<PAGE>
CH ENERGY GROUP, INC.
284 South Avenue
Poughkeepsie, New York 12601-4879
July 24, 1998
OFICS Filer Support
SEC Operations Center
6432 General Green Way
Alexandria, VA 22312-2413
Re: CH Energy Group, Inc.
Amendment No. 1 to Registration Statement, on Form
S-4 Registration No. 333-52797
Ladies and Gentlemen:
On behalf of CH Energy Group, Inc. (the "Company"),
enclosed herewith for filing by direct transmission via the
Securities and Exchange Commission's EDGAR system is Amendment
No.1 of the Company's Registration Statement (No. 333-52797), on
Form S-4, relating to 16,700,000 shares of its common stock,
$0.10 par value. The changes incorporated in this Amendment are
not material and reflect completion of information not previously
available and certain technical changes.
The Company hereby requests acceleration of the
effectiveness of said Registration Statement, as amended, to be
effective July 28, 1998. The Proxy Statement/Prospectus is
planned to be mailed on July 31, 1998.
If you have any questions or concerns, please feel free
to call the undersigned, at (914) 486-5757.
Very truly yours,
Ellen Ahearn
Secretary
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
JULY 24, 1998
REGISTRATION NO. 333-52797
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
CH ENERGY GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
NEW YORK 6719 14-1804460
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
ELLEN AHEARN
SECRETARY
CH ENERGY GROUP, INC.
284 SOUTH AVENUE 284 SOUTH AVENUE
POUGHKEEPSIE, NY 12601-4879 POUGHKEEPSIE, NY 12601-4879
(914) 452-2000 (914) 486-5757
(ADDRESS, INCLUDING ZIP CODE, AND (NAME, ADDRESS, INCLUDING ZIP
TELEPHONE NUMBER, INCLUDING AREA CODE, AND TELEPHONE NUMBER,
CODE, OF REGISTRANT'S PRINCIPAL INCLUDING AREA CODE, OF AGENT
EXECUTIVE OFFICES) FOR SERVICE)
COPIES TO:
WILLIAM P. REILLY, ESQ.
GOULD & WILKIE
ONE CHASE MANHATTAN PLAZA
NEW YORK, NY 10005-1401
(212) 344-5680
__________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: As soon as practicable after this Registration Statement
has become effective.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box. [__]
_________________
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED UNIT (2) PRICE (2) FEE
__________ __________ __________ ____________
Common Stock,
par value $.10 per
share (1). 16,700,000 $39.9375 $666,956,250 $ 202,100
(1) The number of shares of Common Stock of CH Energy Group, Inc. ("Holding
Company") to be issued in the Share Exchange described herein (the
"Share Exchange") cannot be precisely determined at the time this
Registration Statement becomes effective because shares of common stock
of Central Hudson Gas & Electric Corporation ("Central Hudson") may be
either issued thereafter and prior to the effective time of the Share
Exchange pursuant to Central Hudson's Stock Purchase Plan or may be
repurchased thereafter and prior to the effective time of the Share
Exchange pursuant to Central Hudson's common stock repurchase program.
This Registration Statement covers a number of shares of common stock of
the Holding Company which is estimated to be at least as large as the
number of shares of common stock of Central Hudson which is expected to
be outstanding at the effective time of the Share Exchange. See the
undertaking in Item 22(4) in Part II of this Registration Statement.
(2) Estimated pursuant to Rule 457(f)(1) of the Securities Act of 1933,
based upon the per share market value of the shares of common stock of
Central Hudson to be exchanged in the Share Exchange, which is the
average of the reported high and low sales prices of a share of common
stock of Central Hudson on the New York Stock Exchange, Inc. Composite
Tape on May 8, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
284 South Avenue
Poughkeepsie, New York 12601-4879
July 31, 1998
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of the Corporation on Friday, September 25, 1998 at
10:30 a.m. The meeting will be held at the Corporation's
headquarters, 284 South Avenue, Poughkeepsie, New York 12601-4879.
The meeting will give you the opportunity to consider and
vote on a proposal to provide the Corporation with the financial
and regulatory flexibility needed to engage effectively in
competitive businesses while it continues to operate its
regulated electric and gas utility business. The Board of
Directors has unanimously approved a holding company structure
for the Corporation in which the Corporation will become a
subsidiary of a Holding Company and holders of the Corporation's
Common Stock will become the holders of the Holding Company's
Common Stock. The Holding Company is named CH Energy Group, Inc.
Enclosed is the combined Prospectus and Proxy Statement of
the Corporation and the Holding Company which will answer
important questions about how the proposed holding company
structure and the related share exchange will affect you as a
shareholder.
I encourage you to vote "FOR" the proposal. PLEASE SIGN AND
RETURN YOUR PROXY CARD, whether or not you plan to attend the
meeting, in the enclosed postage-paid envelope. You may vote in
person at the meeting even if you previously sent in a proxy.
Every vote counts. Approval of the holding company proposal
will require the affirmative vote of the holders of two-thirds of
the outstanding shares of the Corporation's Common Stock. AN
ABSTENTION OR FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST THE PROPOSAL.
Sincerely,
John E. Mack III
Chairman of the Board
& Chief Executive Officer
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
284 South Avenue
Poughkeepsie, New York 12601-4879
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on
September 25, 1998
To the Holders of Common Stock:
A Special Meeting of Shareholders of Central Hudson Gas &
Electric Corporation ("Central Hudson" or "Corporation") will be
held at the offices of the Corporation, 284 South Avenue,
Poughkeepsie, New York 12601-4879, on Friday, September 25, 1998,
at 10:30 a.m. for the following purposes:
1. To adopt a holding company structure for the
Corporation in which the Corporation will become a
subsidiary of a holding company, CH Energy Group, Inc.
("Holding Company"), pursuant to an Agreement and Plan
of Exchange that provides for all of the outstanding
shares of the Corporation's Common Stock to be
exchanged automatically on a share-for-share basis for
shares of the Holding Company's Common Stock, as more
fully described in the accompanying Proxy Statement and
Prospectus ("Holding Company Proposal"); and
2. To act upon such other matters as may properly come
before the meeting, or any adjournments or
postponements of the meeting.
Holders of record of outstanding shares of the Corporation's
Common Stock as of the close of business on July 28, 1998, the
record date, are entitled to receive notice of, and to vote at,
the meeting.
PLEASE SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. Approval of the Holding Company Proposal
will require the affirmative vote of the holders of two-thirds of
the outstanding shares of Central Hudson Common Stock. AN
ABSTENTION OR FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST THE HOLDING COMPANY PROPOSAL.
By Order of the Board of Directors,
Ellen Ahearn
Corporate Secretary
Dated: July 31, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
PROXY STATEMENT
for
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
___________________
PROSPECTUS
for
CH ENERGY GROUP, INC.
COMMON STOCK
This Proxy Statement and Prospectus contains information
relating to a proposal to be voted upon at a Special Meeting of
Shareholders of Central Hudson Gas & Electric Corporation
("Corporation") to be held on Friday, September 25, 1998 at 10:30
a.m. or at any adjournment or postponement of the meeting
("Special Meeting"). The Special Meeting will be held at the
Corporation's offices, 284 South Avenue, Poughkeepsie, New York
12601-4879.
Proposal - The "Holding Company Proposal" is to adopt a
holding company structure for the Corporation in which,
pursuant to an Agreement and Plan of Exchange (the "Exchange
Agreement"), the Corporation will become a subsidiary of CH
Energy Group, Inc. ("Holding Company") and the outstanding
shares of the Corporation's Common Stock, $5.00 par value
("Central Hudson Common Stock") will be exchanged
automatically on a share-for-share basis ("Share Exchange")
for shares of the Holding Company's Common Shares, $.10 par
value ("Holding Company Common Stock"). Up to 16,700,000
shares of Holding Company Common Stock may be issued in the
Share Exchange. The Exchange Agreement may be amended or
terminated and the Share Exchange is subject to certain
conditions. See "THE SHARE EXCHANGE - Conditions to
Effectiveness of the Share Exchange" and "Amendment or
Termination of the Exchange Agreement".
1
THE CORPORATION'S BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE HOLDING COMPANY PROPOSAL AND RECOMMENDS THAT YOU
VOTE "FOR" SUCH PROPOSAL.
Please vote for the Holding Company Proposal and mail your
proxy card to us in the enclosed postage-paid envelope. The
Holding Company Proposal must be approved by the affirmative vote
of the holders of two-thirds of the outstanding shares of Central
Hudson Common Stock. This means that AN ABSTENTION OR FAILURE TO
VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE HOLDING
COMPANY PROPOSAL.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The principal executive offices of both the Corporation and
the Holding Company are located at 284 South Avenue,
Poughkeepsie, New York 12601; telephone number for both entities:
(914) 452-2000.
This Proxy Statement and Prospectus, dated July 31, 1998,
was first mailed to shareholders on or about July 31, 1998.
2
TABLE OF CONTENTS
PAGE
____
QUESTIONS AND ANSWERS ABOUT THE HOLDING COMPANY PROPOSAL... 5
LIST OF DEFINED TERMS...................................... 13
RISK FACTORS............................................... 14
Future Performance of the Holding Company
Common Stock Cannot Be Assured...................... 14
Dividends on the Holding Company Common Stock Will
Initially Depend on Common Stock Dividends Paid
by the Corporation.................................. 14
Non-Utility Businesses May Involve More Risks......... 15
Restructuring May Have Certain Anti-takeover Effects.. 15
INTRODUCTION............................................... 16
Shareholders Entitled to Vote......................... 16
Adjournment of Meeting................................ 16
Proxies............................................... 16
Cost of Proxy Solicitation............................ 17
Proposal: Holding Company and Adoption of the
Exchange Agreement............................... 17
REASONS FOR THE HOLDING COMPANY PROPOSAL................... 18
General............................................... 18
Competing in the New Regulatory Environment........... 18
Flexibility of Utility and Non-Utility Businesses..... 19
THE HOLDING COMPANY'S BUSINESS............................. 20
The Holding Company................................... 20
The Corporation....................................... 21
The PSC............................................... 22
Other Holding Company Subsidiaries.................... 25
DIRECTORS AND OFFICERS OF THE HOLDING COMPANY.............. 26
DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION........ 27
THE SHARE EXCHANGE......................................... 28
Exchange Agreement.................................... 28
Vote Required......................................... 29
Regulatory Approvals.................................. 29
Conditions to Effectiveness of the Share Exchange..... 29
Exchange of Stock Certificates........................ 30
Stock Purchase Plan................................... 30
Amendment or Termination of the Exchange Agreement.... 31
Listing of Holding Company Common Stock............... 31
3
Dividend Policy....................................... 31
Certain Federal Income Tax Consequences............... 33
Treatment of the Corporation's Preferred Stock........ 34
Holding Company Capital Stock......................... 34
Possible Effect of Certain Holding Company Provisions
and the New York Law............................. 36
Comparative Shareholders' Rights...................... 40
Statutory Appraisal Rights............................ 44
VALIDITY OF THE HOLDING COMPANY COMMON STOCK............... 44
FORWARD-LOOKING STATEMENTS................................. 45
EXPERTS.................................................... 45
SUBMISSION OF SHAREHOLDER PROPOSALS........................ 45
WHERE YOU CAN GET MORE INFORMATION......................... 46
EXHIBIT A--AGREEMENT AND PLAN OF EXCHANGE.................. A-1
EXHIBIT B--RESTATED CERTIFICATE OF INCORPORATION OF
THE HOLDING COMPANY............................. B-1
EXHIBIT C--BY-LAWS OF THE HOLDING COMPANY.................. C-1
4
QUESTIONS AND ANSWERS ABOUT THE
HOLDING COMPANY PROPOSAL
These questions and answers address the Holding Company
Proposal that will be voted on at a Special Meeting of
Shareholders of the Corporation to be held on Friday, September
25, 1998 at 10:30 a.m., but may not include all the information
about the Proposal that is important to you. For more complete
information, please read this entire Proxy Statement and
Prospectus, including the Exhibits, and the other documents
referred to in this document. See "WHERE YOU CAN GET MORE
INFORMATION".
WHAT IS THE HOLDING COMPANY PROPOSAL? WHY IS IT BEING PROPOSED?
The Holding Company Proposal will result in a structure in
which the Holding Company will be the parent corporation of other
entities including the Corporation. If approved, the Holding
Company will provide financial and other administrative services
for its subsidiaries. Upon consummation of the Holding Company
Proposal, Holding Company Common Stock will be held by the former
holders of Central Hudson Common Stock.
Federal and state initiatives are promoting competition in
the sale of electricity and gas by "unbundling" the integrated
services that electric and gas utilities have traditionally
provided and enabling customers to purchase electricity and gas
directly from suppliers other than their local utilities. In
February 1998, the New York State Public Service Commission
("PSC") modified, and as modified, approved an Amended and
Restated Settlement Agreement among the Corporation, the PSC
staff and certain other parties (as modified, the "PSC Settlement
Agreement") that provides for a transition of the Corporation to
a competitive electric market in the Corporation's franchise
territory and authorizes a corporate reorganization of the
Corporation into a holding company structure. (See "THE HOLDING
COMPANY'S BUSINESS - The PSC".) The holding company structure
will provide the financial and regulatory flexibility needed to
engage effectively in competitive businesses and take advantage
of the opportunities presented by the changing business
environment of the energy industry while the Corporation
continues to operate its regulated electric and gas utility
business. The Holding Company will be able to establish and fund
new businesses without PSC approval and the delay inherent in the
PSC approval process. (SEE "REASONS FOR THE HOLDING COMPANY
PROPOSAL".)
5
WHAT IS THE SHARE EXCHANGE?
The Share Exchange is the means by which the holding company
structure will be established. If shareholders approve the
Holding Company Proposal at the Special Meeting, common
shareholders of the Corporation will automatically become holders
of the Holding Company Common Stock and each share of Central
Hudson Common Stock will become one share of Holding Company
Common Stock. Following the Share Exchange, the Holding Company
will own all of the Corporation's Common Stock and all but one
(1) of the Corporation's subsidiaries will become direct
subsidiaries of the Holding Company. (See "THE SHARE
EXCHANGE".)
WILL THE VALUE OF MY SHARES BE AFFECTED BY THE SHARE EXCHANGE?
The value of a company's stock is affected by a number of
factors including market and economic conditions. Consequently,
no prediction can be made as to what the value of the Holding
Company Common Stock will be after consummation of the Share
Exchange.
The future performance of the Holding Company Common Stock
will depend, in part, on the results of operations of the
Corporation and the Holding Company's other subsidiaries. The
Corporation is expected to be the largest subsidiary of the
Holding Company for the next several years. The Corporation
believes that the Holding Company Common Stock should initially
perform as if it were Central Hudson Common Stock. Over time, to
the extent the Holding Company's investments increase (by
expanding existing subsidiaries and adding new subsidiaries), the
investment performance of the Holding Company Common Stock will
be affected increasingly by the results of operations of
subsidiaries other than the Corporation.
HOW WILL DIVIDENDS BE AFFECTED?
Following consummation of the Holding Company Proposal,
former Central Hudson Common shareholders, who will then be
Holding Company Common shareholders, will receive the dividends
on Holding Company Common Stock declared by the Board of
Directors of the Holding Company. Dividends declared by Central
Hudson will be paid to the Holding Company. Dividends on Central
Hudson preferred stock, which will remain outstanding, will
continue to be declared by the Corporation's Board of Directors
and will be paid by the Corporation to its preferred
shareholders.
Dividends on Holding Company Common Stock are expected to be
paid initially at least at the same rate and on the same schedule
as is now paid on Central Hudson Common Stock. The most recent
dividend declared on Central Hudson Common Stock was $.54 per
share, to be paid on August 1, 1998.
6
While dividends on Holding Company Common Stock will depend
primarily on the dividends and other distributions that the
Corporation and the other subsidiaries of the Holding Company pay
to the Holding Company and the capital requirements of the
Holding Company and its subsidiaries, the Holding Company
initially expects to maintain a policy, like that of the
Corporation, of paying an appropriate percentage of earnings to
its shareholders. There can be no assurance that the
subsidiaries of the Holding Company other than the Corporation
will have earnings or pay any dividends to the Holding Company in
the foreseeable future. Under the PSC Settlement Agreement, the
Corporation's ability to pay dividends to the Holding Company is
subject to certain restrictions. (See "THE SHARE EXCHANGE
Dividend Policy".)
WILL I HAVE TO EXCHANGE MY CENTRAL HUDSON STOCK CERTIFICATES FOR
NEW HOLDING COMPANY CERTIFICATES?
No. Your present certificates for Central Hudson Common
Stock will automatically represent an equal number of shares of
Holding Company Common Stock when the Share Exchange occurs and
will no longer represent Central Hudson Common Stock.
WHERE WILL MY HOLDING COMPANY COMMON STOCK BE TRADED? WHAT WILL
BE THE TICKER SYMBOL?
Upon consummation of the Share Exchange, the Holding Company
Common Stock will be listed on the New York Stock Exchange
("NYSE"), and will trade under the ticker symbol "CNH".
Central Hudson Common Stock is presently listed and traded
on the NYSE. The reported closing price of the Central Hudson
Common Stock on July 15, 1998 was $45 9/16. After the Share
Exchange, Central Hudson Common Stock will no longer trade and
will be delisted.
WHAT WILL BE THE BUSINESS OF THE HOLDING COMPANY?
Upon consummation of the Holding Company Proposal, the
Corporation will become a subsidiary of the Holding Company and
Holding Company Common Stock will be held by the former holders
of Central Hudson Common Stock. Three (3) current Corporation
subsidiaries, Central Hudson Enterprises Corporation, CH
Resources, Inc. and Greene Point Development Corporation, and any
new subsidiaries, established before the Holding Company Proposal
is consummated, will also become direct subsidiaries of the
Holding Company. One (1) current Corporation subsidiary, Phoenix
Development Company, Inc., will continue to be a direct
subsidiary of the Corporation after the Holding Company proposal
is consummated. The Holding Company may establish other
subsidiaries from time to time, including one or more
7
intermediate subsidiary holding companies, to hold its Central
Hudson Common Stock and the stock of its other subsidiaries.
(See "THE HOLDING COMPANY'S BUSINESS Other Holding Company
Subsidiaries".)
The Corporation will continue to operate its utility
business subject to regulation by the PSC, the Federal Energy
Regulatory Commission ("FERC"), the Nuclear Regulatory Commission
("NRC") and other governmental agencies. The PSC regulates,
among other things, the Corporation's electric and gas rates and
the issuance of its securities. The FERC regulates, among other
things, the Corporation's rates for sales at wholesale, rates for
electric transmission and interconnections with other utilities.
The NRC regulates Unit No. 2 of the Nine Mile Point Nuclear
Station ("Nine Mile 2 Plant"), located in Scriba, New York, in
which the Corporation has a 9% co-tenancy interest with certain
other New York utilities.
The Holding Company will not be subject to regulation by the
PSC, FERC, or the NRC, except to the extent that the rules or
orders of these agencies impose restrictions on the Holding
Company's relationships with the Corporation or the Corporation's
relationships with the Holding Company's other subsidiaries. The
Holding Company expects to be an exempt public utility holding
company under the Public Utility Holding Company Act of 1935
("1935 Act"). (See "THE HOLDING COMPANY'S BUSINESS The Holding
Company".)
WHAT WILL THE HOLDING COMPANY STRUCTURE LOOK LIKE?
PRESENT STRUCTURE
CENTRAL HUDSON GAS &
ELECTRIC CORPORATION
--------------------
CH Energy Greene Point Phoenix Central Hudson CH
Group, Development Development Enterprises Resources,
Inc.* Corporation Company, Corporation Inc.
Inc.
PROPOSED STRUCTURE*
CH ENERGY GROUP, INC.
---------------------
Central Hudson Green Point Central Hudson CH Resources, Inc.
Gas & Electric Development Enterprises
Corporation Corporation Corp.
Phoenix
Development
Company, Inc.
8
_____________________
* Presently, the Corporation has a subsidiary which, on
consummation of the Share Exchange, will become the Holding
Company owner of the Corporation as shown in the "Proposed
Structure". The Holding Company may establish other
subsidiaries from time to time, including one or more
intermediate subsidiary holding companies, to hold its
Central Hudson Common Stock and the stock of its other
subsidiaries. Any new subsidiaries of the Corporation
established before the Holding Company Proposal is
implemented will also become subsidiaries of the Holding
Company.
