Common Stock is converted or exchanged. In the event that the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on outstanding shares of Class A Common Stock payable in shares of
Class A Common Stock, (ii) subdivide outstanding shares of Class A Common
Stock, or (iii) combine outstanding shares of Class A Common Stock into a
smaller number of shares, then in each such case the amount set forth in the
immediately preceding sentence with respect to the exchange or conversion of
Shares of Series 2 Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which shall be the number of shares of Class A
Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Class A Common Stock that
were outstanding immediately prior to such event.
Section 8. Conversion and Redemption. The Series 2 Preferred Stock
shall be subject to conversion or redemption on the terms provided below in
this Section 8. Except as provided in this Section 8, the Series 2 Preferred
Stock shall not be redeemable.
Section 8.1. Conversion or Redemption.
(A) If the Board of Directors so declares, or in the event of any
of the following:
(x) the Disposition, in one transaction or a series of related
transactions, by the Corporation and/or its subsidiaries of all or
substantially
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<PAGE> 8
all of the properties and assets attributed to the Atlantic Utility
Group (as defined in the Certificate) to one or more persons or
entities (other than (1) the Disposition by the Corporation of its
properties and assets in one transaction or a series of related
transactions in connection with the dissolution or the liquidation or
winding up of the Corporation and the distribution of assets to
stockholders in Liquidation), (2) to any person or entity controlled
(as determined by the Board of Directors) by the Corporation, or (3)
pursuant to a Related Business Transaction, or
(y) the purchase by the Corporation of all (but not less than
all) of the outstanding shares of Class A Common Stock or the
redemption or conversion of all (but not less than all) of the
outstanding shares of Class A Common Stock pursuant to subsection 4.2
of Section II of Article IV of the Certificate,
then each outstanding Share of the Series 2 Preferred Stock shall be converted,
as of the Conversion Date provided by paragraph (A) of subsection 8.2 into the
number of fully paid and nonassessable shares of Series 1 Preferred Stock (or
if the Series 1 Preferred Stock is not Publicly Traded at such time and shares
of any other class or series of junior preferred stock of the Corporation
(other than Series 2 Preferred Stock) entitled to vote generally, together with
the Common Stock, are then Publicly Traded, of such other class or series of
junior preferred stock as has the largest Market Capitalization as of the close
of business on the Trading Day immediately preceding the date of the notice of
conversion required by paragraph (A) of subsection 8.2) equal to the applicable
percentage, on the Conversion Date, set forth below of the Market Value Ratio
of the Series 2 Preferred Stock to the Series 1 Preferred Stock as of the fifth
Trading Day prior to the date of the notice of such conversion required by such
paragraph (A):
<TABLE>
<CAPTION>
12 Month Period Prior to
the Applicable Anniversary Percentage of
of the Effective Date Market Value Ratio
-------------------------- ------------------
<S> <C>
First 125%
Second 120%
Third 115%
Fourth and Thereafter 110%
</TABLE>
(B) If the Corporation consummates (i) a tender offer made by the
Corporation for all of the outstanding Shares of Series 2 Preferred Stock at an
all cash price of at least 110% of the Time-Weighted Market Price of a share of
Series 2 Preferred Stock as of the Trading Day immediately preceding the date
of such offer or (ii) an exchange offer by the Corporation to exchange each
outstanding Share of Series 2 Preferred Stock into a number of shares of Series
1 Preferred Stock (or if the Series 1 Preferred Stock is not Publicly Traded at
such time and shares of any other class or series
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<PAGE> 9
of junior preferred stock of the Corporation (other than Series 2 Preferred
Stock) entitled to vote generally, together with the Common Stock, are then
Publicly Traded, of such other class or series of junior preferred stock as has
the largest Market Capitalization as of the close of business on the Trading
Day immediately preceding the date of such offer) equal to at least 110% of the
Market Value Ratio of the Series 2 Preferred Stock to the Series 1 Preferred
Stock as of the Trading Day immediately preceding the date of such offer,
which, in either case, is accepted by the holders of greater than 50% of the
outstanding shares of Series 2 Preferred Stock, then the Board of Directors may
either (x) provided that there are funds of the Corporation legally available
therefor, redeem as of the Redemption Date provided in paragraph (B) of
subsection 8.2 each Share of Series 2 Preferred Stock remaining outstanding in
exchange for cash in an amount equal to the highest cash price paid per share
by the Corporation pursuant to such tender offer or to the product of the
highest number of shares of Series 1 Preferred Stock (or such other class or
series of junior preferred stock of the Corporation) per share issued in
exchange for any share of Series 2 Preferred Stock pursuant to such exchange
offer and the Time-Weighted Market Price of a share of Series 1 Preferred Stock
(or such other class or series of junior preferred stock of the Corporation) as
of the Trading Day immediately preceding the date of such exchange offer, as
the case may be, or (y) declare that each Share of Series 2 Preferred Stock
remaining outstanding shall be converted as of the Conversion Date provided in
paragraph (A) of subsection 8.2 into a number of fully paid and nonassessable
shares of Series 1 Preferred Stock (or if the Series 1 Preferred Stock is not
Publicly Traded at such time and shares of any other class or series of junior
preferred stock of the Corporation (other than Series 2 Preferred Stock)
entitled to vote generally, together with the Common Stock, are then Publicly
Traded, of such other class or series of junior preferred stock as has the
largest Market Capitalization as of the close of business on the Trading Day
immediately preceding the date of notice of such conversion required by such
paragraph (A)) equal to the quotient of the highest cash price paid per share
by the Corporation pursuant to such tender offer and the Time-Weighted Market
Price of a share of Series 1 Preferred Stock (or such other class or series of
junior preferred stock of the Corporation) as of the Trading Day immediately
preceding the date of the notice of such conversion required by such paragraph
(A) or to the highest number of shares of Series 1 Preferred Stock (or such
other class or series of junior preferred stock of the Corporation) per share
issued in exchange for any Share of Series 2 Preferred Stock pursuant to such
exchange offer, as the case may be.
(C) If any person (including the Corporation) makes a tender offer
to purchase shares of Series 1 Preferred Stock for cash, property, or other
securities, the holders of Shares of Series 2 Preferred Stock will be entitled
to convert each and any such Share of Series 2 Preferred Stock into the number
of fully paid and nonassessable shares of Series 1 Preferred Stock equal to
100% of the Market Value Ratio of the Series 2 Preferred Stock to the Series 1
Preferred Stock as of the Trading Day immediately preceding the date of such
tender offer; provided, that (x) any election by such holder to make such
conversion may be fully revoked by such holder with respect to any such Share
of Series 2 Preferred Stock by giving written notice to the Corporation prior
to the
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<PAGE> 10
consummation of such tender offer and (y) such conversion will only be
effective only with respect to such shares of Series 1 Preferred Stock issuable
upon such conversion which are actually accepted for purchase pursuant to such
tender offer.
(D) If any person (including the Corporation) consummates a tender
offer for all of the outstanding shares of Series 1 Preferred Stock at an all
cash price that is accepted by the holders of greater than 50% of the
outstanding shares of Series 1 Preferred Stock, then the Board of Directors
may either (x) redeem as of the Redemption Date provided by paragraph (B) of
subsection 8.2 each Share of Series 2 Preferred Stock outstanding in exchange
for cash in an amount equal to the product of the highest cash price paid per
share by such person pursuant to such tender offer and the Market Value Ratio
of the Series 2 Preferred Stock to the Series 1 Preferred Stock as of the fifth
Trading Day prior to the date of such tender offer or (y) declare that each
Share of Series 2 Preferred Stock outstanding shall be converted as of the
Conversion Date provided by paragraph (A) of subsection 8.2 into a number of
fully paid and nonassessable shares of Series 1 Preferred Stock equal to the
quotient of the highest cash price paid per share by such person pursuant to
such tender offer and the Time-Weighted Market Price of a share of Series 1
Preferred Stock as of the Trading Day immediately preceding the date of the
notice of such conversion required by such paragraph (A).