WHO WILL MANAGE THE HOLDING COMPANY?
The Board of Directors of the Corporation will become the
directors of the Holding Company if the Holding Company Proposal
is consummated. In the future, the directors of the Holding
Company and the Corporation may or may not be the same persons.
Certain officers of the Corporation will also serve as officers
of the Holding Company. (See "DIRECTORS AND OFFICERS OF THE
HOLDING COMPANY".) The PSC Settlement Agreement approving the
Holding Company Proposal contains certain restrictions on
managerial interlocks between the Corporation and the Holding
Company and other subsidiaries of the Holding Company and the
Corporation.
WHEN WILL THE HOLDING COMPANY PROPOSAL BE CONSUMMATED?
The Corporation expects that the Holding Company Proposal
will be consummated as soon as practicable following approval of
such Proposal by the holders of Central Hudson's Common Stock,
which consummation is expected to occur by November 1, 1998.
However, consummation is subject to certain conditions, including
the receipt of certain regulatory approvals, the listing of
Holding Company Common Stock on the NYSE and the filing of the
Holding Company's Restated Certificate of Incorporation and a
Certificate of Exchange with the New York State Department of
State ("Department"). (See "THE SHARE EXCHANGE Conditions to
Effectiveness of the Share Exchange".)
The Corporation's Board of Directors may amend or terminate
the Exchange Agreement, abandon the Share Exchange or amend the
Holding Company's Restated Certificate of Incorporation, at any
time before or after approval of the Holding Company Proposal by
holders of Central Hudson Common Stock. No amendment, however,
may materially and adversely affect the rights of the holders of
Central Hudson's Common Stock, as determined in the sole judgment
of the Corporation's Board of Directors. (See "THE SHARE
EXCHANGE Amendment or Termination of the Exchange Agreement".)
9
WHAT REGULATORY APPROVALS ARE REQUIRED?
PSC, FERC and NRC approvals are required. In February 1998,
the PSC approved the PSC Settlement Agreement which provides for
a transition to a competitive electric market and authorizes a
corporate reorganization of the Corporation into a holding
company structure. In July 1998, the FERC and the NRC issued
their respective consents authorizing the Corporation to adopt
the holding company structure. The Holding Company proposal is
subject to the continued effectiveness of all necessary
regulatory approvals. The Holding Company will file with the
Securities and Exchange Commission ("SEC") for an exemption from
the 1935 Act. (See "THE SHARE EXCHANGE Regulatory Approvals".)
HOW WILL MY RIGHTS AS A SHAREHOLDER BE AFFECTED?
Following consummation of the Holding Company Proposal, the
former holders of Central Hudson Common Stock will automatically
become holders of Holding Company Common Stock, and their rights
will be governed by the Holding Company's Restated Certificate of
Incorporation and By-laws (the forms of which are included as
Exhibits B and C, respectively, to this Proxy Statement and
Prospectus) rather than those of the Corporation. Since the
Corporation's preferred stock is not being exchanged, the Share
Exchange will not change the rights of holders of preferred stock
as set forth in the Corporation's Certificate of Incorporation.
The Holding Company's Restated Certificate of Incorporation
provides the Holding Company with broad corporate powers to
engage in any lawful act or activity for which a corporation may
be formed under New York law. In contrast, the Corporation is
organized as an electric and gas corporation. The Holding
Company's Restated Certificate of Incorporation and By-laws will
be different from the Corporation's Certificate of Incorporation
and By-laws with respect to the classification of the board of
directors, removal of directors, authorized shares, advance
notice of shareholder proposals and director nominations and
certain other matters. (See "THE SHARE AGREEMENT -- Comparative
Shareholders' Rights".)
ARE THERE FEDERAL INCOME TAX CONSEQUENCES TO COMMON SHAREHOLDERS?
The Corporation has received an opinion from its general
counsel, Gould & Wilkie, that no income gain or loss will be
recognized under federal income tax laws as a result of the
consummation of the Holding Company Proposal. Immediately
following the consummation, the aggregate tax basis for any
future gain or loss on any sale of Holding Company Common Stock
will be the same as the aggregate tax basis in Central Hudson
10
Common Stock immediately before the consummation. (See "THE
SHARE EXCHANGE Certain Federal Income Tax Consequences".)
WILL THE CORPORATION'S PREFERRED STOCK OR BONDS BE EXCHANGED?
No. The Corporation's preferred stock will not be exchanged
and will continue as outstanding shares of the Corporation's
preferred stock. The rights of holders of the preferred shares
as provided for in the Corporation's Certificate of Incorporation
will not change. The Corporation's bonds will not change and
will continue to be obligations of the Corporation. (See "THE
SHARE EXCHANGE Exchange Agreement" and "Treatment of the
Corporation's Preferred Stock".)
HOW WILL MY PARTICIPATION IN THE STOCK PURCHASE PLAN BE AFFECTED?
All shares of Central Hudson Common Stock held under the
Corporation's Stock Purchase Plan will be automatically exchanged
for shares of the Holding Company Common Stock. The Stock
Purchase Plan will be continued with Holding Company Common Stock
after the Share Exchange. (See "THE SHARE EXCHANGE Stock
Purchase Plan".)
WILL THE HOLDING COMPANY HAVE A COMMON STOCK REPURCHASE PLAN LIKE
THE CORPORATION?
The Holding Company has not yet determined whether it will
have a Holding Company Common Stock repurchase plan like that of
the Corporation. (See "THE SHARE EXCHANGE Holding Company
Capital Stock - Common Stock Repurchase Plan".)
WHAT DO I NEED TO DO NOW?
Just mail your signed proxy card in the enclosed postage-paid return envelope
as soon as possible, so that your shares may
be represented at the Special Meeting. The meeting will take
place on Friday, September 25, 1998 at Central Hudson's
headquarters, 284 South Avenue, Poughkeepsie, New York.
WHAT SHAREHOLDER VOTE IS REQUIRED FOR APPROVAL OF THE HOLDING
COMPANY PROPOSAL?
Holders of record of Central Hudson Common Stock on July 28,
1998 are entitled to vote at the Special Meeting. Two-thirds of
the outstanding shares of Central Hudson Common Stock must be
voted "FOR" the Holding Company Proposal at the Special Meeting
in order to approve the Holding Company Proposal.
11
You should rely only on the information contained or
incorporated by reference in this Proxy Statement and Prospectus.
Neither the Corporation nor the Holding Company has authorized
anyone to provide you with different information. This document
is dated July 31, 1998. Do not assume that the information
contained or incorporated by reference in this document is
accurate as of any date other than that date, and neither the
mailing of this document nor the issuance of Holding Company
Common Stock shall create any implication to the contrary.
12
LIST OF DEFINED TERMS
DEFINED TERM PAGE
Auction Incentive........................................ 23
Central Hudson By-Laws................................... 36
Central Hudson Charter................................... 36
Central Hudson Common Stock.............................. 1
CHEC..................................................... 15
Corporation.............................................. 1
Corporation's Form 10-K.................................. 25
Danskammer Plant......................................... 23
Department............................................... 9
Effective Time........................................... 30
Energy Act............................................... 18
Exchange Agreement....................................... 1
FERC..................................................... 8
Fossil-Fueled Units...................................... 23
Holding Company.......................................... 1
Holding Company By-Laws.................................. 15
Holding Company Charter.................................. 15
Holding Company Common Stock............................. 1
Holding Company Proposal................................. 1
Interested Shareholder................................... 39
Nine Mile 2 Plant........................................ 8
NRC...................................................... 8
NYBCL.................................................... 36
NYPSL.................................................... 19
NYSE..................................................... 7
PSC...................................................... 5
PSC Order................................................ 22
PSC Settlement Agreement................................. 5
Record Date.............................................. 16
Roseton Plant............................................ 23
SEC...................................................... 10
SFAS..................................................... 25
Share Exchange........................................... 1
Special Meeting.......................................... 1
1935 Act................................................. 8
1998 Proxy Statement..................................... 27
13
RISK FACTORS
Future Performance of the Holding Company Common Stock Cannot Be
Assured
The purpose of the Share Exchange is to establish a holding
company structure that will enhance the ability of the
Corporation to take advantage of competitive business
opportunities beyond the Corporation's present regulated utility
business. The Corporation's Board of Directors believes the
Share Exchange and holding company structure to be in the best
interests of the Corporation and its shareholders. Nevertheless,
the success of the Holding Company in realizing its goals and the
future performance of Holding Company Common Stock cannot be
assured.
Dividends on the Holding Company Common Stock Will Initially
Depend on Common Stock Dividends Paid by the Corporation
For a period of time following consummation of the Share
Exchange, the funds required by the Holding Company to enable it
to pay dividends on Holding Company Common Stock are expected to
be derived predominantly from the dividends paid by the
Corporation. Accordingly, the ability of the Holding Company to
pay such dividends, as a practical matter, will be governed by
the ability of the Corporation to pay common stock dividends. It
is anticipated that such cash dividends paid by the Corporation
to the Holding Company will be sufficient to enable the Holding
Company to pay cash dividends on Holding Company Common Stock and
to meet operating and other expenses. The ability of the
Corporation to pay dividends on its common stock will continue to
be subject to the preferential dividend rights of the holders of
the Corporation's preferred stock. In addition, although it has
no present intention to do so, it is possible that the
Corporation may need to issue additional preferred stock in the
future to meet its capital requirements. Such additional
preferred stock will also have preferential dividend rights.
Because the Corporation will remain subject to regulation by the
PSC, the amount of its earnings and dividends will be affected by
the manner in which the PSC regulates the Corporation. In
addition, pursuant to the terms of the Settlement Agreement,
common stock dividends paid by the Corporation to the Holding
Company will generally be limited in any calendar year to 100% of
net income available for common stock. There can be no
guarantee, however, of the amount of the initial quarterly
dividend on the Holding Company Common Stock or of the payment of
future dividends, as the declaration of such dividends will
primarily be dependent upon the receipt of dividends from
subsidiaries of the Holding Company which, in turn, will be
dependent upon the future earnings and financial condition of
these subsidiaries. See "THE SHARE EXCHANGE Dividend Policy".
14
Non-Utility Businesses May Involve More Risk
The Corporation's principal subsidiary, Central Hudson
Enterprises Corporation ("CHEC"), participates and owns
investments in cogeneration, marketing and other energy related
services. The Corporation will transfer CHEC to the Holding
Company at the time of, or shortly following, the Share Exchange.
It is the current intention to have the Holding Company's
non-utility subsidiaries engage primarily in energy-related
businesses which will not be regulated by state or federal
agencies which regulate public utilities. Such unregulated
businesses may encounter competitive and other factors not
previously experienced by the Corporation, and may have
different, and perhaps greater, investment risks than those
involved in the regulated electric and gas utility business of
the Corporation. There can be no assurance that such businesses
will be successful or, if unsuccessful, that they will not have a
direct or indirect adverse effect on the Holding Company.
The Holding Company will obtain funds to invest in non-utility subsidiaries
and other businesses from dividends it
receives from the Corporation, borrowings and other financings,
and dividends the Holding Company may in the future receive from
any non-utility subsidiaries. There can be no assurance that
non-utility subsidiaries will have earnings or pay any dividends
to the Holding Company in the foreseeable future.
Restructuring May Have Certain Anti-Takeover Effects
Certain provisions of the Holding Company's Restated
Certificate of Incorporation ("Holding Company Charter") and the
By-Laws of the Holding Company ("Holding Company By-Laws") to be
in effect at the Effective Time could discourage certain types of
transactions that may involve an actual or threatened change of
control of the Holding Company. While these provisions are
designed to improve the ability of the Holding Company Board of
Directors to prevent transactions that, in the Holding Company
Board's opinion, do not have the effect of maximizing long-term
shareholder value or are otherwise not in the best interests of
the shareholders of the Holding Company, they may, individually
or in the aggregate, delay, discourage or prevent an unsolicited
takeover attempt that a shareholder might believe to be in the
shareholders' interest, including those attempts that might
result in a premium over the market price for Holding Company
Common Stock. Such provisions may also adversely affect the
market price for Holding Company Common Stock. The form of the
Holding Company Charter is attached hereto as Exhibit B and the
form of the Holding Company By-Laws are attached hereto as
Exhibit C. See "THE SHARE EXCHANGE - Possible Effect of Certain
Holding Company Provisions and the New York Law".
15
INTRODUCTION
This Proxy Statement and Prospectus and the accompanying
Proxy are furnished in connection with the solicitation by the
Board of Directors of the Corporation of proxies for use at the
Corporation's Special Meeting of Shareholders to be held on
Friday, September 25, 1998, and are first being sent to
shareholders on or about July 31, 1998. The mailing address of
the Corporation's principal executive offices is 284 South
Avenue, Poughkeepsie, New York 12601-4879.
Shareholders Entitled to Vote
Only holders of record of Central Hudson Common Stock on
July 28, 1998 ("Record Date") are entitled to receive notice of
the Special Meeting. As of the close of business on the Record
Date, there were 16,975,387 shares of Central Hudson Common Stock
outstanding. Only holders of record of Central Hudson Common
Stock on the Record Date are entitled to vote at the Special
Meeting or any adjournments thereof. Such holders are entitled
to one (1) vote per share at the Special Meeting. No other class
of securities is entitled to vote at the Special Meeting.
Adjournment of Meeting
The Corporation reserves the right to adjourn the Special
Meeting one or more times, and to continue to solicit proxies, if
insufficient affirmative votes are present in person or by proxy
to adopt the Holding Company Proposal.
Proxies
Any shareholder giving the enclosed Proxy has the right to
revoke it at any time before it is voted. To revoke a proxy, the
shareholder must file with the Secretary of the Corporation
either a written revocation or a duly executed proxy bearing a
later date. Also, a shareholder who attends the Special Meeting
in person may vote by ballot at the meeting, thereby canceling
any proxy previously given.
The accompanying Proxy provides shareholders with the
opportunity to specify their approval or disapproval of, or
abstention with respect to, the Holding Company Proposal. The
Holding Company Proposal requires the approval of the holders of
two-thirds of the outstanding shares of Central Hudson Common
Stock (not just two-thirds of the votes cast). An abstention or
broker non-vote WILL NOT be counted as a vote in favor of
adoption of such Proposal, and as a result will have the effect
of a vote AGAINST such Proposal. The Holding Company Proposal is
considered "non-discretionary," and brokers who have received no
instructions from their clients do not have the authority to vote
on such Proposal.
16
With respect to all matters, other than the Holding Company
Proposal, that may properly come before the Special Meeting, the
affirmative vote of the majority of shares of Central Hudson
Common Stock present in person or represented by proxy at the
Special Meeting, voting on the subject matter, in person or by
proxy, will be the act of the shareholders. Abstentions and
broker non-votes are voted neither "for" nor "against", and have
no effect on the vote on these matters, but are counted in the
determination of a quorum. Holders of a majority of the shares
of Central Hudson Common Stock entitled to vote at the Special
Meeting constitute a quorum.
Cost of Proxy Solicitation
The cost of preparing, printing and mailing the notice of
meeting, proxy and combined Proxy Statement and Prospectus will
be borne by the Corporation. Proxy solicitation other than by
use of the mail may be made by regular employees of the
Corporation by telephone and personal solicitation. Banks,
brokerage houses, custodians, nominees and fiduciaries are being
requested to forward the soliciting material to their principals
and to obtain authorization for the execution of proxies, and may
be reimbursed for their out-of-pocket expenses incurred in that
connection. In addition, the Corporation has retained D.F. King
& Co., Inc. of New York, New York, a proxy solicitation
organization, to assist in the solicitation of proxies. The fee
of such organization in connection therewith is estimated to be
$25,000, plus reasonable out-of-pocket expenses.
Proposal: Holding Company and Adoption of the Exchange Agreement
To carry out the holding company restructuring, the
Corporation has caused to be incorporated a New York corporation,
CH Energy Group, Inc. (referred to in this Proxy Statement and
Prospectus as the "Holding Company"), which now has a nominal
amount of stock outstanding and no present business or properties
of its own. All of the currently outstanding shares of the
Holding Company Common Stock are owned by the Corporation.
The Boards of Directors of each of Central Hudson and the
Holding Company have adopted the Agreement and Plan of Exchange
(attached as Exhibit A to this Proxy Statement and Prospectus and
herein called the "Exchange Agreement") under which, subject to
approval of the Holding Company Proposal by the holders of
Central Hudson Common Stock and the satisfaction of other
conditions, the Corporation will become a subsidiary of the
Holding Company through the exchange of the outstanding shares of
Central Hudson Common Stock on a share-for-share basis for shares
of Holding Company Common Stock (referred to in this Proxy
Statement and Prospectus as the "Share Exchange"). In connection
with the Share Exchange, all but one (1) of the Corporation's
existing subsidiaries will be transferred to the Holding Company
17
and become subsidiaries of the Holding Company. See "THE HOLDING
COMPANY'S BUSINESS -- Other Holding Company Subsidiaries".
THE CORPORATION'S BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE HOLDING COMPANY PROPOSAL AND RECOMMENDS THAT THE
HOLDERS OF CENTRAL HUDSON COMMON STOCK VOTE IN FAVOR OF ADOPTION
OF THE HOLDING COMPANY PROPOSAL.
REASONS FOR THE HOLDING COMPANY PROPOSAL
General
In making its decision to recommend the Holding Company
Proposal to shareholders, the Board of Directors of the
Corporation considered many factors. All material factors
considered by the Board of Directors of the Corporation in
recommending approval of the proposed Plan of Exchange are
discussed below.
Competing in the New Regulatory Environment
The Board of Directors of the Corporation believes that a
holding company structure will provide the financial and
regulatory flexibility needed to engage effectively in
competitive businesses while permitting the Corporation to
continue to operate its regulated electric and gas utility
business. This structure is a well-established form of
organization for companies engaging in multiple lines of
business, and is increasingly prevalent in the utility industry.
In recent years, federal and state initiatives have promoted
the development of competition in the sale of electricity and
gas. In general, these initiatives have sought to unbundle the
integrated services that electric and gas utilities have
traditionally provided and to enable customers to purchase
electricity and gas directly from suppliers other than their
local utilities.
With the passage of the Energy Policy Act of 1992 ("Energy
Act"), there has been a significant increase in the level of
competition in the market for the generation and sale of
electricity. The Energy Act reduces barriers to market entry for
companies that wish to build, own and operate electric generating
facilities, and it also promotes competition by authorizing the
FERC to require transmission service for wholesale power
transactions. In 1996, the FERC issued Order 888 requiring
electric utilities to file open access transmission tariffs that
would make the utility transmission systems available to
wholesale sellers and buyers of electric energy on a non-discriminatory basis.
The Corporation filed an open access
18
tariff with the FERC which was approved in May 1997. In January
1997, the Corporation, along with the other New York State
electric utilities, submitted a filing to FERC for approval of a
restructuring of the wholesale electric market in New York State,
including the establishment of an "independent system operator"
that would control and operate most electric transmission
facilities in New York as an integrated system on a non-discriminatory basis.
In June 1998, the FERC conditionally
approved such filing.
At the retail level many states are implementing "retail
access" programs giving electric and gas retail customers the
option to choose among energy suppliers. The PSC, in its
"Competitive Opportunities" proceeding, endorsed a fundamental
restructuring of the electric utility industry in New York State
based on competition in the generation and energy services
sectors of the industry. In February 1998, the PSC approved the
PSC Settlement Agreement which provides for a transition to a
competitive electric market and authorizes a corporate
reorganization of the Corporation into a holding company
structure. See - "THE HOLDING COMPANY'S BUSINESS - The PSC".
A decade ago, the price of gas was controlled by regulation
and statutes from the original producer and supplier through the
ultimate end-user. Currently, there is no longer regulation over
the sale price of natural gas as a commodity, and the regulation
of interstate transmission at the federal level has been reduced.
Similar regulatory initiatives are taking place at the state
level, including in New York, to extend competition into the
retail sector. All of the Corporation's gas customers, either
individually or by aggregating their demand with other customers,
have had the option to purchase gas from other suppliers since
1997.