Section 8.2 Notice and Other Provisions.
(A) If the Series 2 Preferred Stock is converted into Series 1
Preferred Stock (or another class or series of junior preferred stock of the
Corporation) pursuant to paragraph (A) of subsection 8.1 or if the Corporation
determines to convert the Series 2 Preferred Stock into Series 1 Preferred
Stock (or another class or series of junior preferred stock of the Corporation)
pursuant to paragraph (B), (C), or (D) of subsection 8.1, the Corporation
shall, not earlier than the 35th Trading Day and not later than the 45th
Trading Day prior to the Conversion Date, cause notice to be given to each
holder of Shares of Series 2 Preferred Stock setting forth (1) a statement that
all outstanding shares of Series 2 Preferred Stock shall be converted, (2) the
Conversion Date (which, (x) in the case of a conversion after a Disposition,
shall not be more than 85 Trading Days following the consummation of such
Disposition, (y) in the case of a purchase by the Corporation or redemption or
conversion of all of the outstanding shares of Class A Common Stock, shall not
be fewer than 35 or more than 85 Trading Days following the consummation of
such purchase, redemption, or conversion of Class A Common Stock, and (z) in
the case of a conversion after a tender or exchange offer pursuant to paragraph
(B), (C), or (D) of subsection 8.1, shall not be fewer than 35 or more than 85
Trading Days following the consummation of such offer), (3) the per share
number of shares of Series 1 Preferred Stock, or another class or series of
junior preferred stock of the Corporation, as the case may be, to be received
with respect to each Share of Series 2 Preferred Stock, including details as to
the calculation thereof, (4) the place or places where certificates for Shares
of Series 2 Preferred Stock, properly endorsed or assigned for transfer (unless
the Corporation shall waive such requirement), are to be surrendered for
delivery of certificates for shares
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<PAGE> 11
of Series 1 Preferred Stock (or another class or series of junior preferred
stock of the Corporation), and (5) a statement to the effect that, except as
otherwise provided by paragraph (D) of this subsection 8.2, dividends on such
Shares of Series 2 Preferred Stock shall cease to be paid as of such Conversion
Date. Such notice shall be sent by first-class mail, postage prepaid, to each
such holder at such holder's address as the same appears on the transfer books
of the Corporation.
(B) If the Corporation determines to redeem Series 2 Preferred Stock
pursuant to subparagraph (B) or (D) of subsection 8.1, the Corporation shall,
not earlier than the 35th Trading Day and not later than the 45th Trading Day
prior to the Redemption Date, cause notice to be given to each holder of Shares
of Series 2 Preferred Stock setting forth (1) a statement that all Shares of
Series 2 Preferred Stock outstanding on the Redemption Date shall be redeemed,
(2) the Redemption Date (which shall not be less than 35 or more than 85
Trading Days following the consummation of the applicable tender or exchange
offer), (3) the redemption price for the Shares, (4) the place or places where
certificates for Shares of Series 2 Preferred Stock, properly endorsed or
assigned for transfer (unless the Corporation waives such requirement), are to
be surrendered for delivery of cash, (5) the number of outstanding Shares of
Series 2 Preferred Stock, and (6) a statement to the effect that, except a
otherwise provided by paragraph (D) of this subsection 8.2, dividends on such
Shares of Series 2 Preferred Stock shall cease to be paid as of such Redemption
Date. Such notice shall be sent by first-class mail, postage prepaid, to each
such holder at such holder's address as the same appears on the transfer books
of the Corporation.