Flexibility of Utility and Non-Utility Businesses
The Corporation operates under the regulatory
requirements of the New York Public Service Law ("NYPSL") and the
PSC. Under Section 107 of the NYPSL, the Corporation must obtain
the PSC's approval before it may invest in any business other
than its own utility business. Prior to the PSC Settlement
Agreement, the Corporation received limited authority from the
PSC under Section 107 of the NYPSL to invest up to an aggregate
of approximately $10 million in CHEC, its energy services
subsidiary. The limited nature of these approvals, the delay
brought about by the approval process for these investments in
competitive businesses and the ability to invest only retained
earnings represented a significant constraint on the
Corporation's ability to move rapidly in an increasingly
competitive and fast-evolving environment. Pursuant to the PSC
Settlement Agreement, the Corporation is authorized to transfer
up to $100 million from the retained earnings of the Corporation
19
prior to the effectiveness of the Share Exchange to invest in
unregulated businesses. The Holding Company will not be subject
to Section 107 of the NYPSL.
Under Section 69 of the NYPSL, the Corporation cannot issue
debt or equity securities for other than certain specified
utility purposes. This restriction has not posed a practical
problem in the past because the Corporation's competitive
businesses (principally CHEC) have been limited in both scope and
magnitude. However, such a restriction is no longer appropriate
given the prospective regulatory and competitive environment,
particularly because many of the Corporation's present and
potential competitors are not subject to similar constraints.
The Holding Company and its subsidiaries other than the
Corporation will be able, without PSC approval under Section 69
of the NYPSL, to issue securities for general corporate purposes
and will be able to finance various transactions that may be
undertaken, including possible acquisitions of other companies
and repurchases of Holding Company Common Stock.
THE HOLDING COMPANY'S BUSINESS
The Holding Company
The Holding Company is a New York corporation incorporated
by the Corporation for purposes of implementing the Holding
Company Proposal. The principal executive offices of the Holding
Company are located at 284 South Avenue, Poughkeepsie, New York
12601-4879, and its telephone number is 914-452-2000. The
Holding Company has not had any business operations. The
currently outstanding shares of Holding Company Common Stock are
owned by the Corporation and will be canceled when the Holding
Company Proposal is implemented.
Following consummation of the Holding Company Proposal, the
Holding Company will own all the outstanding Central Hudson
Common Stock and the stock of other subsidiaries that will engage
in competitive businesses. The investment performance of Holding
Company Common Stock will depend on the results of operations of
the Corporation and the Holding Company's other subsidiaries.
The Holding Company may establish one or more intermediate,
subsidiary holding companies to hold its Central Hudson Common
Stock and the stock of its other subsidiaries.
The Holding Company will finance its operations, investments
in its subsidiaries and various transactions that may be
undertaken, including possible acquisitions of other companies
and repurchases of Holding Company Common Stock, from dividends
and other distributions it receives from the Corporation and its
other subsidiaries, borrowings and the sale of equity or debt
securities. The PSC Settlement Agreement, with certain
20
exceptions, limits the dividends that the Corporation can pay to
the Holding Company to not more than 100 percent of the
Corporation's income available for common stock, calculated on a
two-year rolling average basis. See "THE SHARE EXCHANGE -
Dividend Policy". There can be no assurance that the
subsidiaries of the Holding Company other than the Corporation
will have earnings or pay any dividends to the Holding Company.
The Holding Company will not be subject to regulation by the
PSC, FERC or the NRC, except to the extent that the rules and
orders of these agencies impose restrictions on the Holding
Company's relationships with the Corporation or the Corporation's
relationships with the Holding Company's other subsidiaries.
The Holding Company will be a "public utility holding
company" under the 1935 Act. The staff of the SEC, which
administers the 1935 Act, has recommended, and several bills have
been introduced in Congress that would repeal the 1935 Act.
Unless or until the 1935 Act is repealed, the Holding Company
expects to seek an exemption under Section 3(a)(1) of the 1935
Act on the basis that the Holding Company and the Corporation are
each organized and carry on their businesses substantially in the
State of New York and that neither will derive any material part
of its income from a public utility company organized outside of
the State of New York. This exemption is available even though
Holding Company subsidiaries that are neither an "electric
utility company" nor a "gas utility company" under the 1935 Act
will engage in interstate activities. The exemption would exempt
the Holding Company from all provisions of the 1935 Act except
Section 9(a)(2), which requires SEC approval for a direct or
indirect acquisition by a utility holding company of five percent
(5%) or more of the voting securities of any other electric or
gas utility company. To maintain this exemption, the Holding
Company must file an exemption statement each year prior to March
1 with the SEC. The exemption may be revoked by the SEC if a
substantial question of law or fact exists as to whether the
Holding Company is within the parameters of the exemption, or if
it appears that the exemption may be detrimental to the public
interest or the interest of investors or consumers.
The Corporation
The Corporation is a combination gas and electric utility
engaged principally in the generation, transmission, distribution
and sale of electric energy and the sale, transportation and
distribution of natural gas in the Hudson Valley area of New
York. The Corporation provides electricity to more than 262,000
customers and natural gas to more than 61,000 customers.
Following consummation of the Holding Company Proposal, the
Corporation will continue to operate its regulated electric and
gas utility business.
21
The Corporation's utility business is subject to regulation
by the PSC, FERC, the NRC and other governmental agencies. The
PSC regulates, among other things, the Corporation's electric and
gas retail rates and the issuance of its securities. The FERC
regulates, among other things, the Corporation's rates for sales
at wholesale, rates for electric transmission and
interconnections with other utilities. The NRC regulates the
Nine Mile 2 Plant in which the Corporation has a nine percent
(9%) co-tenancy interest.
The PSC
The PSC, in its "Competitive Opportunities" proceeding,
endorsed a fundamental restructuring of the electric utility
industry in New York State based on competition in the generation
and energy services sectors of the industry. As part of that
proceeding, the Corporation, the PSC Staff and certain other
parties entered into an Amended and Restated Settlement
Agreement, dated January 2, 1998. The PSC, by Orders, issued and
effective February 19, 1998 and June 30, 1998 (collectively, the
"PSC Order"), modified the Settlement Agreement and, as modified,
adopted same so that it became effective on February 19, 1998.
Said Settlement Agreement was modified to reflect the PSC Order
(as modified, herein called the "PSC Settlement Agreement"). The
PSC Settlement Agreement provides for a transition to a
competitive electricity market in the Corporation's franchise
territory by June 30, 2001. The PSC Settlement Agreement will
remain effective whether or not the Holding Company Proposal is
implemented. In the event that the Holding Company Proposal is
not consummated, the Corporation will not be able to realize the
benefits it expects from the holding company structure. The term
of the PSC Settlement Agreement expires June 30, 2001, except for
certain provisions thereof which do not expire. The material
provisions of the PSC Settlement Agreement are:
Retail Access. The Corporation will implement a retail
access program, beginning in the Fall of 1998, which will
permit other sellers of electricity to use the Corporation's
transmission and distribution facilities to make sales to
the Corporation's customers. The program will be phased in
and is targeted to be available to all of the Corporation's
customers not later than June 30, 2001.
Electric Rate Freeze. The Corporation's base electric rates
are frozen at current levels until June 30, 2001 except for
certain adjustments permitted by the PSC Settlement
Agreement.
22
Divestiture of Fossil-Fueled Assets. The Corporation will
auction (in one or more auctions) its fossil-fueled electric
generating units (i.e., the Corporation's interest in the
Roseton Electric Generating Station ("Roseton Plant") and
the Corporation's Danskammer Point Steam Electric Generating
Station ("Danskammer Plant"), (collectively, the "Fossil-Fueled Units")),
with the final sale and transfer to be
completed by June 30, 2001, subject to the right of the PSC
to require an earlier auction and sale if the PSC finds it
is in the public interest. At December 31, 1997, the book
value of the Fossil-Fueled Units represented approximately
20% of the Corporation's net utility plant. The Corporation
has the right to bid in the auction through an affiliate.
The Corporation must submit an auction plan for approval by
the PSC at least six (6) months prior to any scheduled
auction date. The PSC approved an auction incentive in
which the Corporation would receive ten percent (10%) of the
gross sales proceeds above net book value not to exceed
$17.5 million after taxes, provided no affiliate of the
Corporation bids in the auction ("Auction Incentive"). Any
net proceeds of an auction above net book value not retained
by the Corporation will be used in the following order:
first, to offset regulatory assets related to the auctioned
Fossil-Fueled Units; second, to reduce the unrecovered book
cost of the Nine Mile 2 Plant; and third, to provide other
customer benefits. If the sale price of the Fossil-Fueled
Units is below their then current net book value, the
difference will be preserved for recovery as "strandable
costs".
Recovery of Prior Investments. The Corporation will be
given a reasonable opportunity to recover all prudently
incurred, verifiable and appropriately mitigated production-related
electric strandable costs (i.e., those prior
production utility investments and commitments that might
otherwise not be recoverable in a competitive electric
market) through a non-bypassable charge to customers. That
charge will begin July 1, 2001 unless the Fossil-Fueled
Units are transferred from the Corporation to another entity
(which could be an affiliate of the Corporation) prior to
that date, in which case the non-bypassable charge to
customers could commence on the date of the transfer subject
to PSC approval. The amount of strandable costs for the
Fossil-Fueled Units cannot be estimated at this time due,
among other things, to the uncertainties surrounding the
amount of proceeds that might be realized from their
auction(s).
23
Corporate Structure and Other Provisions. The PSC
Settlement Agreement authorizes a holding company structure
for the Corporation. With certain exceptions, it limits the
dividends that the Corporation can pay to not more than 100
percent of the Corporation's income available for common
stock, calculated on a two-year rolling average basis. See
"THE SHARE EXCHANGE - Dividend Policy". The Corporation is
prohibited from making loans to, or guaranteeing the
obligations of, the Holding Company or any other affiliate,
or pledging its assets as security for the indebtedness of
the Holding Company or any other affiliate. The
Corporation, the Holding Company and the Holding Company's
other subsidiaries must operate as separate entities, and
transfers of assets, services and information between the
Corporation and its affiliates are subject to certain
restrictions. Non-administrative operating officers of the
Corporation may not be operating officers of any unregulated
affiliate. No more than five (5) officers of the
Corporation may also serve as officers of the Holding
Company except that the Secretary and Treasurer of the
Corporation may serve in the equivalent position of the
Holding Company and other affiliates. The line officers of
the Corporation with direct responsibility for engineering,
generation resources acquisition or customer services may
not serve as officers of any affiliate of the Corporation.
The Corporation and the Holding Company's other subsidiaries
must have separate operating employees and any transfers of
employees from the Corporation to the Holding Company and
the Holding Company's affiliates are also restricted,
generally, for a period ending February 4, 2000. To fund
competitive businesses prior to effecting the Holding
Company restructuring, the Corporation is authorized to
transfer up to $100 million from the retained earnings of
the Corporation to invest in unregulated businesses. There
are no limitations on the businesses in which the Holding
Company or any of its subsidiaries may invest. The
Corporation, however, may not own a major electric
generation facility within its existing electric franchise
territory in addition to that already owned. And, for a
period of five (5) years from the transfer of the last of
the Fossil-Fueled Units, the Corporation and all of its
affiliates may not own more than 1700 Mw of electric
generating capability from any source located or to be
located at the Danskammer Plant/Roseton Plant site. Neither
the Corporation, the Holding Company nor any of their
affiliates are restricted in their right to own or operate
any form of electric generation outside of the Corporation's
existing electric franchise territory.
24
Accounting Effect. As a result of the PSC Settlement
Agreement, there have been changes to certain of the
Corporation's accounting policies. The Corporation's
accounting policies conform to generally accepted accounting
principles which, for regulated public utilities, include
Statement of Financial Accounting Standards ("SFAS") No. 71,
"Accounting for the Effects of Certain Types of Regulation".
In February 1998, the Corporation applied the standards in
SFAS No. 101, "Regulated Enterprises - Accounting for the
Discontinuation of Application of FASB Statement No. 71" to
the Fossil-Fueled Units portion of its business that is
being deregulated as a result of the PSC Settlement
Agreement. This application of SFAS No. 101 had no material
adverse effect on the Corporation's financial position or
results of operations.
For additional information about the PSC Settlement
Agreement, including information about effects of the PSC
Settlement Agreement on the Corporation's accounting policies,
see (i) "Competition/Deregulation" in the Management's Discussion
and Analysis sections of the Corporation's Annual Report on Form
10-K for the year ended December 31, 1997 ("Corporation's Form
10-K") and the Corporation's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1998, (ii) the Corporation's
Current Reports on Form 8-K, dated February 10, 1998 and July 24,
1998, and (iii) "WHERE YOU CAN GET MORE INFORMATION".
Other Holding Company Subsidiaries
It is currently anticipated that the Holding Company
initially will have three (3) subsidiaries in addition to the
Corporation: CHEC, Greene Point Development Corporation, and CH
Resources, Inc. These corporations are wholly-owned subsidiaries
of the Corporation that will be transferred to the Holding
Company. Phoenix Development Corporation will remain a wholly-owned subsidiary
of the Corporation.
CHEC is a domestic corporation organized under the laws of
New York. CHEC was incorporated in 1960 as an unregulated
wholly-owned subsidiary of Central Hudson and has been active in
its present business since 1982. For more than the past five
years, CHEC has been engaged in the business of conducting energy
audits, providing services related to design, financing,
installation, and maintenance of energy conservation measures and
cogeneration systems for private businesses, institutional
organizations and governmental entities. CHEC also participates
in cogeneration, small hydro and alternate energy production
projects, directly through limited partnership investments and
its wholly-owned subsidiary, Cencogen - West Delaware Corp., and
CHEC is licensed by FERC as a power marketer. At December 31,
1997, the Corporation's investment in CHEC was approximately
$11.6 million (about 1% of the Corporation's total consolidated
assets).
25
CH Resources, Inc., Phoenix Development Company, Inc. (which
will remain as a subsidiary of the Corporation), and Greene Point
Development Corporation were established to either hold real
property for the future use of the Corporation or to participate
in energy-related ventures. Currently, the assets held by these
corporations are not material.
Under Section 107 of the NYPSL, the Corporation must obtain
the PSC's approval before it may invest in any business other
than its own utility business. Prior to the PSC Settlement
Agreement, the Corporation received limited authority from the
PSC to invest up to an aggregate of approximately $10 million in
CHEC. Pursuant to the PSC Settlement Agreement, the Corporation
is authorized to invest up to $100 million in unregulated
subsidiaries prior to consummation of the Holding Company
Proposal. The Corporation expects that any new subsidiaries
established and funded pursuant to this authorization would also
be transferred to the Holding Company upon consummation of the
Holding Company Proposal. The Holding Company will not be
subject to Section 107 of the NYPSL.
The Holding Company (or the Corporation prior to the
consummation of the Holding Company Proposal) may establish one
or more energy supply subsidiaries. An energy supply subsidiary
could become an unregulated owner and operator of electric
generating plants (including any that may be purchased at auction
from the Corporation) and marketer of electricity. Energy supply
subsidiaries might also market electricity directly to energy
service companies and through exchanges where buyers and sellers
trade electricity, contract for operations and maintenance work
and participate in building new generating facilities.
The Holding Company may also establish other subsidiaries to
engage in competitive businesses and one or more intermediate,
subsidiary holding companies to hold its Central Hudson Common
Stock and the stock of its other subsidiaries.
DIRECTORS AND OFFICERS OF THE HOLDING COMPANY
Pursuant to the Holding Company's Charter and By-laws, the
Holding Company's Board of Directors will, as of the first Annual
Meeting of Shareholders after the Effective Time, be divided into
three (3) classes of directors, with the directors in each class
generally being elected for a three-year term. The Holding
Company's By-laws will permit the Board of Directors to fix from
time to time the number of directors in a range of three (3) to
25, and the Board of Directors has fixed its initial size at
eight (8), effective as of the Effective Time.
Immediately after the Effective Time, the Board of Directors
of the Holding Company shall consist of those persons who are
directors of the Corporation immediately prior to the Effective
26
Time. If the Corporation's shareholders approve the Holding
Company Proposal, they will be considered also to have ratified
the election of such persons as the directors of the Holding
Company. It is anticipated that the directors of the Corporation
immediately after the Effective Time will be those persons who
are directors of the Corporation immediately prior to the
Effective Time. It is also anticipated that the Holding Company
and its subsidiaries will have some common officers. After
consummation of the Share Exchange, the Holding Company Board of
Directors vacancies may be filled by action of the Holding
Company's Board of Directors.
It is expected that the majority of the Holding Company
officers will initially also be officers of the Corporation and
that the Holding Company will have few employees. In the future,
the Holding Company may employ additional officers and employees.
DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION
Information concerning the names, ages, positions and
business experience of the Board of Directors and executive
officers of the Corporation and information about executive
compensation is incorporated by reference herein from Items 1,
10, 11 and 13 of the Corporation's Form 10-K (which incorporates
portions of the Corporation's definitive proxy statement, dated
March 2, 1998, for its Annual Meeting of Shareholders held on
April 7, 1998 ("1998 Proxy Statement")). For restrictions on
officers holding common positions in the Corporation, the Holding
Company and/or any affiliate thereof, see "THE HOLDING COMPANY'S
BUSINESS - The PSC" and "Corporate Structure and Other
Provisions".
The following table lists the number of shares of Common
Stock beneficially owned, as of June 30, 1998, by each director,
and each executive officer listed in the table under the caption
"Executive Compensation" in the 1998 Proxy Statement and by all
directors and executive officers of the Corporation as a group:
Name No. of Shares (1) % of Class (2)
Jack Effron................. 2,068 less than 1%
Frances D. Fergusson........ 1,803 less than 1%
Heinz K. Fridrich........... 2,866 less than 1%
Edward F. X. Gallagher...... 2,394 less than 1%
Paul J. Ganci............... 9,561 (3) less than 1%
Charles LaForge............. 3,715 less than 1%
John E. Mack III............ 12,288 (3) less than 1%
Edward P. Swyer............. 8,268 less than 1%
Joseph J. DeVirgilio, Jr.... 1,446 less than 1%
Carl E. Meyer............... 1,550 less than 1%
Allan R. Page............... 2,639 less than 1%
All directors and executive
officers as a group
(18 persons).............. 53,270 less than 1%
27
(1) Based on information furnished to the Corporation by the
directors and executive officers as of June 30, 1998.
(2) The percentage ownership calculation for each owner has been
made on the basis that there are outstanding 16,975,387
shares of Central Hudson Common Stock on the Record Date.
(3) Includes shares owned by the respective spouses of the named
individuals as follows: Mrs. Mack-850 shares and Mrs.
Ganci-2,044 shares. The shares owned by Mrs. Mack and Mrs.
Ganci are considered to be beneficially owned by Mr. Mack
and Mr. Ganci, respectively, only for the purpose of this
proxy statement and the respective named individuals
disclaim any beneficial interest in such shares for all
other purposes.
THE SHARE EXCHANGE
Exchange Agreement
The Exchange Agreement has been unanimously adopted by the
Boards of Directors of the Corporation and the Holding Company
and is subject to adoption by the holders of at least two-thirds
of the outstanding shares of Central Hudson Common Stock. See
"Vote Required". In the Share Exchange, (i) each share of
Central Hudson Common Stock outstanding immediately prior to the
Effective Time will be exchanged for one new share of Holding
Company Common Stock, (ii) the Holding Company will become the
owner of all outstanding Central Hudson Common Stock, and (iii)
the shares of the Holding Company Common Stock held by the
Corporation immediately prior to the Effective Time will be
canceled.
As a result, upon consummation of the Share Exchange, the
Holding Company will become a holding company, the Corporation
will become a subsidiary of the Holding Company and all of the
Holding Company Common Stock outstanding immediately after the
Share Exchange will be owned by the former holders of Central
Hudson Common Stock outstanding immediately prior to the Share
Exchange. The Exchange Agreement is attached to this Proxy
Statement and Prospectus as Exhibit A and is incorporated herein
by reference.
The Corporation's outstanding shares of preferred stock will
not be exchanged in the Share Exchange, but will continue to be
outstanding as shares of the Corporation's preferred stock. The
Share Exchange will not change the rights of the holders of such
preferred stock as currently provided in the Corporation's
Certificate of Incorporation. Debt of the Corporation will
continue as outstanding obligations of the Corporation after the
Share Exchange.
28
Vote Required
Under New York law, the affirmative vote of the holders of
record on the Record Date of two-thirds of the outstanding shares
of Central Hudson Common Stock is required to approve the Holding
Company Proposal. Holders of record on the Record Date will be
entitled to one (1) vote per share of Central Hudson Common
Stock. Under the rules of the NYSE, member brokerage firms that
hold shares in street name for beneficial owners may, to the
extent that such beneficial owners do not furnish voting
instructions with respect to any or all proposals submitted for
stockholder action, vote in their discretion upon proposals which
are considered "discretionary" proposals under the rules of the
NYSE. Member brokerage firms that have received no instructions
from their clients as to "non-discretionary" proposals do not
have discretion to vote on these proposals. Under the rules of
the NYSE, the Holding Company Proposal is considered a "non-discretionary
item" whereby brokerage firms may not vote in their
discretion on behalf of their clients if such clients have not
furnished voting instructions. Such "broker non-votes" will not
be considered as votes cast in determining the outcome of the
Holding Company Proposal. Accordingly, such "broker non-votes"
will have the same legal effect as a vote against the Holding
Company Proposal.
Regulatory Approvals
New York Public Service Commission. By the PSC Order, the PSC
approved the PSC Settlement Agreement, which provides for the
holding company restructuring. For a description of the PSC
Settlement Agreement, see "THE HOLDING COMPANY'S BUSINESS - The
PSC".
FERC and NRC Consents. On July 2, 1998, the FERC issued its
consent to the Holding Company restructuring under Section 203 of
the Federal Power Act. On July 19, 1998, the NRC consented,
under 10 C.F.R. subsection 50.80, to the Holding Company restructuring as
it relates to the possessory license of the Corporation with
respect to the Nine Mile 2 Plant. The NRC's Order includes a
provision allowing any person adversely affected by the Order to
request, by August 19, 1998, a hearing relative to the NRC's
issuance of the Order.
Conditions to Effectiveness of the Share Exchange
The Share Exchange is subject to the satisfaction of the
following conditions (in addition to approval of the Holding
Company Proposal by the holders of Central Hudson Common Stock):
(i) all necessary orders, authorizations, approvals or waivers
from the PSC, the FERC and the NRC and all other jurisdictive
regulatory bodies, boards or agencies have been received, remain
in full force and effect, and do not include, in the sole
judgment of the Board of Directors of the Corporation,
29
unacceptable conditions; (ii) shares of the Holding Company
Common Stock to be issued in connection with the Share Exchange
have been listed, subject to official notice of issuance, on the
NYSE; (iii) the Holding Company Charter (Exhibit B to this Proxy
Statement and Prospectus) has been filed with the Department;
(iv) a registration statement is effective under the Securities
Act of 1933 relating to the Holding Company Common Stock to be
issued in the Share Exchange; and (v) a favorable opinion of
counsel covering certain United States federal income tax matters
has been received and such favorable rulings have been received
from the New York State and/or Federal tax authorities with
respect to
the Share Exchange and related transactions as the Boards of
Directors of the Corporation and the Holding Company shall
determine are necessary and appropriate.
Following satisfaction of these conditions, the Share
Exchange will become effective upon (or at a specified time)
filing with the Department a certificate of exchange pursuant to
Section 913(d) of the New York Business Corporation Law
("Effective Time"). The Corporation cannot predict when all
conditions will be satisfied, but expects that the Share Exchange
will become effective on or about November 1, 1998.
Exchange of Stock Certificates
If the Share Exchange is effected, it will not be necessary
for holders of Central Hudson Common Stock physically to exchange
their existing stock certificates for certificates of Holding
Company Common Stock. The certificates which represent shares of
Central Hudson Common Stock outstanding immediately prior to the
Effective Time will automatically represent an equal number of
shares of Holding Company Common Stock immediately after the
Effective Time and will no longer represent Central Hudson Common
Stock. New certificates bearing the name of the Holding Company
will be issued after the Share Exchange, if and as certificates
representing shares of Central Hudson Common Stock outstanding
immediately prior to the Share Exchange are presented for
exchange or transfer.
Stock Purchase Plan
Shares of Central Hudson Common Stock (including
uncertificated whole and fractional shares) held in its Stock
Purchase Plan will automatically become a like number of shares
of the Holding Company Common Stock at the Effective Time. At
the Effective Time, the Holding Company will succeed to that Plan
as in effect immediately prior to the Effective Time, and shares
of the Holding Company Common Stock will be issued under that
Plan on and after the Effective Time.
30
Amendment or Termination of the Exchange Agreement
The Boards of Directors of the Corporation and the Holding
Company may amend any of the terms of the Exchange Agreement at
any time before or after its adoption by the holders of Central
Hudson Common Stock and prior to the Effective Time, but no such
amendment may, in the sole judgment of the Board of Directors of
the Corporation, materially and adversely affect the rights of
the Corporation's shareholders.
The Exchange Agreement may be terminated and the Share
Exchange abandoned at any time before or after the shareholders
of the Corporation adopt the Holding Company Proposal, and prior
to the Effective Time, if the Board of Directors of the
Corporation determine, in their sole judgment, that consummation
of the Share Exchange would, for any reason, be inadvisable or
not be in the best interests of the Corporation or its
shareholders.
Listing of Holding Company Common Stock
The Holding Company is applying to have its common stock
listed on the NYSE. It is expected that such listing will become
effective at the Effective Time. The stock exchange ticker
symbol of Holding Company Common Stock will be "CNH". Following
the Share Exchange, Central Hudson Common Stock will no longer
trade and will be delisted and no longer be registered pursuant
to Section 12 of the Securities Exchange Act of 1934.
Dividend Policy
The Holding Company does not now, nor will it immediately
after the Share Exchange, conduct directly any business
operations from which it will derive any revenues. The Holding
Company plans to obtain funds for its own operations from
dividends paid to the Holding Company by its subsidiaries, and
from sales of securities or debt incurred by the Holding Company.
Dividends on the Holding Company Common Stock will initially
depend upon the earnings, financial condition and capital
requirements of the Corporation, and the dividends that the
Corporation pays to the Holding Company. In the future,
dividends from the Holding Company's subsidiaries other than the
Corporation may also be a source of funds for dividend payments
by the Holding Company. Payment of Central Hudson Common Stock
dividends to the Holding Company will be subject to the prior
rights of holders of the Corporation's preferred stock. In
addition, although it has no present intention to do so, the
Corporation may issue additional preferred stock in the future to
meet its capital requirements. Such additional preferred stock
will also have preferential dividend rights.
31
It is presently anticipated that, initially, the Holding
Company will pay quarterly dividends on the Holding Company
Common Stock at least equal to the rate, and on approximately the
same schedule, as the dividend most recently declared by the
Corporation on the Central Hudson Common Stock. While future
dividends will depend on the earnings, financial condition and
capital requirements of the Corporation and the Holding Company's
other subsidiaries, the Holding Company presently expects that
the Holding Company will maintain a policy, like that of the
Corporation, of paying an appropriate percentage of earnings to
its shareholders. The Corporation currently pays about 75.3% of
its income as dividends.
Following consummation of the Share Exchange, CHEC and
certain other subsidiaries of the Corporation will be transferred
to the Holding Company and will not be available to the holders
of the Corporation's preferred stock as a source of cash for the
payment of dividends or other amounts. CHEC and the
Corporation's other subsidiaries have not paid dividends to the
Corporation in the past.
The PSC Settlement Agreement contains conditions imposing
limitations on dividend payments by the Corporation to the
Holding Company, which limitations could reduce the funds
available to the Holding Company to pay dividends on Holding
Company Common Stock. These limitations are as follows: (1)
during the first two (2) years after the consummation of the
Share Exchange, dividends on Central Hudson Common Stock cannot
exceed the income available for such dividends and after such two
(2) year period, dividends on Central Hudson Common Stock cannot
exceed a rate equal to 100% of the annual average income
available for such dividends, calculated on a two-year rolling
average basis; (2) in the event that the Corporation has senior
rated debt and is downgraded below BBB+ by more than one credit
rating agency due to the performance of or concerns about the
financial condition of the Holding Company or any affiliate,
other than the Corporation, the Corporation's dividends will be
limited to 75% of the average annual income available for common
stock (calculated on a two-year rolling average basis); (3) in
the event that such senior rated debt is placed on "Credit Watch"
(or the equivalent) for a rating below BBB by more than one
rating agency due to the performance of or concerns about the
financial condition of the Holding Company or any affiliate other
than the Corporation, common stock will be limited to a rate of
not more than 50% of the average annual income available for
common stock, on a two-year rolling average basis; and (4) in the
event of a downgrade of the Corporation's senior debt rating
below BBB- by more than one credit rating agency, due in
substantial part to the performance of or concerns about the
financial condition of the Holding Company or any affiliate other
than the Corporation, no dividends will be paid until the
Corporation's senior debt rating has been restored to BBB- or
32
higher by all credit rating agencies then rating the Corporation.
Any such limitations on dividend payments by the Corporation to
the Holding Company are likely to result in a reduction in the
dividends paid by the Holding Company to its shareholders. These
limitations will survive the expiration of the PSC Settlement
Agreement on June 30, 2001.
The Corporation's current Standard & Poor's Corporation,
Moody's Investors Service, Inc., Duffs & Phelps Credit Rating Co.
and Fitch Investors Service unsecured senior debt ratings are A-,
A2, A and A, respectively.
No dividends may be paid, or funds set apart for payment, on
Central Hudson Common Stock unless all dividends accrued on the
Corporation's outstanding preferred stock have been paid, or
declared and set apart for payment.
Certain Federal Income Tax Consequences
The Corporation and the Holding Company have received an
opinion from Gould & Wilkie, their general counsel, regarding
material Federal income tax consequences of the Share Exchange,
to the effect that, based on certain assumptions and factual
representations:
(1) no gain or loss will be recognized by a holder of
Central Hudson Common Stock upon the exchange solely of such
holder's Central Hudson Common Stock solely for Holding
Company Common Stock;
(2) the basis of shares of Holding Company Common Stock
received by a former holder of shares of Central Hudson
Common Stock in an exchange described in (1) above in the
aggregate will equal the basis of such former holder's
shares of Central Hudson Common Stock exchanged therefor,
and the holding period for such shares of Holding Company
Common Stock will include the holding period for shares of
Central Hudson Common Stock exchanged therefor to the extent
that such shares of Central Hudson Common Stock were held as
a capital asset at the effective time of the Share Exchange;
(3) no gain or loss will be recognized by the Holding
Company or the Corporation on account of the Share Exchange
or the issuance of shares of Holding Company Common Stock to
the former holders of shares of Central Hudson Common Stock
pursuant to the Exchange Agreement; and
(4) the consummation of the Share Exchange will not result
in the termination of the existence of the affiliated group
of corporations of which the Corporation has been the common
parent, and the Corporation will be included in such
33
affiliated group of corporations of which the Holding
Company will become the new common parent.
Shareholders of the Corporation will be required to attach
to their income tax returns a complete statement of all the facts
relating to the Share Exchange. The facts to be disclosed
include the shareholder's basis in the shares of Central Hudson
Common Stock transferred to the Holding Company and the nature
and amount of shares of Holding Company Common Stock received in
the Share Exchange. Shareholders of the Corporation will also be
required to keep permanent records of any information relating to
the Share Exchange that is required to be filed with their income
tax returns.
The foregoing discussion does not cover the tax consequences
of the Share Exchange under state, local or foreign income or
other tax laws. Shareholders of the Corporation are urged to
consult with their own tax advisors with respect to the effects
of such laws.
Treatment of the Corporation's Preferred Stock
Shares of the Corporation's preferred stock will not be
exchanged in the Share Exchange, but will continue as preferred
stock of the Corporation. Therefore, holders of the
Corporation's preferred stock will not become holders of Holding
Company preferred or Common Stock as a result of the Share
Exchange. The Share Exchange and the holding company structure
will not change the rights of holders of the outstanding shares
of the Corporation's preferred stock. The Corporation's
preferred stock will continue to rank senior to the Corporation's
Common Stock as to dividends and as to the distribution of the
Corporation's assets upon any liquidation.
Holding Company Capital Stock
Generally. Since the Exchange Agreement is conditioned on
the Holding Company Charter being filed prior to the Share
Exchange with the Department, approval of the Holding Company
Proposal will constitute approval and ratification of the Holding
Company Charter. The Holding Company's Board of Directors will
adopt the Holding Company By-laws prior to the Share Exchange.
These documents will govern certain rights of the holders of
Holding Company Common Stock after the Share Exchange as
discussed under this caption and under "Comparative Shareholders'
Rights" below.
The following statements with respect to Holding Company
Common Stock are based on certain provisions of the Holding
Company Charter and By-laws, in the form to be effective as of
the Effective Time. A copy of the Holding Company Charter and
By-laws, substantially in the form to be effective at the
34
Effective Time, are attached as Exhibits B and C hereto and are
incorporated herein by reference.
The Holding Company is authorized to issue 30,000,000 shares
of common stock, $.10 par value (of which approximately
16,700,000 shares are expected to be outstanding at the Effective
Time of the Share Exchange), and 1,200,000 shares of preferred
stock, $.10 par value. The Holding Company preferred stock may be
issued from time to time in series as the Holding Company's Board
of Directors may determine, and the respective dividend rates,
redemption terms (if any), amounts payable on liquidation, voting
rights (if any), number of votes per share, conversion rights (if
any), and other terms will be fixed by the Holding Company's
Board of Directors with respect to any such series prior to
issuance.
When issued in the Share Exchange, shares of the Holding
Company Common Stock will be fully paid and nonassessable.
Holders of the Holding Company Common Stock and preferred stock
are not entitled to preemptive rights.
Dividends. Subject to prior rights of the Holding Company's
preferred stock (if any should become outstanding), the Holding
Company's Common Stock is entitled to such dividends as may be
declared by the Holding Company's Board of Directors, and the
Holding Company may purchase or otherwise acquire outstanding
shares of the Holding Company Common Stock out of funds legally
available therefor.
As summarized above, the PSC Settlement Agreement imposes
certain limitations on the dividends that the Corporation may pay
to the Holding Company after the Share Exchange. See "Dividend
Policy".
Liquidation Rights. Upon liquidation of the Holding
Company, any net assets remaining after payment to the holders
(if any) of the Holding Company preferred stock of the full
amounts to which they are entitled to receive are distributable
pro rata to the holders of the Holding Company Common Stock.
Voting Rights. Holders of the Holding Company Common Stock
are entitled to one vote per share. Holders of Holding Company
preferred stock shall have no voting rights unless, in connection
with the issuance of a series of preferred stock, the Holding
Company's Board of Directors provides voting rights or unless
otherwise required by law. There are no cumulative voting
rights. The Holding Company's Board of Directors is divided into
three classes, with directors elected generally to serve for
terms of three (3) years.
35
Transfer Agent and Registrar. The transfer agent and
registrar for the Holding Company Common Stock will be First
Chicago Trust Company of New York, Jersey City, New Jersey.
Indemnification and Limitation of Liability. As generally
do the Corporation's by-laws ("Central Hudson By-laws"), the
Holding Company By-laws will provide that the Holding Company
shall indemnify to the full extent permitted by law any person
made, or threatened to be made, a party to any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person or such
person's testator or intestate is or was a director, officer or
employee of the Holding Company, or serves or served at the
request of the Holding Company with any other enterprise as a
director, officer or employee. Expenses incurred by any such
person in defending any such action, suit or proceeding will be
paid or reimbursed by the Holding Company promptly upon receipt
by it of an undertaking of such person to repay such expenses if
it shall ultimately be determined that such person is not
entitled to be indemnified by the Holding Company. No amendment
of this by-law provision will impair the rights of any person
arising at any time with respect to events occurring prior to
such amendment.
As does the Corporation's certificate of incorporation
("Central Hudson Charter"), the Holding Company Charter will
provide that no director shall have personal liability to the
Holding Company or its shareholders for damages for any breach of
duty in such capacity, except for the liability for acts or
omissions in bad faith or involving intentional misconduct or a
knowing violation of law, or if such director personally gained
in fact a financial profit or other advantage to which such
director was not legally entitled or if such act violated Section
719 of the New York Business Corporation Law ("NYBCL"). Any
amendment or repeal of such liability limitation provision may
not apply to or have any effect on the liability or alleged
liability of any director for or with respect to any acts or
omissions of such director occurring prior to such amendment or
repeal.
Common Stock Repurchase Plan. The Corporation currently has
a repurchase plan under which it can acquire up to 2.5 million
shares of issued and outstanding Central Hudson Common Stock.
Since January 1, 1997 and through April 30, 1998, the Corporation
repurchased 621,200 shares of Central Hudson Common Stock. The
Holding Company has not yet determined whether it will establish
a plan to repurchase Holding Company Common Stock.
Possible Effect of Certain Holding Company Provisions and the New
York Law
36
It is not the intention of the Corporation's Board of
Directors to discourage legitimate offers to enhance shareholder
value. However, certain provisions of the Holding Company
Charter and By-laws could have the effect of discouraging
unsolicited attempts to take over and acquire the Holding
Company. To the extent that these provisions discourage
potential takeover bids, they might limit the opportunity for the
Holding Company's shareholders to sell their shares at a premium
over then prevailing market prices.
Non-Cumulative Voting. The Holding Company will not provide
for cumulative voting in the election of directors. Cumulative
voting means that the total number of votes which a holder of
common stock may cast for the election of directors shall equal
the number of directors to be elected multiplied by the number of
shares held, and such shareholder may cast all of such votes for
a single nominee for director or may distribute them among all or
several nominees, as such shareholder sees fit.
Under cumulative voting, it is possible for representation
on a board of directors to be obtained by an individual or group
of individuals who own less than a majority of the voting stock.
Such a shareholder or group may have interests and goals which
are not consistent with, and indeed might be in conflict with,
those of a majority of the shareholders. The Board of Directors
of the Holding Company believes that each director should
represent all shareholders, rather than the interests of any
special constituency, and that the presence on the Holding
Company's Board of Directors of one or more directors
representing such a constituency could disrupt and impair the
efficient management of the Holding Company. The lack of
cumulative voting could discourage the accumulation of blocks of
Holding Company Common Stock and therefore could tend to make
increases in the market price of Holding Company Common Stock,
which could result therefrom, less likely to occur. Therefore,
shareholders may not be able to sell their shares of Holding
Company Common Stock at a market price influenced by this type of
activity.
Advance Notice of Business to be Brought Before Shareholder
Meetings. Under the Holding Company By-laws shareholders must
provide the Holding Company prior written notice of any business
to be brought before an annual or special meeting (including the
nomination of directors) in order for it to be considered. With
respect to any annual meeting, the Holding Company By-laws
require the written notice to be received by the Secretary of the
Holding Company no earlier than 90 days nor later than 60 days
prior to the first anniversary of the preceding year's annual
meeting, except that if the date of the annual meeting is more
than 30 days before or more than 60 days after such anniversary
date, the Holding Company By-laws require the written notice to
be received by the Secretary of the Holding Company no earlier
37
than 90 days nor later than the later of 60 days prior to the
date of, or 10 days after the public announcement of, such annual
meeting. With respect to any special meeting, the Holding
Company By-laws require the written notice to be received by the
Secretary of the Holding Company no earlier than 90 nor later
than the later of 60 days prior to, or 10 days after the
announcement of, such special meeting.
These advance notice by-laws provisions are intended to
provide an orderly process for shareholder action and provide the
Holding Company's Board of Directors with a meaningful
opportunity to consider a proposal or director nomination by a
shareholder and, to the extent deemed necessary or desirable by
that Board, inform all of its shareholders of any recommendation
of that Board. The provisions may provide sufficient time for
the Holding Company to institute litigation or take other steps
to respond to a shareholder proposal, or to prevent the proposal
from being acted upon, if such response or prevention is thought
to be necessary or desirable. The provisions for advance notice
of director nominations may inhibit shareholders from
participating in the nomination process for directors. Such
provisions may also provide sufficient time for the Holding
Company to institute litigation or take other steps to prevent
the nominee from being elected or serving if such prevention is
thought to be necessary or desirable.
"Blank-Check" Stock. The Holding Company Charter will
authorize the issuance of 1,200,000 shares of Holding Company
preferred stock. In addition, after giving effect to the Share
Exchange, approximately 13,300,000 shares of Holding Company
Common Stock will be authorized but unissued and not reserved for
issuance. An effect of the existence of unissued Holding Company
Common Stock and preferred stock may be to enable the Holding
Company Board of Directors to render more difficult or discourage
a transaction to obtain control of the Holding Company without
the consent of the Holding Company Board of Directors. Such
shares might be issued by the Holding Company Board of Directors
without shareholder approval in transactions that might prevent
or render more difficult or costly the completion of a takeover
transaction, as by diluting voting or other rights of the
proposed acquiror. The Holding Company Charter will grant the
Holding Company Board of Directors broad power to establish the
rights and preferences of the authorized and unissued preferred
stock, one or more classes or series of which could be issued
entitling holders to vote separately as a class on any proposed
merger or consolidation, to convert such stock into shares of
Holding Company Common Stock or possibly other securities, to
demand redemption at a specified price under prescribed
circumstances related to a change of control, or to exercise
other rights designed to impede a takeover.