(C) The Corporation shall not be required to issue or deliver
fractional shares of any capital stock or of any other securities (other than
fractional shares of Series 1 Preferred Stock in integral multiples of one
one-hundredths of a share) to any holder of Series 2 Preferred Stock upon any
conversion or redemption pursuant to this Section 8. If more than one Share
(or more than one fractional share) of Series 2 Preferred Stock shall be held
at the same time by the same holder, the Corporation may aggregate the number
of shares of any capital stock that shall be issuable or any other securities
or property that shall be distributable to such holder upon any conversion or
redemption (including any fractional shares). If there are fractional shares
of any capital stock or of any other securities remaining to be issued or
distributed to the holders of Series 2 Preferred Stock, the Corporation shall,
if such fractional shares are not issued or distributed to the holder, pay cash
in respect of such fractional shares in an amount equal to the Fair Value
thereof on the fifth Trading Day prior to the date such payment is to be made
(without interest).
(D) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any Shares of Series 2 Preferred Stock; provided,
however, that if the Conversion Date or Redemption Date, as the case may be,
with respect to any Shares of Series 2 Preferred Stock shall be subsequent to
the record date for the payment of a dividend or other distribution thereon or
with respect thereto, the holders of Series 2 Preferred Stock at the close of
business on such record date shall be entitled to receive the
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<PAGE> 12
dividend or other distribution payable on or with respect to such Shares on the
date set for payment of such dividend or other distribution, in each case
without interest, notwithstanding the subsequent conversion or redemption of
such Shares.
(E) Before any holder of Series 2 Preferred Stock shall be entitled
to receive any cash payment and/or certificate or instruments representing
shares of any capital stock and/or securities or property to be distributed to
such holder with respect to Series 2 Preferred Stock pursuant to this Section
8, such holder shall surrender at such place as the Corporation shall specify
certificates for Series 2 Preferred Stock, properly endorsed or assigned for
transfer (unless the Corporation shall waive such requirement). The
Corporation shall as soon as practicable after receipt of certificates
representing shares of Series 2 Preferred Stock deliver to the person for whose
account such shares were so surrendered, or to such person's nominee or
nominees, the cash and/or the certificates or instruments representing the
number of shares (or fractional shares, if any) of the kind of capital stock
and/or other securities or property to which such person shall be entitled as
aforesaid, together with any payment in respect of fractional shares
contemplated by paragraph (C) of this subsection 8.2, in each case without
interest. If less than all of the Shares of Series 2 Preferred Stock
represented by any one certificate are to be redeemed or converted, the
Corporation shall issue and deliver a new certificate for the Shares of Series
2 Preferred Stock not redeemed.
(F) From and after any applicable Conversion Date or Redemption Date,
as the case may be, all rights of a holder of Shares of Series 2 Preferred
Stock that were converted or redeemed shall cease except for the right, upon
surrender of the certificates representing such shares as required by paragraph
(E) of this subsection 8.2, to receive the cash and/or the certificates or
instruments representing shares of the kind of capital stock and/or other
securities or property for which such shares were converted or redeemed,
together with any payment in respect of fractional shares contemplated by
paragraph (C) of this subsection 8.2 and rights to dividends as provided in
paragraph (D) of this subsection 8.2, in each case without interest. No holder
of a certificate that immediately prior to the applicable Conversion Date
represented Shares of Series 2 Preferred Stock shall be entitled to receive any
dividend or other distribution or interest payment with respect to shares of
any kind of capital stock or other security or instrument for which Series 2
Preferred Stock was converted until the surrender as required by this
subsection 8 of such certificate in exchange for a certificate or certificates
or instrument or instruments representing such capital stock or other
security. Upon such surrender, there shall be paid to the holder the amount of
any dividends or other distributions (without interest) which theretofore
became payable on any class or series of capital stock of the Corporation as of
a record date after the Conversion Date, but that were not paid by reason of
the foregoing, with respect to the number of shares (or fractional shares, if
any) of the kind of capital stock represented by the certificate or
certificates issued upon such surrender. From and after a Conversion Date, the
Corporation shall, however, be entitled to treat the certificates for Series 2
Preferred Stock that have not yet been surrendered for conversion as evidencing
the ownership of the number of shares (or fractional shares, if any) of the
kind or kinds of
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<PAGE> 13
capital stock of the Corporation for which the Shares of Series 2 Preferred
Stock represented by such certificates shall have been converted,
notwithstanding the failure to surrender such certificates.