38
Section 912 of the New York Business Corporation Law.
Section 912 of the NYBCL applies to the Corporation and will
apply to the Holding Company upon consummation of the Share
Exchange. Section 912 of the NYBCL would prohibit a "business
combination" (as defined in Section 912, generally including
mergers, sales and leases of assets, issuances of securities and
similar transactions) by the Holding Company or a subsidiary with
an "interested shareholder" (as defined in Section 912, generally
the beneficial owner of 20 percent or more of the Holding
Company's voting stock) within five (5) years after the person or
entity becomes an interested shareholder, unless (i) prior to the
person or entity becoming an interested shareholder, the business
combination or the transaction pursuant to which such person or
entity became an interested shareholder shall have been approved
by the Holding Company's Board of Directors, or (ii) the business
combination is approved by the holders of a majority of the
outstanding voting stock of the Holding Company, excluding shares
held by the interested shareholder, at a meeting called for such
purpose not earlier than five (5) years after such interested
shareholder's stock acquisition date.
Section 70 of the New York Public Service Law. Under Section
70 of the NYPSL, unless authorized by the PSC, no gas corporation
or electric corporation may directly or indirectly acquire the
stock or bonds of any other corporation incorporated for, or
engaged in, the same or a similar business, or proposing to
operate or operating under a franchise from New York State or any
other state or any other municipality. In general, no stock
corporation other than a gas corporation or electric corporation
or street railroad corporation may purchase or acquire, take or
hold, more than ten percent (10%) of the voting capital stock of
any gas corporation or electric corporation organized or existing
under or by virtue of the laws of New York unless with the
consent of, and subject to the terms and conditions set by, the
PSC. No consent may be given by the PSC to any such acquisition
unless it has been shown that such acquisition is in the public
interest. Any contract, assignment, transfer or agreement for
transfer of any stock in violation of Section 70 will be void and
of no effect, and no such transfer or assignment may be made upon
the books of any such gas corporation or electric corporation, or
will be recognized as effective for any purpose. An "electric
corporation" is defined generally to include any corporation,
company, partnership and person owning, operating or managing any
electric plant. A "gas corporation" is defined generally to
include any corporation, company, partnership and person owning,
operating or managing any gas plant. In the event of a merger,
consolidation or takeover transaction involving the Holding
Company, any regulatory approvals required for such a transaction
would depend on the structure and other details of the
transaction. The necessary approvals could include approval of
the PSC under Section 70 of the NYPSL.
39
Fair Price Provisions. The Holding Company Charter (Article
10) contains a "fair price" provision which is essentially the
same as the "fair price" provision contained in the Central
Hudson Charter. This "fair price" provision is designed
generally to assure that all shareholders receive the same price
and/or equal treatment for their shares of Holding Company Common
Stock upon an offer for the Holding Company Common Stock under a
proposed business combination. The "fair price" provision
prohibits certain business combinations with a controlling or
substantial shareholder ("Interested Shareholder") unless (i) the
minimum price and procedural requirements are satisfied thereof,
(ii) a majority of disinterested directors approve the
transaction, or (iii) the required supermajority shareholder vote
is obtained, consisting of the affirmative vote of at least 80%
of the Holding Company's voting shares, in which vote at least
two thirds of the disinterested shareholders approve the
transaction. Such provision supplements the "fair price"
protection available under Section 912 of the NYBCL, as described
above. See the proposed Holding Company Charter attached hereto
as Exhibit B.
Other Provisions. Some other provisions of the Holding
Company's Charter or By-laws may also tend to discourage
potential offers to take over and acquire the business of the
Holding Company. The Holding Company's Board of Directors will
be divided into three classes, with directors in each class
generally being elected to serve a three-year term. Also,
special shareholder meetings may be called only by the Board
pursuant to a resolution adopted by a majority of the entire
Board. The Holding Company By-laws also provide that directors
may not be removed without cause by the shareholders, except in
the case of a director elected by the holders of any class or
series of stock (other than Holding Company Common Stock), voting
as a class or series, when so entitled by the applicable
provisions of the Holding Company Charter. Finally, certain
provisions of the Holding Company Charter and By-laws (relating
to, for example, limitation on director liabilities, the ability
to call special meetings of shareholders, presiding at meetings
of shareholders, classified Board of Directors, election and
removal of directors, advance notice requirements for shareholder
proposals and nomination of directors at shareholder meetings,
and indemnification) may only be amended by the affirmative vote
of not less than 75% of the shares entitled to vote at a
shareholder meeting and with respect to certain such provisions,
the affirmative vote of not less than 75% of the entire Board of
Directors also is required.
Comparative Shareholders' Rights
The Corporation and the Holding Company are both New York
corporations. When the Share Exchange becomes effective, holders
40
of Central Hudson Common Stock will become holders of Holding
Company Common Stock, and their rights will be governed by the
Holding Company Charter and By-laws instead of those of the
Corporation.
Certain differences between the rights of holders of Holding
Company Common Stock and those of holders of Central Hudson
Common Stock are summarized below. Such summary is qualified in
its entirety by reference to the information included in the
exhibits hereto, in exhibits to the Registration Statement of
which this Proxy Statement and Prospectus is a part, and in
materials incorporated herein by reference.
Purpose Clause. The corporate purposes for which the Corporation
may engage in business are those related to electricity, gas and
other forms of energy and related activities. The Holding
Company is authorized to engage in any and all lawful acts and
activities.
Authorized Shares. Authorized Holding Company Common Stock and
Central Hudson Common Stock are 30,000,000 each. As of the
Record Date, there were 16,975,387 shares of Central Hudson
Common Stock issued and outstanding. Up to approximately
16,700,000 shares of Holding Company Common Stock may be issued
in the Share Exchange.
As of the Record Date, there were 560,300 outstanding shares
of the Corporation's preferred stock and 639,700 authorized but
unissued shares of the Corporation's preferred stock. On
consummation of the Share Exchange, the Holding Company will have
1,200,000 authorized shares of preferred stock.
Preferred Stock. The respective Boards of Directors of the
Holding Company and the Corporation are authorized to issue
preferred stock in series.
The Central Hudson Charter does not establish voting rights,
preferences or other rights with respect to the Corporation's
preferred stock, except for the Corporation's 4 1/2% Cumulative
Preferred Stock. For all series of preferred stock issued after
the Corporation's 4 1/2% Cumulative Preferred Stock, the
Corporation's Board of Directors is given full authority to
establish and designate each particular series of preferred stock
and fix the preferences, privileges and voting power of each
particular series including, but not limited to, the following:
(i) the serial designation, (ii) the dividend rate and payments
dates, (iii) liquidation provisions, (iv) redemption provisions,
and (v) provisions relating to the exchangeability of the shares
of such series into shares of any other series of the same or any
other class or classes of stock of the Corporation. The
Corporation's outstanding preferred stock is generally not
entitled to vote, but only has limited voting rights as required
41
by law and as set out in the Central Hudson Charter, which rights
generally arise only in the event of certain arrearages in
payment of dividends or in the event it is proposed to amend the
Central Hudson Charter to alter the preferences of outstanding,
preferred stock of the Corporation, or which authorizes shares
having preferences superior to those of outstanding preferred
stock of the Corporation or which increases the authorized amount
of the Corporation's preferred stock, certain corporate
transactions affecting the Corporation's preferred stock.
Certain series of the Corporation's preferred stock are subject
to redemption and sinking fund provisions. After the Share
Exchange, outstanding preferred stock of the Corporation will
continue as equity securities of Central Hudson with the same
preferences, designations, relative rights, privileges and
powers, and subject to the same restrictions, limitations and
qualifications, as were applicable to outstanding Corporation
preferred stock prior to the Share Exchange.
The Holding Company Charter will not establish voting
rights, preferences or other rights with respect to the Holding
Company preferred stock. The Holding Company's Board of
Directors is given full authority to establish and designate each
particular series of preferred stock and to fix the rights,
preferences and limitations of each particular series, and the
relative rights, preferences and limitations between series, as
follows: (i) the serial designation; (ii) the number of shares in
such series; (iii) the dividend rate or rates and the date or
dates upon which such dividends shall be payable; (iv) whether
dividends on such series will be cumulative, and, if so, from
which date or dates; (v) liquidation provisions; (vi) provisions
relating to the purchase, redemption or acquisition; (vii)
provisions relating to sinking or other similar funds; (viii)
provisions relating to the conversion or exchange of shares of
such series into shares of any class of stock (except that
conversion or exchange may not be made into shares having
superior dividend or liquidation preferences); (ix) the voting
rights, if any, in addition to those required by law and the
number of votes per share; and (x) any other relative rights,
preferences or limitations of such series not inconsistent with
the Holding Company Charter or with applicable law.
Par Value. A designated par value per share is not required
under the NYBCL and serves no useful purpose in modern corporate
practice. Pursuant to Section 180 of the New York State Tax Law,
every corporation organized under New York law is subject to a
tax of one-twentieth of one percent on the amount of the par
value of all the shares that it is authorized to issue.
Authorized stock without par value is taxed (based upon an
assumed par value of $100 per share) at $.05 per share. To
reduce taxes in connection with the formation of the Holding
Company, the respective par values of shares of Holding Company
Common Stock ($.10 par value) and the Holding Company preferred
42
stock ($.10 par value) have been designated as a lower amount
than those of the Corporation's Common Stock ($5 par value) and
the Corporation's preferred stock ($100 par value). It is not
anticipated that the lower par value of shares of Holding Company
Common Stock or Holding Company preferred stock will affect the
market value of these shares.
Special Meetings of Shareholders. The Holding Company By-laws
will provide that a special meeting of shareholders may be called
only by the Holding Company Board of Directors pursuant to a
resolution approved by a majority of the entire Holding Company
Board of Directors. The Central Hudson By-laws provide that a
special meeting of shareholders may be called by the Board of
Directors, the Chairman of the Board of Directors, the President
or by the shareholders together holding at least one-third of the
capital stock of the Corporation entitled to vote or act with
respect to the business to be brought before that meeting.
Classified Board. The Holding Company Charter and By-laws will
provide (i) for the Board of Directors to determine the number of
directors in a range of three (3) to 25; and (ii) for the
division of the Board of Directors into three classes with
directors in each class generally being elected for a three-year
term. The Central Hudson Charter does not provide for a
classified board.
Required Vote for Certain Transactions. For corporations, like
the Holding Company, incorporated after February 22, 1998, the
NYBCL requires the approval of the board of directors of a
corporation followed by the affirmative vote of a majority of all
outstanding shares entitled to vote thereon to authorize a merger
or consolidation (Section 903), the sale, lease, exchange or
other disposition of all or substantially all the assets of a
corporation (Section 909) or a binding share exchange (Section
913) unless the certificate of incorporation of such corporation
expressly provides otherwise. For corporations, like the
Corporation, in existence on February 22, 1998, the NYBCL
requires approval of the board of directors of a corporation
followed by the affirmative vote of two-thirds of all outstanding
shares entitled to vote thereon to authorize any such
transaction, unless the certificate of incorporation of such
corporation expressly provides otherwise. The Holding Company
Charter requires that any such transaction with respect to the
Holding Company and an Interested Shareholder be authorized by
the approval of the Holding Company's Board of Directors followed
by the affirmative vote of 80% of all outstanding shares of the
Holding Company entitled to vote thereon (so-called "fair price"
provision; see "Fair Price Provisions"). The Central Hudson
Charter has the same "fair price" provision. However, in all
such transactions not involving an Interested Shareholder, the
Holding Company Charter would require approval of the
Corporation's Board of Directors followed by the affirmative vote
43
of a majority of all outstanding shares of Holding Company Common
Stock and the Central Hudson Charter would require approval of
the Corporation's Board of Directors followed by the affirmative
vote of two-thirds of all outstanding shares of Central Hudson
Common Stock entitled to vote thereon.
Removal of Directors, Filling of Vacancies. The Holding Company
Charter will provide that directors may be removed only for cause
by the shareholders or the Board of Directors, except in the case
of a director elected by the holders of any class or series of
stock (other than Holding Company Common Stock), voting as a
class or series, when so entitled by the applicable provisions of
the Holding Company Charter. The Central Hudson By-laws govern
removal of a director and removal may be done by the shareholders
with or without cause. The Holding Company By-laws will provide
that vacancies on the Board of Directors occurring for any reason
may be filled by a majority of the Board of Directors then in
office, although less than a quorum exists, and not by
shareholders. The Central Hudson By-laws are the same except
that they provide that vacancies on the Board of Directors,
occurring by reason of the removal of a director without cause,
may be filled only by a vote of the shareholders.
Other Provisions. Certain provisions of the Holding Company
Charter and By-laws not provided for in the Central Hudson
Charter and By-laws (relating to, for example, preferred stock,
limitation on director liabilities, the ability to call special
meetings of shareholders, classified Board of Directors, election
and removal of directors, advance notice requirements for
shareholder proposals and nomination of directors at shareholder
meetings) may only be amended by the affirmative vote of not less
than 75% of the shares then entitled to vote at shareholder
meetings and with respect to certain such provisions, the
affirmative vote of not less than 75% of the entire Board of
Directors also is required.
Statutory Appraisal Rights
Pursuant to changes in the NYBCL made in February 1998,
holders of Central Hudson Common Stock and the Corporation's
preferred stock will not have statutory appraisal rights (i.e.,
dissenter's rights) in connection with the Share Exchange because
the Central Hudson Common Stock is listed on a national
securities exchange and because the Corporation's preferred stock
will not be exchanged in the Share Exchange.
VALIDITY OF THE HOLDING COMPANY COMMON STOCK
The validity of the shares of the Holding Company Common
Stock to be issued in the Share Exchange will be passed upon by
Gould & Wilkie, general counsel to the Corporation and the
Holding Company, One Chase Manhattan Plaza, New York, New York
10005-1401.
44
FORWARD-LOOKING STATEMENTS
This Proxy Statement and Prospectus contains certain
forward-looking statements. These statements are based upon
management's current expectations and information currently
available and are subject to risks and uncertainties that could
cause actual results to differ materially from those projected in
such statements. Whenever the words "anticipate", "believe",
"estimate", "expect", "project", "objective", or similar
expressions are used, they are intended to identify forward-looking statements.
For example, such forward-looking statements
may include, without limitation, statements in connection with
the future payment of dividends, statements as to the pursuit of
business in new markets, statements in connection with the
regulatory approval process or future regulation of the Holding
Company and its subsidiaries, statements in connection with the
future businesses or management of the Holding Company and its
subsidiaries, and statements in connection with the effects or
benefits of a holding company structure. In addition to the
assumptions and other factors referred to specifically in
connection with such statements, factors that could cause the
Corporation's actual results to differ materially from those
contemplated in any forward-looking statements include, among
others, regulatory developments, the rapidly changing and
increasingly competitive electric and gas utility environment,
the ability to obtain adequate and timely rate relief, cost
recovery (including the potential impact of stranded costs),
legal or administrative proceedings, business conditions,
technological developments, changes in the cost or availability
of capital, labor developments, nuclear or environmental
incidents, factors affecting the utility industry in general,
such as deregulation and the unbundling of energy services,
weather conditions and changes in fuel supply or cost, and other
considerations that may be disclosed from time to time in the
Holding Company's or the Corporation's publicly disseminated
documents or filings. The Holding Company and the Corporation
undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
EXPERTS
The consolidated financial statements of the Corporation
incorporated by reference herein have been audited by Price
Waterhouse LLP, independent public accountants, as indicated in
their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving
said report.
SUBMISSION OF SHAREHOLDER PROPOSALS
If the Share Exchange is consummated, proposals of the
45
holders of Holding Company Common Stock intended to be presented
at the 1999 annual meeting of shareholders of the Holding Company
to be included in the proxy material related to that meeting must
be received by the Holding Company by November 23, 1998. If the
Share Exchange is not consummated, proposals of holders of
Central Hudson Common Stock intended to be presented at the 1999
annual meeting of shareholders of the Corporation to be included
on the proxy material related to that meeting must be received by
the Corporation by October 30, 1998. Any such proposals must be
sent to the Secretary of the Holding Company or the Corporation,
as the case may be, at 284 South Avenue, Poughkeepsie, New York
12601-4879.
Matters intended to be presented by holders of Holding
Company Common Stock at the 1999 annual meeting of shareholders
of the Holding Company must be stated in writing and delivered to
the Secretary of the Holding Company by such shareholders during
the period 90 and 60 days prior to the date of that meeting,
which is expected to be held on April 27, 1999.
If the Share Exchange is consummated, the Corporation will
no longer be publicly held and the Holding Company will be the
sole owner of Central Hudson Common Stock. In such event there
will be no meeting of shareholders of the Corporation in 1999 or
thereafter at which the holders of Holding Company Common Stock
can attend.
WHERE YOU CAN GET MORE INFORMATION
The Corporation files annual, quarterly and special reports,
proxy statements and other information with the SEC. Following
consummation of the Holding Company Proposal, the Holding Company
will also make these filings. You may read and copy any
information the Corporation has filed or the Holding Company will
file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference
rooms. The Corporation's and the Holding Company's SEC filings
are also available to the public from commercial document
retrieval services or at the Internet web site maintained by the
SEC at "http://www.sec.gov". In addition, the Corporation's SEC
filings may be inspected at the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The Holding Company has filed a Registration Statement on
Form S-4 to register with the SEC Holding Company Common Stock to
be issued when the Holding Company Proposal is consummated. This
Proxy Statement and Prospectus is a part of that Registration
Statement and constitutes a prospectus of the Holding Company in
addition to being a proxy statement of the Corporation for the
Special Meeting. As permitted by SEC rules, this Proxy Statement
and Prospectus does not contain all the information you can find
46
in the Registration Statement or in its exhibits. Statements
made in this Proxy Statement and Prospectus about the contents of
any document included as an exhibit are qualified in their
entirety by reference to that exhibit.
The SEC allows the Corporation to "incorporate by reference"
information into this Proxy Statement and Prospectus, which means
that important information can be disclosed to you by referring
you to another document filed separately with the SEC. The
information incorporated by reference is legally deemed to be
part of this Proxy Statement and Prospectus, except for any
information superseded by information in this Proxy Statement and
Prospectus or information that is subsequently incorporated by
reference in this Proxy Statement and Prospectus. The following
documents of the Corporation which have been filed with the SEC
(File No. 1-3268) are incorporated by reference in this Proxy
Statement and Prospectus:
Annual Report on Form 10-K for the year ended December 31,
1997;
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998;
Current Reports on Form 8-K, dated February 10, 1998 and
July 24, 1998; and
Definitive proxy statement, dated March 2, 1998, for the
Corporation's Annual Meeting of Shareholders held on April
7, 1998.
The Corporation is also incorporating by reference any
additional documents that the Corporation files with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 between the date of this Proxy Statement and
Prospectus and up until the consummation of the Holding Company
Proposal.
If you are a shareholder of the Corporation, you may have
already received some of the documents incorporated by reference.
If you need copies of the documents, you can obtain them through
the SEC's Internet website or as otherwise described above. In
addition, the Corporation's shareholders may obtain from the
Corporation copies of documents that have been or may be
incorporated in this Proxy Statement and Prospectus, other than
exhibits to certain documents, by requesting them in writing or
by telephone from:
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
SHAREHOLDER RELATIONS
284 South Avenue
Poughkeepsie, New York 12601-4879
(914) 486-5204
47<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE (the "Agreement"), dated
as of April 24, 1998, is between CENTRAL HUDSON GAS & ELECTRIC
CORPORATION, a New York corporation and the corporation whose
shares of Common Stock, par value $5.00 per share, will be
acquired pursuant to the "Exchange" provided for in this
Agreement (the "Subject Corporation") and CH ENERGY GROUP, INC.,
a New York corporation and the corporation which will acquire the
foregoing shares of Common Stock of the Subject Corporation (the
"Acquiring Corporation"). The Subject Corporation and the
Acquiring Corporation are hereinafter referred to, collectively,
as the "Corporations."
WITNESSETH:
WHEREAS, the authorized capital of the Subject Corporation
consists of:
(a) 30,000,000 shares of Common Stock, par value $5.00 per
share ("Subject Corporation Common Stock"), of which 17,101,987
were issued and outstanding as of April 17, 1988 (which number of
issued and outstanding shares is subject to change prior to the
Effective Time (as hereinafter defined) of the Exchange pursuant
to the Subject Corporation's Stock Purchase Plan); and
(b) 1,200,000 shares of Cumulative Preferred Stock, $100 par
value of which the following are outstanding as of the date
hereof: (i) 70,300 shares of its 4 1/2% Cumulative Preferred
Stock; (ii) 20,000 shares of its 4.75% Cumulative Preferred
Stock; (iii) 60,000 shares of its Cumulative Preferred Stock,
Series D;(iv) 60,000 shares of its 4.96% Cumulative Preferred
Stock, Series E; (v) 200,000 shares of its 6.20% Redeemable
Cumulative Preferred Stock; and (vi) 150,000 shares of its 6.80%
Redeemable Cumulative Preferred Stock (each of the series set
forth in (i) through and including (v) herein being hereinafter
referred to collectively as the "Subject Corporation Preferred
Stock");
WHEREAS, the Acquiring Corporation is a wholly-owned
subsidiary of the Subject Corporation with authorized capital
stock consisting of 30,000,000 shares of Common Stock, par value
$.10 per share ("Acquiring Corporation Common Stock"), of which
ten (10) shares are issued and outstanding and owned by the
Subject Corporation;
A-1
WHEREAS, the Boards of Directors of the Corporations deem it
desirable and in the best interest of the Corporations and the
shareholders of the Subject Corporation that, at the Effective
Time, (a) the Acquiring Corporation acquire and become the owner
and holder of each share of Subject Corporation Common Stock
issued and outstanding at the Effective Time, (b) each share of
Subject Corporation Common Stock issued and outstanding
immediately prior to the Effective Time be automatically
exchanged for one share of Acquiring Corporation Common Stock,
and (c) each holder of shares of Subject Corporation Common Stock
issued and outstanding immediately prior to the Effective Time
becomes the holder of a like number of shares of Acquiring
Corporation Common Stock, all on the terms and conditions
hereinafter set forth; and
WHEREAS, the Boards of Directors of the Corporations have
each approved and adopted this Agreement, and the Board of
Directors of the Subject Corporation has recommended that the
shareholders of the Subject Corporation approve and adopt the
Exchange and this Agreement pursuant to Section 913 of the New
York Business Corporation Law (the "BCL").
NOW, THEREFORE, the Corporations hereby agree as follows:
ARTICLE I
The Exchange and this Agreement shall be submitted to the
holders of the Subject Corporation Common Stock for approval and
adoption as provided by Section 913 of the BCL. The affirmative
vote of the holders of at least two-thirds of the issued and
outstanding Subject Corporation Common Stock shall be necessary
to approve and adopt the Exchange and this Agreement.
ARTICLE II
Subject to the terms and conditions of this Agreement, the
Exchange shall become effective immediately following the close
of business on the date of filing with the New York Department of
State (the "Department of State") of a certificate of exchange
pursuant to Section 913(d) of the BCL ("Certificate"), or at such
later time and date as may be stated in the Certificate (the time
and date at and on which the Exchange becomes effective being
referred to herein as the "Effective Time").
ARTICLE III
A. At the Effective Time:
(1) each share of Subject Corporation Common Stock issued
and outstanding immediately prior to the Effective Time shall be
automatically exchanged for one share of Acquiring Corporation
Common Stock, which shares shall be fully paid and nonassessable
by the Acquiring Corporation;
A-2
(2) the Acquiring Corporation shall acquire and become the
owner and holder of each issued and outstanding share of Subject
Corporation Common Stock so exchanged;
(3) each share of Acquiring Corporation Common Stock issued
and outstanding immediately prior to the Effective Time shall be
canceled and shall thereupon constitute an authorized and
unissued share of Acquiring Corporation Common Stock;
(4) each share of Subject Corporation Common Stock held
under the Subject Corporation's Stock Purchase Plan immediately
prior to the Effective Time shall be automatically exchanged for
a like number of shares (including fractional and uncertificated
shares) of Acquiring Corporation Common Stock, which shares shall
be held under and pursuant to the Stock Purchase Plan, as
hereinafter provided and each share of such Common Stock held in
the treasury of the Subject Corporation immediately prior to the
Effective Time shall be canceled and shall be restored to the
status of an authorized but unissued share of Subject Corporation
Common Stock.
(5) the former holders of Subject Corporation Common Stock
shall be entitled only to receive shares of Acquiring Corporation
Common Stock in exchange therefor as provided in this Agreement;
no statutory appraisal rights under Section 910 of the BCL are
applicable to such former holders.
B. Shares of Subject Corporation Preferred Stock shall not
be exchanged or otherwise affected by or in connection with the
Exchange. Each share of Subject Corporation Preferred Stock
issued and outstanding immediately prior to the Effective Time
shall continue to be issued and outstanding following the
Exchange and shall continue to be one share of Subject
Corporation Preferred Stock of the applicable series designation.
C. Prior to the Effective Time, the Acquiring Corporation's
Certificate of Incorporation shall be amended and restated
substantially in the form set forth as Attachment 1 to this
Agreement.
D. As of the Effective Time, the Acquiring Corporation
shall succeed to the Stock Purchase Plan as in effect immediately
prior to the Effective Time, and the Stock Purchase Plan shall be
appropriately modified to provide for the issuance or delivery of
Acquiring Corporation Common Stock on and after the Effective
Time pursuant thereto.
A-3
ARTICLE IV
The filing of the Certificate with the Department of State
and the consummation of the Exchange shall be subject to
satisfaction of the following conditions at or prior to the
Effective Time:
(1) the affirmative vote of the holders of Subject
Corporation Common Stock provided for in Article I of this
Agreement shall have been received;
(2) such orders, authorizations, approvals or waivers from
the New York Public Service Commission and all other jurisdictive
regulatory bodies, boards or agencies required to consummate the
Exchange and related transactions shall have been received, shall
remain in full force and effect, and shall not include, in the
sole judgment of the Boards of Directors of the Subject
Corporation and the Acquiring Corporation, unacceptable
conditions;
(3) a registration statement is effective under the
Securities Act of 1933 relating to the Acquiring Corporation
Common Stock to be issued or reserved for issuance in connection
with the Exchange;
(4) the Acquiring Corporation Common Stock to be issued in
connection with the Exchange shall have been listed, subject to
official notice of issuance, by the New York Stock Exchange;
(5) a favorable opinion of counsel covering certain United
States federal income tax matters shall have been received, and
such favorable rulings shall have been received from state and
federal tax authorities as to the Exchange and related matters as
the Boards of Directors of the Subject Corporation and the
Acquiring Corporation, in their sole judgment, shall determine
are necessary and appropriate for the consummation of the
Exchange; and
(6) the Restated Certificate of Incorporation of the
Acquiring Corporation shall have been filed with the Department
of State.
ARTICLE V
Following the Effective Time, each holder of an outstanding
certificate or certificates theretofore representing shares of
Subject Corporation Common Stock may, but shall not be required
to, surrender the same to the Acquiring Corporation's Transfer
Agent for cancellation and reissuance of a new certificate or
certificates in such holder's name or for cancellation and
A-4
transfer, and each such holder or transferee shall be entitled to
receive a certificate or certificates representing the same
number of shares of Acquiring Corporation Common Stock as the
shares of Subject Corporation Common Stock previously represented
by the certificate or certificates surrendered. Until so
surrendered or presented for exchange or transfer, each
outstanding certificate which, immediately prior to the Effective
Time, represents Subject Corporation Common Stock shall be deemed
and shall be treated for all purposes to represent the ownership
of the same number of shares of Acquiring Corporation Common
Stock as though such surrender or exchange or transfer had taken
place. The holders of Subject Corporation Common Stock at the
Effective Time shall have no right at and after the Effective
Time to have their shares of Subject Corporation Common Stock
transferred on the stock transfer books of the Subject
Corporation (such stock transfer books being deemed closed for
this purpose at the Effective Time), and at and after the
Effective Time such stock transfer books may be deemed to be the
stock transfer books of the Acquiring Corporation.
ARTICLE VI
A. This Agreement may be amended, modified or supplemented,
or compliance with any provision hereof may be waived, at any
time prior to the Effective Time (including, without limitation,
after receipt of the affirmative vote of holders of Subject
Corporation Common Stock as provided in Article IV(1) hereof), by
the mutual consent of the Boards of Directors of the Subject
Corporation and the Acquiring Corporation at any time prior to
the Effective Time; provided, however, that no such amendment,
modification, supplement or waiver would, in the sole judgment of
the Board of Directors of the Subject Corporation, materially and
adversely affect the shareholders of the Subject Corporation.
B. This Agreement may be terminated and the Exchange and
related transactions abandoned, at any time prior to the
Effective Time (including, without limitation, after receipt of
the affirmative vote of holders of Subject Corporation Common
Stock as provided in Article IV(1) hereof), if the Board of
Directors of the Subject Corporation determines, in its sole
judgment, that consummation of the Exchange would for any reason
be inadvisable or not in the best interests of the Subject
Corporation or its shareholders.
A-5
IN WITNESS WHEREOF, each of the Corporations, pursuant to
authorization and approval given by its Board of Directors, has
caused this Agreement and Plan of Exchange to be executed as of
the date first above written.
CENTRAL HUDSON GAS &
ELECTRIC CORPORATION
By: John E. Mack, III
CH ENERGY GROUP, INC.
By: John E. Mack, III
A-6
<PAGE>
EXHIBIT B
(Attachment 1 to the
Exchange Agreement)
RESTATED CERTIFICATE OF INCORPORATION
OF
CH ENERGY GROUP, INC.
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
The undersigned, being respectively, the Chairman of the
Board and the Secretary of CH Energy Group, Inc., a New York
corporation, in accordance with Section 807 of the Business
Corporation Law of the State of New York, do hereby certify that:
FIRST: The name under which the corporation was
originally incorporated was CH Energy Group, Inc. (the
"Corporation").
SECOND: The Certificate of Incorporation of the
Corporation was filed by the Department of State on April 24,
1998.
THIRD: The Certificate of Incorporation is amended to
effect one or more amendments authorized by the Business
Corporation Law of the State of New York, namely: Article 4 is
amended to provide for the issuance of preferred stock and for
the establishment of the relative rights limitations and
preferences related thereto; new Article 7 is added to provide
provisions for the election and removal of directors of the
Corporation; new Article 8 is added to require a super-majority
vote for certain changes in the Certificate of Incorporation; new
Article 9 is added to provide for amendment of the Corporation's
By-Laws and to require a super-majority vote for changes in
certain provisions thereof; and new Article 10 is added to
require a super-majority vote of shareholders with respect to
certain Business Combinations. The text of the Certificate of
Incorporation is hereby restated as so amended to read in its
entirety as follows:
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1. The name of the Corporation is CH Energy Group, Inc.
(the "Corporation").
2. The purpose for which the Corporation is formed is to
engage in any lawful act or activity for which corporations may
be formed under the Business Corporation Law of the State of New
York; provided that the Corporation is not formed to engage in
any act or activity which requires the consent or approval of any
state official, department, board, agency or other body, without
such consent or approval first being obtained.
3. The office of the Corporation in the State of New York
is to be located in the City of Poughkeepsie, County of Dutchess.
4. The aggregate number of shares which the Corporation
shall have authority to issue is (a) 30,000,000 shares of Common
Stock, with a par value of $.10 per share (the "Common Stock"),
and 1,200,000 shares of Preferred Stock, with a par value of $.10
per share (the "Preferred Stock").
The relative rights, preferences and limitations of the
shares of such classes of stock are as follows:
A. The Preferred Stock may be issued from time to time by
the Board of Directors as shares of one or more series of
Preferred Stock, and the Board of Directors is expressly
authorized, prior to issuance, in the resolution or resolutions
providing for the issue of shares of each particular series, to
establish and designate each particular series and to fix before
issuance the designations, rights, preferences, privileges,
voting powers, limitations, restrictions or qualifications of
each particular series, and the relative rights, preferences and
limitations between series, including, but without limitation of
the foregoing general powers:
(i) The distinctive serial designation of
such series which shall distinguish it from other
series;
(ii) The number of shares included in such
series, which number may be increased or decreased
from time to time unless otherwise provided by the
Board of Directors in creating such series;
(iii) The annual or other dividend rate or
rates (or method of determining such rate or
rates) for shares of such series and the date or
dates upon which such dividends shall be payable;
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(iv) Whether dividends on the shares of such
series shall be cumulative, and, in the case of
shares of any series having cumulative dividend
rights, the date or dates (or method for
determining such date or dates) from which
dividends on the shares of such series shall be
cumulative;
(v) The amount or amounts which shall be
paid out of the assets of the Corporation to the
holders of the shares of such series upon
voluntary or involuntary liquidation, dissolution,
or winding up of the Corporation;
(vi) The price or prices (cash or otherwise)
at which, the period or periods within which and
the terms and conditions upon which the shares of
such series may be purchased, redeemed or acquired
(by exchange or otherwise), in whole or in part,
at the option of the Corporation;
(vii) Provision or provisions, if any, for
the Corporation to purchase, redeem or acquire (by
exchange or otherwise), in whole or in part,
shares of such series pursuant to a sinking or
other similar fund, and the price or prices (cash
or otherwise) at which, the period or periods
within which and the terms and conditions upon
which the shares of such series shall be so
purchased, redeemed or acquired, in whole or in
part, pursuant to such provision or provisions;
(viii) The period or periods within which
and the terms and conditions, if any, including
the price or prices or the rate or rates of
conversion or exchange and the terms and
conditions of any adjustments thereof, upon which
the shares of such series shall be convertible or
exchangeable at the option of the holder or the
Corporation or both into shares of any class of
stock or into shares of any other series of
Preferred Stock, except into shares having rights
or preferences as to dividends or the distribution
of assets upon liquidation, dissolution or winding
up of the Corporation which are prior or superior
in rank to those of the shares being converted or
exchanged;
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(ix) The voting rights, if any, of the
shares of such series in addition to those
required by law, including the number of votes per
share (which may be fractional or more or less
than one) and any requirement for the approval by
the holders of up to two-thirds of the shares of
Preferred Stock, or of the shares of one or more
series, or of both, as a condition to specified
corporate action or amendments to the Certificate
of Incorporation; and
(x) Any other relative rights, preferences
or limitations of the shares of such series not
inconsistent herewith or with applicable law.
B. All issued and outstanding series of Preferred Stock
(i) shall rank prior or superior to the Common Stock in respect
of the right to receive dividends and the right to receive
payments out of the assets of the Corporation upon voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, (ii) shall be of equal rank, regardless of series,
and (iii) shall be identical in all respects except as provided
in Paragraph A of this Article 4. The shares of any particular
series of the Preferred Stock shall be identical with each other
in all respects except as to the date from and after which
dividends thereupon shall be cumulative or accrue if declared.
In case dividends or amounts payable on liquidation, dissolution
or winding up of the Corporation are not paid in full on the
Preferred Stock, the shares of all series of the Preferred Stock
shall share ratably in the payment of dividends, including
accumulations, if any, in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in
full, and in any distribution of assets other than by way of
dividends in accordance with the sums which would be payable on
such distributions if all sums payable were discharged in full.
All Preferred Stock redeemed, purchased or otherwise acquired by
the Corporation (including shares surrendered for conversion or
exchange or acquired by conversion or exchange or otherwise)
shall be canceled and thereupon restored to the status of
authorized and unissued shares of Preferred Stock undesignated as
to series.
C. No holder of shares of the Corporation of any class or
series, now or hereafter authorized, shall have any preferential
or preemptive right to subscribe for, purchase or receive, or
have any preferential or preemptive right with respect to, any
shares of the Corporation of any class or series whatsoever, now
or hereafter authorized, or any options or warrants for any such
shares, or any rights to subscribe for or purchase any such
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shares, or any securities convertible into or exchangeable for
any such shares whatsoever, whether now or hereafter authorized
and whether issued for cash or other consideration or by way of
dividend or otherwise, which may at any time be issued, sold,
delivered or offered by the Corporation.
D. Except as may from time to time be required by law and
except as otherwise may be provided by the Board of Directors in
accordance with Paragraph A of this Article 4 in respect of any
particular series of Preferred Stock, all voting rights of the
Corporation shall be vested exclusively in the holders of the
Common Stock who shall be entitled to one vote per share on all
matters.
5. The Secretary of State of the State of New York is
designated as the agent of the Corporation upon whom any process
in any action or proceeding against it may be served. The post
office address to which the Secretary of State shall mail a copy
of any such process served upon such Secretary is CH Energy
Group, Inc., 284 South Avenue, Poughkeepsie, New York 12601-4879,
Attention: Corporate Secretary.
6. No director of the Corporation shall have personal
liability to the Corporation or its shareholders for damages for
any breach of duty in such capacity, provided that the foregoing
shall not eliminate or limit the liability of any director if a
judgment or other final adjudication adverse to such director
establishes that such director's acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation
of law or that such director personally gained in fact a
financial profit or other advantage to which such director was
not legally entitled or that such director's act violated Section
719 of the Business Corporation Law of New York. No amendment to
or repeat of this Article 6 shall apply to or have any effect on
the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. If the
Business Corporation Law of the State of New York is amended
hereafter to expand or limit the liability of a director, then
the liability of a director of the Corporation shall be expanded
to the extent required or limited to the extent permitted by the
Business Corporation Law of the State of New York, as so amended.
7. The following provisions shall relate to the Board of
Directors of the Corporation:
A. The size of the Board of Directors shall be fixed by or
pursuant to the By-Laws. At the first annual meeting of
shareholders following the adoption of this Restated Certificate
of Incorporation, or any special meeting in lieu thereof, the
Board of Directors shall be divided into three classes designated
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Class I, Class II and Class III, which classes shall be as nearly
equal in number as the then total number of directors
constituting the entire Board permits. Class I, Class II and
Class III directors shall be so elected for terms expiring at the
next succeeding annual meeting, the second succeeding annual
meeting and the third succeeding annual meeting, respectively,
and until their respective successors are elected and qualified.
At each annual meeting of shareholders after such first annual
(or special) meeting of shareholders following the adoption of
this Restated Certificate of Incorporation, the directors chosen
to succeed those in the class whose terms then expire shall be
elected by shareholders for terms expiring at the third
succeeding annual meeting after election, or for such lesser term
for which one or more may be nominated in a particular case in
order to assure that the number of directors in each class shall
be appropriately constituted, and until their respective
successors are elected and qualified. Newly created
directorships or any decrease in directorships resulting from
increases or decreases in the number of directors shall be so
apportioned among the classes of directors as to make all the
classes as nearly equal in number as possible. Vacancies on the
Board of Directors at any time for any reason may be filled by a
majority of the directors then in office, although less than a
quorum.
Notwithstanding the foregoing, whenever the holders of
any one or more classes or series of stock (other than the Common
Stock), now or hereafter authorized, shall have the right, voting
separately or by class or series, to elect directors at an annual
or special meeting of shareholders, the election, term of office,
filling of vacancies and other features of such directorships
shall be governed by any provisions of the Certificate of
Incorporation applicable thereto, and such directors so elected
shall not be divided into one or more classes pursuant to this
Article 7A unless expressly provided by such provisions.
B. Subject to the rights of any class or series of stock
having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, any
director may be removed from office by a vote of the shareholders
entitled to vote thereon only for cause and any director may be
removed from office by action of the Board of Directors only for
cause.
8. In addition to any vote that may be required by law or
in the Certificate of Incorporation in respect of any class or
series of stock, now or hereafter authorized, ranking prior or
superior in right of payment to the Common Stock in respect of
the right to receive dividends or the right to receive payments
out of the assets of the Corporation upon any voluntary or
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involuntary liquidation, dissolution or winding up of the
Corporation, the provisions of Articles 4C, 4D, 6, 7, 8, 9 and 10
of the Certificate of Incorporation shall not be amended or
repealed, or a new provision adopted inconsistent therewith,
without the approval of not less than 75% of the entire Board of
Directors at any regular or special meeting of directors and the
affirmative vote of not less than 75% of the shares entitled to
vote thereon at such annual or special meeting of shareholders at
which any such action is proposed.