(G) The Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issuance
or delivery of any shares of capital stock and/or other securities upon
conversion or redemption of Shares of Series 2 Preferred Stock pursuant to this
Section 8. The Corporation shall not, however, be required to pay any tax that
may be payable in respect of any transfer involved in the issuance or delivery
of any shares of capital stock and/or other securities in a name other than
that in which the shares of capital stock and/or other securities in a name
other than that in which the Shares of Series 2 Preferred Stock so converted or
redeemed were registered, and no such issuance or delivery shall be made unless
and until the person requesting such issuance or delivery has paid to the
Corporation the amount of any such tax or has established to the satisfaction
of the Corporation that such tax has been paid.
(H) Neither the failure to mail any notice required by this
subsection 8.2 to any particular holder of Series 2 Preferred Stock nor any
defect therein shall affect the sufficiency thereof with respect to any other
holder of outstanding Shares of Series 2 Preferred Stock or the validity of any
such conversion or redemption.
(I) The Board of Directors may establish such rules and requirements
to facilitate the effectuation of the transactions contemplated by this Section
8 as the Board of Directors shall determine to be appropriate.
Section 8.3 Certain Definitions. As used in this Section 8, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meaning in the plural, and vice versa), unless the
context otherwise requires. All other capitalized terms used in this Section 8
have the meanings ascribed to them elsewhere in this Certificate of Designation
or in Article IV of the Certificate.
(A) the term "Conversion Date" shall mean the date fixed by the
Board of Directors as the effective date for the conversion of shares of Series
2 Preferred Stock into shares of Series 1 Preferred Stock (or another class or
series of junior preferred stock of the Corporation) as shall be set forth in
the notice to holders of shares of Series 2 Preferred Stock required pursuant
to paragraph (A) of subsection 8.2 of this Section 8.
(B) the term "Market Capitalization" with respect to any class or
series of junior preferred stock on any date shall mean the product of (i) the
Market Value of one share of such class or series of junior preferred stock on
such date and (ii) the number of shares of such class or series of junior
preferred stock outstanding on such date.
(C) the term "Market Value Ratio of Series 2 Preferred Stock to
Series 1 Preferred Stock" as of any date shall mean the fraction (which may be
greater than 1/1),
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<PAGE> 14
expressed as a decimal (rounded to the nearest five decimal places), of a share
of Series 1 Preferred Stock (or another class or series of junior preferred
stock of the Corporation, if so provided in subsection 8.1 because the Series 1
Preferred Stock is not then Publicly Traded) to be issued in respect of a Share
of Series 2 Preferred Stock upon a conversion of Series 2 Preferred Stock into
Series 1 Preferred Stock (or another class or series of junior preferred stock
of the Corporation) in accordance with subsection 8.1, based on the market
value of a Share of Series 2 Preferred Stock to the market value of a share of
Series 1 Preferred Stock (or such other class or series of junior preferred
stock) as of such date, determined by the fraction the numerator of which shall
be the sum of (A) four times the average Market Value of one Share of Series 2
Preferred Stock over the period of five consecutive Trading Days ending on such
date, (B) three times the average Market Value of one Share of Series 2
Preferred Stock over the period of five consecutive Trading Days ending on the
fifth Trading Day prior to such date, (C) two times the average Market Value of
one Share of Series 2 Preferred Stock over the period of five consecutive
Trading Days ending on the tenth Trading Day prior to such date, and (D) the
average Market Value of one Share of Series 2 Preferred Stock over the period
of five consecutive Trading Days ending on the fifteenth Trading Day prior to
such date, and the denominator of which shall be the sum of (A) four times the
average Market Value of one share of Series 1 Preferred Stock (or such other
class or series of junior preferred stock) over the period of five consecutive
Trading Days ending on such date, (B) three times the average Market Value of
one share of Series 1 Preferred Stock (or such other class or series of junior
preferred stock) over the period of five consecutive Trading Days ending on the
fifth Trading Day prior to such date, (C) two times the average Market Value of
one share of Series 1 Preferred Stock (or such other class or series of junior
preferred stock) over the period of five consecutive Trading Days ending on
the tenth Trading Day prior to such date, and (D) the average Market Value of
one share of Series 1 Preferred Stock (or such other class or series of junior
preferred stock) over the period of five consecutive Trading Days ending on the
fifteenth Trading Day prior to such date.