9. Except as otherwise provided in the Certificate of
Incorporation in respect of any class or series of stock, now or
hereafter authorized, ranking prior or superior in right of
payment to the Common Stock in respect of the right to receive
dividends or the right to receive payments out of the assets of
the Corporation upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the By-Laws of the
Corporation may be amended or repealed, or new By-Laws may be
adopted, either (a) by a vote of shareholders entitled to vote at
any annual or special meeting of shareholders, or (b) by a vote
of the majority of the entire Board of Directors at any regular
or special meeting of directors; provided, however, that any
amendment or repeal of, or the adoption of any new By-Law or
provision inconsistent with, Article I (Section 1.2--"Special
Meetings", 1.4--"Presiding at Meetings" or 1.12--"Notice of
Shareholder Business and Nominations"), Article II (Section
2.1--"Number of Directors", 2.2--"Elections, Terms and Vacancies"
or 2.8--"Removal of Directors"), Article VI--"Indemnification",
or Article VIII--"Amendments to By-Laws" of the By-Laws, if by
action of such shareholders, shall be only upon the affirmative
vote of not less than 75% of the shares entitled to vote thereon
at such annual or special meeting of shareholders at which any
such action is proposed and, if by action of the Board of
Directors, shall be only upon the approval of not less than 75%
of the entire Board of Directors at any regular or special
meeting of directors.
10. The vote of the shareholders of the Corporation
required to approve any Business Combination shall be as set
forth in this Article 10. The term "Business Combination" shall
mean any transaction that is referred to in any one or more
clauses (A) through (E) of subparagraph (a) of this Article 10.
Each other capitalized term shall have the meaning ascribed to it
in subparagraph (c) of this Article 10.
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(a) In addition to any affirmative vote
required by law or this Certificate of
Incorporation and except as otherwise expressly
provided in subparagraph (b) of this Article 10:
(A) any merger, consolidation or
binding share exchange of the
Corporation or any Subsidiary with (i)
any Interested Shareholder or (ii) any
other person (whether or not itself an
Interested Shareholder) which is, or
after such merger, consolidation or
binding share exchange would be, an
Affiliate of an Interested Shareholder;
or
(B) any sale, lease, exchange,
mortgage, pledge, transfer or other
disposition (in one transaction or a
series of transactions) to or with any
Interested Shareholder or any Affiliate
of any Interested Shareholder of assets
of the Corporation or any Subsidiary
having an aggregate Fair Market Value of
$5,000,000 or more; or
(C) the issuance or transfer by
the Corporation or any Subsidiary (in
one transaction or a series of
transactions) of any securities of the
Corporation or any Subsidiary to any
Interested Shareholder or any Affiliate
of any Interested Shareholder in
exchange for cash, securities or other
property (or a combination thereof)
having an aggregate Fair Market Value of
$5,000,000 or more, other than the
issuance of securities upon the
conversion of convertible securities of
the Corporation or any Subsidiary which
were not acquired by such Interested
Shareholder (or such Affiliate) from the
Corporation or a Subsidiary; or
(D) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation
proposed by or on behalf of an Interested
Shareholder or any Affiliate of any Interested
Shareholder; or
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(E) any transaction involving the
Corporation or any Subsidiary (whether
or not with or into or otherwise
involving an Interested Shareholder),
and including, without limitation, any
reclassification of securities
(including any reverse stock split), or
recapitalization or reorganization of
the Corporation, or any merger or
consolidation of the Corporation with
any of its Subsidiaries or any self
tender offer for or repurchase of
securities of the Corporation by the
Corporation or any Subsidiary or any
other transaction (whether or not with
or into or otherwise involving an
Interested Shareholder), which in any
such case has the effect, directly or
indirectly, of increasing the
proportionate share of the outstanding
shares of any class of equity securities
or securities convertible into equity
securities of the Corporation or any
Subsidiary which is directly or
indirectly beneficially owned by any
Interested Shareholder or any Affiliate
of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 80
percent of the combined voting power of the then outstanding
shares of the Voting Stock, in each case voting together as a
single class, which vote shall include the affirmative vote of at
least two-thirds (2/3) of the combined voting power of the
outstanding shares of Voting Stock held by shareholders other
than the Interested Shareholder. Such affirmative vote shall be
required notwithstanding any provision of law or any other
provision of this Restated Certificate of Incorporation or any
agreement with any national securities exchange or otherwise
which might permit a lesser vote or no vote and in addition to
any affirmative vote required of the holders of any class or
series of Voting Stock pursuant to law, this Restated Certificate
of Incorporation or any class or series of Preferred or
Preference Stock Designation (a "Preferred or Preference Stock
Designation") being any designation of the rights, powers and
preferences of any class or series of Preferred or Preference
Stock made pursuant to Paragraph 4A of this Restated Certificate
of Incorporation).
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(b) The provisions of subparagraph (a) of
this Article 10 shall not be applicable to any
particular Business Combination, and such Business
Combination shall require only such affirmative
vote as may be required by law, any other
provision of this Restated Certificate of
Incorporation, any Preferred or Preference Stock
Designation and any agreement with any national
securities exchange, if, in the case of a Business
Combination that does not involve any cash or
other consideration being received by the
shareholders of the Corporation, solely in their
respective capacities as shareholders of the
Corporation, the condition specified in the
following subparagraph (1) is met, or, in the case
of any other Business Combination, the conditions
specified in the following subparagraph (1) or the
conditions specified in the following subparagraph
(2) are met:
(1) such Business Combination shall have
been approved by a majority of the Disinterested
Directors; or
(2) each of the five conditions specified in
the following clauses (A) through (E) shall have
been met:
(A) the aggregate amount of the
cash and the Fair Market Value as of the
Consummation Date of any consideration
other than cash to be received per share
by holders of Common Stock in such
Business Combination shall be at least
equal to the highest of the following
(it being intended that the requirements
of this clause (2)(A) shall be required
to be met with respect to all shares of
Common Stock outstanding whether or not
the Interested Shareholder has acquired
any shares of the Common Stock):
(i) if applicable, the highest per
share price (including any brokerage
commissions, transfer taxes and
soliciting dealers' fees) paid in order
to acquire any shares of Common Stock
beneficially owned by the Interested
Shareholder which were acquired
beneficially by such Interested
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Shareholder (x) within the two-year period immediately
prior to the Announcement Date or (y) in the
transaction in which it became an Interested
Shareholder, whichever is higher; or
(ii) the Fair Market Value per
share of Common Stock on the
Announcement Date or on the
Determination Date, whichever is higher;
or
(iii) the amount which bears the
same percentage relationship to the Fair
Market Value of the Common Stock on the
Announcement Date as the highest per
share price determined in (2)(A)(i)
above bears to the Fair Market Value of
the Common Stock on the date of the
commencement of the acquisition of the
Common Stock by such Interested
Shareholder; and
(B) the aggregate amount of the cash and the
Fair Market Value as of the Consummation Date of
any consideration other than cash to be received
per share by holders of the shares of any class or
series of Voting Stock (other than Common Stock)
shall be at least equal to the highest of the
following (it being intended that the requirements
of this clause (2)(B) shall be required to be met
with respect to every class and series of such
outstanding Voting Stock, whether or not the
Interested Shareholder has previously acquired any
shares of a particular class or series of Voting
Stock):
(i) if applicable, the highest per
share price (including any brokerage
commissions, transfer taxes and
soliciting dealers' fees) paid in order
to acquire any shares of such class or
series of Voting Stock beneficially
owned by the Interested Shareholder
which were acquired beneficially by such
Interested Shareholder (x)within the
two-year period immediately prior to the
Announcement Date or (y)in the
transaction in which it became an
Interested Shareholder, whichever is
higher; or
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(ii) if applicable, the highest
preferential amount per share to which
the holders of shares of such class or
series of Voting Stock are entitled in
the event of any voluntary or
involuntary liquidation, dissolution or
winding up of the Corporation; or
(iii) the Fair Market Value per
share of such class or series of Voting
Stock on the Announcement Date or the
Determination Date, whichever is higher;
or
(iv) the amount which bears the
same percentage to the Fair Market Value
of such class or series of Voting Stock
on the Announcement Date as the highest
per share price in (2)(B)(i) above bears
to the Fair Market Value of such Voting
Stock on the date of the commencement of
the acquisition of such Voting Stock by
such Interested Shareholder; and
(C) the consideration to be received by
holders of a particular class or series of
outstanding Voting Stock (including Common Stock)
shall be in cash or in the same form as was
previously paid in order to acquire beneficially
shares of such class or series of Voting Stock
that are beneficially owned by the Interested
Shareholder and, if the Interested Shareholder
beneficially owns shares of any class or series of
Voting Stock that were acquired with varying forms
of consideration, the form of consideration to be
received by each holder of such class or series of
Voting Stock shall be, at the option of such
holder, either cash or the form used by the
Interested Shareholder to acquire beneficially the
largest number of shares of such class or series
of Voting Stock beneficially acquired by it prior
to the Announcement Date; and
(D) after such Interested Shareholder has
become an Interested Shareholder and prior to the
consummation of such Business Combination:
(i) such Interested Shareholder
shall not have become the beneficial
owner of any additional shares of Voting
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Stock of the Corporation, except as part of the
transaction in which it became an Interested
Shareholder or upon conversion of convertible
securities acquired by it prior to becoming an
Interested Shareholder or as a result of a pro rata
stock dividend or stock split; and
(ii) such Interested Shareholder
shall not have received the benefit,
directly or indirectly (except
proportionately as a shareholder), of
any loans, advances, guarantees, pledges
or other financial assistance or tax
credits or other tax advantages provided
by the Corporation or any Subsidiary,
whether in anticipation of or in
connection with such Business
Combination or otherwise; and
(iii) such Interested Shareholder
shall not have caused any material
change in the Corporation's business or
capital structure, including, without
limitation, the issuance of shares of
capital stock of the Corporation to any
third party; and
(iv) there shall have been (x) no
failure to declare and pay at the
regular date therefor the full amount of
dividends (whether or not cumulative) on
any outstanding Preferred or Preference
Stock, except as approved by a majority
of the Disinterested Directors, (y) no
reduction in the rate of dividends,
annualized on the basis of the last
dividend declaration, paid on Common
Stock (except as necessary to reflect
any subdivision of the Common Stock),
except as approved by a majority of the
Disinterested Directors and (z) an
increase in such annual rate of
dividends (as necessary to prevent any
such reduction) in the event of any
reclassification (including any reverse
stock split), recapitalization,
reorganization, self tender offer or any
similar transaction which has the effect
of reducing the number of outstanding
shares of the Common Stock, unless the
failure so to increase such annual rate
was approved by a majority of the
Disinterested Directors; and
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(E) a proxy or information statement
describing the proposed Business Combination and
complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing
such Act, rules and regulations), whether or not
the Corporation is then subject to such
requirements, shall be mailed by and at the
expense of the Interested Shareholder at least 30
days prior to the Consummation Date of such
Business Combination to the public shareholders of
the Corporation (whether or not such proxy or
information statement is required to be mailed
pursuant to such Act or subsequent provisions),
and shall contain at the front thereof in a
prominent place (i) any recommendations as to the
advisability (or inadvisability) of the Business
Combination which the Disinterested Directors, if
any, may choose to state, and (ii) the opinion of
a reputable national investment banking firm as to
the fairness (or not) of such Business Combination
from the point of view of the remaining public
shareholders of the Corporation (such investment
banking firm to be engaged solely on behalf of the
remaining public shareholders, to be paid a
reasonable fee for their services by the
Corporation upon receipt of such opinion, to be
unaffiliated with such Interested Shareholder,
and, if there are at the time any Disinterested
Directors, to be selected by a majority of the
Disinterested Directors).
(c) For purposes of this Article 10:
(1) A "person" shall include, without limitation, any
individual, firm, corporation, group (as such term is used
in Regulation 13D-G of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on
_______________, 1998) or other entity.
(2) "Interested Shareholder" shall mean any person
(other than the Corporation or any Subsidiary or any
employee benefit plan of the Corporation or any Subsidiary)
who or which:
(A) is the beneficial owner,
directly or indirectly, of more than 10
percent of the combined voting power of
the then outstanding shares of Voting
Stock; or
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(B) is an Affiliate of the Corporation and
at any time within the two-year period immediately
prior to the date in question was the beneficial
owner, directly or indirectly, of 10 percent or
more of the combined voting power of the then
outstanding shares of Voting Stock; or
(C) is an assignee of or has otherwise
succeeded to the beneficial ownership of any
shares of Voting Stock that were at any time
within the two-year period immediately prior to
the date in question beneficially owned by an
Interested Shareholder, if such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not
involving a public offering within the meaning of
the Securities Act of 1933.
(3) A person shall be a "beneficial owner" of any
Voting Stock:
(A) which such person or any of its
Affiliates or Associates beneficially owns,
directly or indirectly; or
(B) which such person or any of its
Affiliates or Associates has (a) the right to
acquire (whether or not such right is exercisable
immediately) pursuant to any agreement,
arrangement or understanding or upon the exercise
of conversion rights, exchange rights, warrants or
options, or otherwise, or (b) the right to vote or
direct the vote pursuant to any agreement,
arrangement or understanding; or
(C) which are beneficially owned, directly
or indirectly, by any other person with which such
person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
(4) For the purposes of determining whether a person
is an Interested Shareholder pursuant to subparagraph (c)(2)
of this Article 10, the number of shares of Voting Stock
deemed to be outstanding shall include shares deemed owned
by such Interested Shareholder through application of
subparagraph (c)(3) of this Article 10, but shall not
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include any other shares of Voting Stock that may be
issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(5) "Affiliate" and "Associates" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on ____________, 1998.
(6) "Subsidiary" shall mean any company more than 50
percent of whose outstanding equity securities having
ordinary voting power in the election of directors is owned,
directly or indirectly, by the Corporation or by a
Subsidiary or by the Corporation and one or more
Subsidiaries; provided, however, that for the purposes of
the definition of Interested Shareholder set forth in
subparagraph (c)(2) of this Article 10, the term
"Subsidiary" shall mean only a company of which a majority
of each class or series of capital stock entitled to vote
generally in the election of directors of such company is
owned, directly or indirectly, by the Corporation.
(7) "Disinterested Director" shall mean any member of
the Board of Directors of the Corporation who is
unaffiliated with, and not a nominee of, the Interested
Shareholder and was a member of the Board prior to the time
that the Interested Shareholder became an Interested
Shareholder, and any successor of a Disinterested Director
who is unaffiliated with, and not a nominee of, the
Interested Shareholder and who is recommended to succeed a
Disinterested Director by a majority of Disinterested
Directors then on the Board of Directors.
(8) "Fair Market Value" shall mean (1) in the case of
stock, the highest closing sale price during the 30-day
period commencing on the 40th day preceding the date in
question of a share of such stock on the Composite Tape for
New York Stock Exchange-Listed Stocks, or, if such stock is
not quoted on the New York Stock Exchange-Composite Tape, on
the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such
exchange, the highest closing sale price or bid quotation
with respect to a share of such stock during the 30-day
period commencing on the 40th day preceding the date in
question on the National Association of Securities Dealers,
Inc. Automated Quotations System or any system then in use,
or if no such quotations are available, the fair market
value on the date in question of a share of such stock as
B-16
determined by a majority of the Disinterested Directors in
good faith; and (2) in the case of property other than cash
or stock, the fair market value of such property on the date
in question as determined by a majority of the Disinterested
Directors in good faith.
(9) In the event of any Business Combination in which
the Corporation survives, the phrase "any consideration
other than cash to be received" as used in subparagraph
(b)(2)(A) and (B) of this Article 10 shall include the
shares of Common Stock and/or the shares of any other class
or series of outstanding Voting Stock retained by the
holders of such shares.
(10) "Announcement Date" shall mean the date of first
public announcement of the proposed Business Combination.
(11) "Determination Date" shall mean the date on which
the Interested Shareholder became an Interested Shareholder.
(12) "Consummation Date" shall mean the date of the
consummation of the Business Combination.
(13) The term "Voting Stock" shall mean all outstanding
shares of capital stock of all classes and series of the
Corporation entitled to vote generally in the election of
directors of the Corporation, in each case voting together
as a single class.
(d) A majority of the Disinterested Directors shall
have the power and duty to determine, on the basis of
information known to them after reasonable inquiry, all
facts necessary to determine compliance with this Article 10
including, without limitation:
(1) whether a person is an Interested
Shareholder;
(2) the number of shares of Voting Stock
beneficially owned by any person;
(3) whether a person is an Affiliate or Associate
of another person;
(4) whether the requirements of subparagraph
(b)(2) of this Article 10 have been met with
respect to any Business Combination;
B-17
(5) whether the assets which are the subject of
any Business Combination have, or the
consideration to be received for the issuance or
transfer of securities by the Corporation or any
Subsidiary in any Business Combination has, an
aggregate Fair Market Value of $5,000,000 or more;
and
(6) such other matters with respect to which a
determination is required under this Article 10.
The good faith determination of a majority of the
Disinterested Directors on such matters shall be
conclusive and binding for all purposes of this
Article 10.
(e) Nothing contained in this Article 10 shall be
construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
(f) Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80 percent of
the combined voting power of the Voting Stock, voting
together as a single class, shall be required to alter,
amend or repeal this Article 10 or to adopt any provisions
inconsistent therewith; provided, however, that if there is
an Interested Shareholder on the record date for the meeting
at which such action is submitted to the shareholders for
their consideration, such 80 percent vote must include the
affirmative vote of at least two-thirds (2/3) of the
combined voting power of the outstanding shares of Voting
Stock held by shareholders other than the Interested
Shareholder.
(g) Nothing contained in this Article 10 is intended,
or shall be construed, to affect any of the relative rights,
preferences or limitations, within the meaning of such terms
under Section 801(b)(12) of the New York Business
Corporation Law or any successor statute, of any shares of
any authorized class or series thereof of the Corporation,
whether issued or unissued.
B-18
FOURTH: The foregoing Restated Certificate of
Incorporation was authorized by the Board of Directors of the
Corporation at a meeting of the Board of Directors held on
________, 1998, followed by the written consent of the sole
shareholder of the Corporation, dated ____________, 1998.
IN WITNESS WHEREOF, I have subscribed and affirm the
statements contained in this Restated Certificate of
Incorporation as true under the penalties of perjury this _____
day of ___________, 1998.
B-19
<PAGE>
EXHIBIT C
BY-LAWS
of
CH ENERGY GROUP, INC.
______, 1998
POUGHKEEPSIE, NEW YORK
INDEX
PAGE
ARTICLE I MEETINGS OF SHAREHOLDERS
Section 1.1 Annual Meetings............................. C-4
Section 1.2 Special Meetings............................ C-4
Section 1.3 Place of Meetings........................... C-4
Section 1.4 Presiding at Meetings....................... C-4
Section 1.5 Quorum...................................... C-5
Section 1.6 Adjournment................................. C-5
Section 1.7 Notice of Meetings.......................... C-5
Section 1.8 Waiver and Consent.......................... C-6
Section 1.9 Fixing Record Date.......................... C-7
Section 1.10 List of Shareholders at Meetings........... C-7
Section 1.11 Proxies.................................... C-7
Section 1.12 Notice of Shareholder Business and
Nominations................................ C-8
Section 1.13 Inspectors of Elections.................... C-12
Section 1.14 Vote of Shareholders....................... C-13
ARTICLE II BOARD OF DIRECTORS
Section 2.1 Number of Directors......................... C-13
Section 2.2 Elections, Terms and Vacancies.............. C-13
Section 2.3 Meetings of the Board....................... C-14
Section 2.4 Notice and Adjournment...................... C-14
Section 2.5 Quorum...................................... C-15
Section 2.6 Unanimous Written Consent................... C-15
Section 2.7 Resignation of Directors.................... C-15
Section 2.8 Removal of Directors........................ C-15
Section 2.9 Compensation of Directors................... C-16
Section 2.10 Time and Place of Meetings................. C-16
Section 2.11 Special Meetings........................... C-16
Section 2.12 Telephonic Meetings........................ C-16
C-1
ARTICLE III COMMITTEES
Section 3.1 Organization and Authority.................. C-16
Section 3.2 Executive Committee......................... C-17
Section 3.3 Action by a Committee....................... C-17
Section 3.4 Quorum...................................... C-18
Section 3.5 Reports to Board of Directors............... C-18
Section 3.6 Compensation of Committee Members........... C-18
Section 3.7 Resignation and Removal of Committee
Members..................................... C-18
Section 3.8 Unanimous Written Consent................... C-18
Section 3.9 Place of Committee Meetings................. C-19
Section 3.10 Notice..................................... C-19
ARTICLE IV OFFICERS AND THEIR DUTIES
Section 4.1 Officers.................................... C-19
Section 4.2 Term of Office; Resignation; Removal;
Vacancies................................... C-19
Section 4.3 Powers and Duties........................... C-20
Section 4.4 Salaries.................................... C-20
Section 4.5 Chairman of the Board of Directors.......... C-20
Section 4.6 Vice Chairman............................... C-21
Section 4.7 President................................... C-21
Section 4.8 Vice President.............................. C-21
Section 4.9 Secretary................................... C-22
Section 4.10 Treasurer.................................. C-22
Section 4.11 Controller................................. C-23
Section 4.12 Other Officers............................. C-23
ARTICLE V SHARES
CERTIFICATED SHARES
Section 5.1 Certificates, Registrar and Transfer
Agent....................................... C-24
Section 5.2 Authorization of Facsimile Signatures
and Seal.................................... C-24
Section 5.3 Transfer of Certificated Shares............. C-24
Section 5.4 Lost, Stolen or Destroyed Share
Certificates................................ C-24
C-2
ARTICLE VI INDEMNIFICATION
Section 6.1 General Applicability....................... C-25
Section 6.2 Scope of Indemnification.................... C-25
Section 6.3 Other Indemnification Provisions............ C-26
Section 6.4 Survival of Indemnification................. C-26
Section 6.5 Inability to Limit Indemnification.......... C-27
Section 6.6 Severability................................ C-27
ARTICLE VII OTHER MATTERS
Section 7.1 Books to be Kept............................ C-27
Section 7.2 Corporate Seal.............................. C-28
Section 7.3 When Notice or Lapse of Time Unnecessary.... C-28
Section 7.4 Contracts, etc., How Executed............... C-28
Section 7.5 Loans....................................... C-29
Section 7.6 Deposits.................................... C-29
Section 7.7 General and Special Bank Accounts........... C-29
Section 7.8 Fiscal Year................................. C-30
ARTICLE VIII AMENDMENTS TO BY-LAWS
Section 8.1 By Directors................................ C-30
Section 8.2 By Shareholders............................. C-30
C-3
CH Energy Group, Inc.