(D) the term "Redemption Date" shall mean the date fixed by the
Board of Directors as the effective date for a redemption of Shares of Series 2
Preferred Stock, as set forth in a notice to holders thereof required pursuant
to paragraph (B) of subsection 8.2.
(E) the term "Time-Weighted Market Price" as of any date with
respect to any class or series of junior preferred stock shall mean an amount
equal to (i) the sum of (A) four times the average Market Value of one share of
such class or series of junior preferred stock over the period of five
consecutive Trading Days ending on such date, (B) three times the average
Market Value of one share of such class or series of junior preferred stock
over the period of five consecutive Trading Days ending on the fifth Trading
Day prior to such date, (C) two times the average Market Value of one share of
such class or series of junior preferred stock over the period of five
consecutive Trading Days ending on the tenth Trading Day prior to such date,
and (D) the average Market Value of one share of such class or series of junior
preferred stock over the period of five
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<PAGE> 15
consecutive Trading Days ending on the fifteenth Trading Day prior to such
date, (ii) divided by ten (10).
(F) the term "Trading Day" with respect to any class or series of
junior preferred stock shall mean each weekday other than any day on which the
relevant class or series of junior preferred stock of the Corporation is not
traded on any national securities exchange or quoted in the NASDAQ National
Market or in the over-the-counter market.
Section 9. Ranking. Except as provided below, the Series 2 Preferred
Stock shall rank junior to all other series of Preferred Stock, par value $.01
per share, and to any other class of preferred stock that hereafter may be
issued by the Corporation as to the payment of dividends and the distribution
of assets, unless the terms of any such series or class shall provide
otherwise. The Series 2 Preferred Stock shall rank prior, as to dividends and
upon liquidation, dissolution, or winding up, to the Company Common Stock and
the Class A Common Stock. Notwithstanding anything to the contrary in this
Section 9, the Series 2 Preferred Stock shall rank on parity, as to dividends
and upon liquidation, dissolution, and winding up, with the Series 1 Junior
Preferred Stock.
Section 10. Amendment. Except as set forth in Section 1 hereof, the
Certificate, including, without limitation, this Certificate of Designation,
shall not hereafter be amended, either directly or indirectly, or through
merger or consolidation with another corporation in any manner that would alter
or change the powers, preferences, or special rights of the Series 2 Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two thirds of the outstanding Shares of Series 2 Preferred
Stock, voting separately as a class.
Section 11. Fractional Shares. The Series 2 Preferred Stock may be
issued in fractions of one one-hundredth of a Share or other fractions of a
share, which fractions shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends, participate in
distributions, redemptions, and conversions, and to have the benefit of all
other rights of holders of Shares of Series 2 Preferred Stock.
Section 12. Additional Definitions.
(A) The term "Company Common Stock" shall mean the class of stock
designated as the Common Stock, par value $.01 per share, of the Corporation at
the date hereof or any other class of stock resulting from successive changes
or reclassification of such Company Common Stock.
(B) The term "Class A Common Stock" shall mean the class of stock
designated as the Class A Common Stock, par value $.01 per share, of the
Corporation at the date hereof or any other class of stock resulting from
successive changes of reclassification of such Class A Common Stock.
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<PAGE> 16
(C) The term "Junior Stock" (i) as used in Section 4, shall mean
the Company Common Stock, the Class A Common Stock, and any other class or
series of capital stock of the Corporation hereafter authorized or issued over
which the Series 2 Preferred Stock has preference or priority as to the payment
of dividends and (ii) as used in Section 6, shall mean the Company Common
Stock, the Class A Common Stock, and any other class or series of capital stock
of the Corporation over which the Series 2 Preferred Stock has preference or
priority in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
(D) The term "Parity Stock" (i) as used in Section 4, shall mean
any class or series of stock of the Corporation hereafter authorized or issued
ranking pari passu with the Series 2 Preferred Stock as to the payment of
dividends, including the Series 1 Preferred Stock and (ii) as used in Section
6, shall mean any class or series of stock of the Corporation hereinafter
authorized or issued and ranking pari passu with the Series 2 Preferred Stock
as to the distribution of assets on any liquidation, dissolution, or winding up
of the Corporation, including the Series 1 Preferred Stock.
[SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 17
IN WITNESS WHEREOF, Conectiv has caused this Certificate to be signed
by its Chairman and Chief Executive Officer this ___ day of ___________, 1998.
CONECTIV
By
-------------------------------
Howard E. Cosgrove
Chairman and Chief Executive
Officer
17
<PAGE> 1
Exhibit F-1
Joyce Koria Hayes, Esquire
7 Graham Court
Newark, DE 19711
302-266-9211
302-266-9212(fax)
April 16, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Conectiv
SEC File Number 70-9155
Ladies and Gentlemen:
I have acted as counsel for Conectiv, a Delaware corporation, in
connection with its Form U-1 Application/Declaration (File No. 70-9155), as
amended ("Declaration"), filed with the Securities and Exchange Commission
("Commission") with respect to the proposed transactions described therein
("Proposed Transactions"). In the Declaration, authority is requested for
Conectiv to implement a stockholder rights plan ("Plan") and to enter into a
related Rights Agreement ("Agreement") with Conectiv Resource Partners, Inc.,
("Partners") a Delaware Corporation and an authorized mutual service company
under the Public Utility Holding Company Act of 1935 (the "Act"), as agent.
As discussed more completely in the Declaration and the Plan filed
as an exhibit to the Declaration, pursuant to the Plan, the Board of Directors
of Conectiv would declare a dividend distribution of one Company Common Right
("Company Common Right") for each outstanding share of Conectiv Common Stock,
$.01 par value per share ("Company Common Stock") and one Class A Common Right
(("Class A Common Right") (The Company Common Rights and the Class A
Common Rights are hereinafter referred to as "Rights.")) for each outstanding
share of Conectiv Class A Common Stock $.01 par value per share ("Class A Common
Stock") to stockholders of record at the close of business on a specified record
date. In addition, each holder of a share of Common Stock or Class A
<PAGE> 2
Common Stock, as the case may be, issued after the record date would similarly
be entitled to receive one Company Common or Class A Common Right, as the case
may be, for each such share. Each Company Common Right issued to a registered
holder of Company Common Stock would, after the Rights become exercisable,
entitle such holder to purchase from Conectiv one one-hundredth of one share of
Series 1 Junior Participating Preferred Stock (the "Series 1 Preferred Stock")
at a price per share to be determined by the Conectiv Board of Directors, and
each Class A Common Right issued to a registered holder of Class A Common Stock
would, after the Rights become exercisable, entitle such holder to purchase from
Conectiv one one-hundredth of one share of Series 2 Junior Participating
Preferred Stock (the "Series 2 Preferred Stock") at prices per share to be
determined by the Conectiv Board of Directors.
In connection with this opinion, I have examined originals or
copies, certified or otherwise identified to my satisfaction, of such records of
Conectiv and such other documents, certificates and corporate or other records
as I have deemed necessary or appropriate as a basis for the opinions set forth
herein. In my examination, I have assumed the genuineness of all signatures, the
legal capacity of all persons, the authenticity of all documents submitted to me
as originals, the conformity to original documents of documents submitted to me
as certified or photostatic copies and the authenticity of the originals of such
copies. As to various questions of fact material to such opinions I have, when
relevant facts were not independently established, relied upon statements
contained in the Declaration. I have also relied, with respect to paragraphs 2,
3 and 4 of the opinions on the opinion of Potter Anderson & Corroon LLP,
counsel to the Conectiv Board of Directors with respect to this matter; with
respect to paragraph 1, on the opinions of Peter F. Clark, General Counsel of
Conectiv as to matters of Virginia and Delaware law and Joanne M. Scanlon,
attorney employed by Delmarva Power and Light Co., as to matters of New Jersey
law; and with respect to paragraph 5 on the opinion of Mr. Clark.
The opinions expressed below in respect of the Proposed Transactions
are subject to the following assumptions, qualifications, limitations,
conditions and exceptions:
(a) The Rights Agreement, the dividend distribution of the Rights,
the establishment of the Series 1 and Series 2 Preferred Stock, the
authorization and issuance of the Series 1 or Series 2 Preferred Stock, and the
other aspects of the Proposed Transactions shall have been duly authorized and
approved by the Board of Directors of Conectiv and the Certificates of
Designation for the Series 1 and Series 2 Preferred Stock shall have been duly
and validly executed, delivered and filed with the Secretary of State of the
State of Delaware.
<PAGE> 3
(b) The Rights Agreement shall have been duly authorized, executed
and delivered by the parties thereto.
(c) The Commission shall have duly entered an appropriate order or
orders with respect to the Proposed Transactions as described in the Declaration
granting and permitting the Declaration to become effective under the Act, as
amended, and the rules and regulations thereunder.
(d) All legal matters incident to consummation of the Proposed
Transactions shall be satisfactory to me.
(e) The opinions in paragraphs 3 and 4 relating to rights and
privileges are subject to (i) applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, fraudulent transfer and similar laws relating to or
affecting creditors' rights generally and (ii) principles of equity, including
without limitation concepts of materiality, good faith, fair dealing and
reasonableness.
Based on the foregoing, and subject to the assumptions,
qualifications, limitations, conditions and exceptions set forth herein, I am of
the opinion that, in the event the Proposed Transactions are consummated in
accordance with the Declaration:
1. All state laws applicable to the Proposed Transactions will have
been complied with; however, I express no opinion as to the need to comply with
state blue sky laws.
2. Conectiv is validly organized and duly existing.
3. Upon issuance on the effective date of the Rights dividend, the
Rights will have been validly issued and the holders of the Rights will be
entitled to the rights and privileges appertaining thereto set forth in the
Rights Agreement.
4. The shares of Series 1 or Series 2 Preferred Stock, when
established by the filing of the Certificates of Designation with respect to the
Series 1 and Series 2 Preferred Stock, respectively, and when issued pursuant to
the Plan, will be validly issued, fully paid and nonassessable, and the holders
of such shares will be entitled to the rights and privileges appertaining
thereto set forth in the Certificate of Incorporation of Conectiv as amended by
the Certificates of Designation.
5. The consummation of the Proposed Transactions will not violate
the legal rights of the holders of any securities issued by Conectiv or any
associate company thereof.
<PAGE> 4
I hereby consent to the use of this opinion in connection with the
Declaration.
Very truly yours,
Joyce Koria Hayes