(THE "COMPANY")
BY-LAWS
______, 1998
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.1 ANNUAL MEETINGS
The annual meeting of the shareholders, for the election of
directors and the transaction of such other business as may be
brought before the meeting, in accordance with these By-Laws,
shall be held each year on the fourth Tuesday in April (or if
said day be a legal holiday, then on the next succeeding business
day), at such place and time of day as the Directors may
determine.
SECTION 1.2 SPECIAL MEETINGS
Subject to the rights of the holders of any series of stock
having a preference over the Common Stock of the Company as to
dividends or upon liquidation ("Preferred Stock") with respect to
such series of Preferred Stock, special shareholders' meetings
may be called only by the Chairman of the Board of Directors
pursuant to a resolution adopted by a majority of the total
number of directors which the Company would have if there were no
vacancies. At any special meeting, only such business may be
transacted which is related to the purpose(s) set forth in the
notice of such special meeting given pursuant to Section 1.7 of
these By-laws.
SECTION 1.3 PLACE OF MEETINGS
Shareholders' meetings shall be held at the principal office
of the Company or at such other place as designated by the Board
of Directors and stated in the notice of such meeting.
SECTION 1.4 PRESIDING AT MEETINGS
At all shareholders' meetings, the Chairman of the Board of
Directors, Vice Chairman, the President or a Vice President,
shall act as Chairman of the meeting as provided for in Sections
4.5, 4.7 and 4.8 and the Secretary or Assistant Secretary shall
act as Secretary of the meeting as provided for in Section 4.9.
C-4
SECTION 1.5 QUORUM
Holders of a majority of the votes of the outstanding shares
of the Company entitled to vote generally in the election of
Directors must be present, in person or by proxy, at each
shareholders' meeting to constitute a quorum at such meeting.
When a specified item of business is required to be voted on by a
class or series, voting as a class, the holders of a majority of
the votes of the shares of such class or series shall constitute
a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders.
Except as may be provided by or pursuant to the Certificate
of Incorporation, at all shareholders' meetings each shareholder
entitled to vote shall be entitled to one vote for each share
held by him or her, and may vote and otherwise act either in
person or by proxy, as provided for in Section 1.11.
SECTION 1.6 ADJOURNMENT
The Chairman of the meeting, or a majority of the shares so
represented at the meeting, may adjourn the meeting despite the
absence of a quorum. When a shareholders' meeting is adjourned
to another time or place, it shall not be necessary to give any
notice of the adjourned meeting if the time and place to which
the meeting is adjourned are announced at the meeting at which
the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted on the
original date of the meeting. However, if after the adjournment
the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
shareholder of record on the new record date entitled to notice
under this Section 1.6.
SECTION 1.7 NOTICE OF MEETINGS
Written notice of the date, time and place of every
shareholders' meeting shall be given personally, or by first
class mail (not less than ten (10) nor more than sixty (60) days
before the date of the meeting) or by third class mail (not less
than twenty-four (24) nor more than sixty (60) days before the
date of the meeting) or as otherwise may be permitted by law, to
each shareholder of record as of the date fixed by the Board of
Directors, pursuant to Section 1.9 hereof, and such other notice
shall be given as may be required by law.
C-5
Notice of a special shareholders' meeting shall indicate
that it is being issued by or at the direction of the person or
persons calling the meeting and shall state the purpose(s) for
which the meeting is called.
If mailed, such notice shall be deemed given when deposited
in the United States mail, with postage thereon prepaid, directed
to the shareholder at his or her address as it appears on the
shareholders' list or record, or, if he or she shall have filed
with the Secretary of the Company a written request that notices
to him or her be mailed to some other address, then directed to
him or her at such other address.
An affidavit of the Secretary of the Corporation or other
person giving the notice or of a transfer agent of the
Corporation that the notice required by this Section 1.7 has been
given shall be supplied at the meeting to which it relates.
SECTION 1.8 WAIVER AND CONSENT
Notice of meeting need not be given to any shareholder who
submits a signed waiver of notice, in person or by proxy, whether
before or after the meeting. The attendance of any shareholder
at a meeting, in person or by proxy, without objecting to the
lack of notice of such meeting prior to the conclusion of the
meeting, shall constitute a waiver of notice by such shareholder.
The transactions of any shareholders' meeting, however
called and noticed, are as valid as though had at a meeting duly
held after regular call and notice, if a quorum is present either
in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in
person or by proxy, signs a written waiver of notice, or a
consent to the holding of the meeting, or an approval of the
minutes thereof.
All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the
meeting. Executors, administrators, guardians, trustees, and
other fiduciaries entitled to vote shares may sign such waivers,
consents and approvals.
C-6
SECTION 1.9 FIXING RECORD DATE
For the purpose of determining the shareholders entitled to
notice of or to vote at any shareholders' meeting or any
adjournment thereof, or for the purpose of determining
shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action,
the Board of Directors may fix, in advance, a date as the record
date for any such determination. Such date shall not be more
than sixty (60) nor less than ten (10) days before the date of
such meeting, nor more than sixty (60) days before the date of
such action.
SECTION 1.10 LIST OF SHAREHOLDERS AT MEETINGS
A list of shareholders as of the record date, certified by
the Secretary or any Assistant Secretary or by a transfer agent,
shall be produced at any shareholders' meeting upon the request
thereat or prior thereto of any shareholder. If the right to
vote at any meeting is challenged, the inspectors, or the person
presiding thereat, shall require such list of shareholders to be
produced as evidence of the right of the persons challenged to
vote at such meeting, and all persons who appear from such list
to be shareholders entitled to vote thereat may vote at such
meeting.
SECTION 1.11 PROXIES
(a) Generally. Every shareholder entitled to vote or
execute consents shall have the right to do so either in person
or by one or more agents authorized by a written proxy executed
by such person or his or her duly authorized agent and filed with
the Secretary of the Company. Any executor, administrator,
guardian, trustee or other fiduciary may give proxies.
(b) Term of Proxies. A proxy is not valid after the
expiration of eleven (11) months from the date of its execution,
unless the length of time for which such proxy is to continue in
force is otherwise specified therein, which in no case shall
exceed seven (7) years from the date of its execution.
C-7
(c) Revocation and Suspension of Proxies. Any proxy duly
executed continues in full force and effect and is not revoked
until a written instrument executed by such person or his or her
duly authorized agent revoking it, or until a duly executed proxy
bearing a later date, is filed with the Secretary of the Company.
A proxy is not revoked by the death or incapacity of the maker
unless, before the vote is counted or the authority is exercised,
written notice of the death or incapacity is given to the
Secretary of the Company. Notwithstanding that a valid proxy is
outstanding, if the person executing the proxy is present at the
meeting and elects to vote in person, then the powers of the
proxy holder are suspended, except in the case of a proxy coupled
with an interest (which states that fact on its face).
(d) Voting by Two or More Proxies. If any instrument of
proxy designates two or more persons to act as proxy, in the
absence of any provision in the proxy to the contrary, the
persons designated may represent and vote the shares in
accordance with the vote or consent of the majority of the
persons named as such proxies. If only one such proxy is
present, such proxy may vote all the shares, and all the shares
standing in the name of the principal(s) for whom such proxy acts
shall be deemed represented for the purpose of obtaining a
quorum. The foregoing provisions shall apply to the voting of
shares by proxies for any two or more administrators, executors,
trustees, or other fiduciaries, unless an instrument or order of
court appointing them otherwise directs.
(e) Directors' Determination of Execution and Use of
Proxies. The Board of Directors may, in advance of any annual or
special meeting of the shareholders, prescribe additional
regulations concerning the manner of execution and filing of
proxies and the validation of the same, which are intended to be
voted at any such meeting.
SECTION 1.12 NOTICE OF SHAREHOLDER BUSINESS AND
NOMINATIONS
A. Annual Shareholders' Meetings
(1) Nominations of persons for election to the Board of
Directors of the Company and the proposal of business to be
C-8
considered by the shareholders may be made at an annual
shareholders' meeting (a) pursuant to the Company's notice of
meeting, (b) by or at the direction of the Board of Directors or
(c) by any shareholder of the Company who was a shareholder of
record at the time of giving of notice provided for in this
Section 1.12 who is entitled to vote at the meeting and who
complies with the notice of procedures set forth in this Section
1.12.
(2) For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (c)
of paragraph A.(1) of this Section 1.12, the shareholder must
have given timely notice thereof in writing to the Secretary of
the Company and such other business must otherwise be a proper
matter for shareholder action. To be timely, a shareholder's
notice shall be delivered to the Secretary at the principal
executive offices of the Company not later than the close of
business on the 60th day nor earlier than the close of business
on the 90th day prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that
the date of the annual meeting is more than 30 days before or
more than 60 days after such anniversary date, notice by the
shareholder to be timely must be so delivered not earlier than
the close of business on the 90th day prior to such annual
meeting and no later than the close of business on the later of
the 60th day prior to such annual meeting or the 10th day
following the day on which the date of such meeting is first
publicly announced or disclosed (in a public filing or otherwise)
by the Company. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for
the giving of a shareholder's notice as described above. Such
shareholder's notice shall set forth (a) as to each person whom
the shareholder proposes to nominate for election or reelection
as a Director all information relating to such person that is
required to be disclosed in solicitations of proxies for election
of Directors in an election contest, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14a-11 thereunder (including such person's written consent to
being named in the proxy statement as a nominee and to serving as
a Director if elected); (b) as to any other business that the
shareholder proposes to bring before the meeting, a brief
C-9
description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting
and any material interest in such business of such shareholder
and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such shareholder, as
they appear on the Company's books, and of such beneficial owner
and (ii) the class and number of shares of the Company which are
owned beneficially and of record by such shareholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph A.(2) of this Section 1.12 to the contrary, in the
event that the number of Directors to be elected to the Board of
Directors of the Company is increased and there is no public
announcement by the Company naming all of the nominees for
Director or specifying the size of the increased Board of
Directors at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a shareholder's notice required
by paragraph A. of Section 1.12 shall also be considered timely,
but only with respect to nominees for any new positions created
by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the Company not later than the
close of business on the 10th day following the day on which such
public announcement is first made by the Company.
B. Special Shareholders' Meetings
Only such business shall be conducted at a special
shareholders' meeting as shall have been brought before the
meeting pursuant to the Company's notice of meeting. Nominations
of persons for election to the Board of Directors may be made at
a special shareholders' meeting at which Directors are to be
elected pursuant to the Company's notice of meeting (a) by or at
the direction of the Board of Directors or (b) provided that the
Board of Directors has determined that Directors shall be elected
at such meeting, by any shareholder of the Company who is a
shareholder of record at the time of giving of notice provided
for in this Section 1.12 who is entitled to vote at the meeting
and who complies with the notice procedures set forth in this
Section 1.12. In the event the Company calls a special
shareholders' meeting for the purpose of electing one or more
C-10
Directors to the Board of Directors, any such shareholder may
nominate a person or persons (as the case may be), for election
to such position(s) as specified in the Company's notice of
meeting, if the shareholder's notice required by paragraph A.(2)
of this Section 1.12 shall be delivered to the Secretary at the
principal executive offices of the Company not earlier than the
close of business on the 90th day prior to such special meeting
and not later than the close of business on the later of the 60th
day prior to such special meeting or the 10th day following the
day on which public announcement or other disclosure (in a public
filing or otherwise) is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to
be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a
new time period for the giving of a shareholder's notice as
described above.
C. General
(1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 1.12 shall be eligible
to serve as Directors and only such business shall be conducted
at a shareholders' meeting as shall have been brought before the
meeting in accordance with the procedures set forth in this
Section 1.12. Except as otherwise provided by law, the Chairman
of the meeting shall have the power and duty to determine whether
a nomination or any business proposed to be brought before the
meeting was made or proposed, as the case may be, in accordance
with the procedures set forth in this Section 1.12 and, if any
proposed nomination or business is not in compliance with this
Section 1.12, to declare that such defective proposal or
nomination shall be disregarded.
(2) For purposes of this Section 1.12, "public
announcement" shall mean disclosure in a press release reported
by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed by the
Company with the Securities and Exchange Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
Section 1.12, a shareholder shall also comply with all applicable
C-11
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this Section
1.12. Nothing in this Section 1.12 of Article I shall be deemed
to affect any rights (i) of shareholders to request inclusion of
proposals in the Company's proxy statement pursuant to Rule 14a-8
under the Exchange Act or (ii) of the holders of any series of
Preferred Stock to elect Directors under specified circumstances.
SECTION 1.13 INSPECTORS OF ELECTIONS
The Board of Directors by resolution shall appoint, or shall
authorize an officer of the Company to appoint, one or more
inspectors, which inspector or inspectors may include individuals
who serve the Company in other capacities, including, without
limitation, as officers, employees, agents or representatives, to
act at the meetings of shareholders and make a written report
thereof. One or more persons may be designated as alternate
inspector(s) to replace any inspector who fails to act. If no
inspector or alternate has been appointed to act or is able to
act at a meeting of shareholders, the Chairman of the meeting
shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging such person's duties, shall take
and sign an oath to execute faithfully the duties of inspector
with strict impartiality and according to the best of such
person's ability. The inspector(s) shall have the duties
prescribed by law. The Chairman of the meeting shall fix and
announce at the meeting the date and time of the opening and the
closing of the polls for each matter upon which the shareholders
will vote at a meeting.
SECTION 1.14 VOTE OF SHAREHOLDERS
Subject to the rights of holders of any series of Preferred
Stock, Directors shall, except as otherwise required by law or by
the Certificate of Incorporation or by a specific provision of
these By-Laws adopted by the shareholders, be elected by a
plurality of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote in the election. Subject to
the rights of holders of any series of Preferred Stock, whenever
any corporate action, other than the election of Directors, is to
be taken by vote of the shareholders, it shall, except as
otherwise required by law or by the Certificate of Incorporation,
be authorized by a majority of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote thereon.
C-12
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 NUMBER OF DIRECTORS
The affairs of this Company shall be managed by no less than
three (3) nor more than twenty-five (25) Directors as fixed by
resolution adopted by a majority of the entire Board of
Directors. Each director shall be at least 18 years of age. No
person who has reached age 70 shall stand for election as a
Director.
SECTION 2.2 ELECTIONS, TERMS AND VACANCIES
At the first annual meeting of shareholders following the
adoption of the Restated Certificate of Incorporation of the
Company, or any special meeting in lieu thereof, the Board of
Directors shall be divided into three classes designated Class I,
Class II and Class III, which classes shall be as nearly equal in
number as the then total number of Directors constituting the
entire Board permits. Class I, Class II and Class III Directors
shall be so elected for terms expiring at the next succeeding
annual meeting, the second succeeding annual meeting and the
third succeeding annual meeting, respectively, and until their
respective successors are elected and qualified. At each annual
shareholders' meeting after such first annual (or special)
meeting of shareholders following the adoption of the Restated
Certificate of Incorporation of the Company, the Directors chosen
to succeed those in the class whose terms then expire shall be
elected by shareholders for terms expiring at the third
succeeding annual meeting after election, or for such lesser term
for which one or more may be nominated in a particular case in
order to assure that the number of Directors in each class shall
be appropriately constituted and until their respective
successors are elected and qualified. Newly created Directorships
or any decrease in Directorships resulting from increases or
decreases in the number of Directors shall be so apportioned
among the classes of Directors as to make all the classes as
nearly equal in number as possible. Vacancies on the Board at any
time may be filled by a majority of the Directors then in office,
although less than a quorum exists and regardless of how such
vacancy shall have been created. A Director elected to fill a
vacancy, unless elected by the shareholders, shall hold office
until the next meeting of shareholders at which the election of
Directors is in the regular order of business, and until his or
her successor has been elected and qualified.
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Notwithstanding the foregoing, whenever the holders of any
one or more classes or series of Stock (other than the Common
Stock) shall have the right, voting separately by class or
series, to elect Directors at an annual or special shareholders'
meeting, the election, term of office, filling of vacancies and
other features of such Directorships shall be governed by any
terms of the Certificate of Incorporation of the Company
applicable thereto, and such Directors so elected shall not be
divided into classes pursuant to this Section 2.2 unless
expressly provided by such terms.
SECTION 2.3 MEETINGS OF THE BOARD
An annual meeting of the Board of Directors shall be held in
each year as soon as practicable after the annual meeting of
shareholders. Regular meetings of the Board shall be held at
such times as may be fixed by the Board. No notice need be given
of annual or regular meetings of the Board of Directors.
SECTION 2.4 NOTICE AND ADJOURNMENT
Notice of each special meeting of the Board shall be given
to each director either by mail not later than noon, New York
time, on the fifth business day prior to the meeting or by
telegram, by facsimile transmission, by written message or orally
to the Directors not later than noon, New York time, on the day
prior to the meeting. Notices shall be deemed to have been given
by mail when deposited in the United States mail, by telegram at
the time of filing, by facsimile transmission upon confirmation
of receipt, and by messenger at the time of delivery by the
messenger. Notices by mail, telegram, facsimile transmission or
messenger shall be sent to each Director at the address or
facsimile number designated by him or her for that purpose, or,
if none has been so designated, at his or her last known
residence or business address. Notice of a meeting of the Board
of Directors need not be given to any Director who submits a
signed waiver of notice whether before or after the meeting, or
who attends the meeting without protesting, prior thereto or at
its commencement, the lack of notice to him or her. A notice or
waiver of notice need not specify the purpose of any meeting of
the Board of Directors. A majority of the Directors present,
whether or not a quorum is present, may adjourn any meeting to
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another time and place. Notice of any adjournment of a meeting
to another time or place shall be given in the manner described
above to the Directors who were not present at the time of the
adjournment and, unless such time and place are announced at the
meeting, to the other Directors.
SECTION 2.5 QUORUM
Unless a greater quorum is required by law, one-third of the
number of Directors at the time serving on the Board of Directors
shall constitute a quorum for the transaction of business, or of
any specified item of business. Except where otherwise provided
by law or in the Certificate of Incorporation or these By-Laws,
the vote of a majority of the Directors present at a meeting at
the time of such vote, if a quorum is then present, shall be the
act of the Board.
SECTION 2.6 UNANIMOUS WRITTEN CONSENT
Any action authorized, in writing, by all of the Directors
entitled to vote thereon and filed with the minutes of the
Company shall be the act of the Board with the same force and
effect as if the same had been passed by unanimous vote at a duly
called meeting of the Board.
SECTION 2.7 RESIGNATION OF DIRECTORS
Any Director of the Company may resign at any time. Such
resignation shall be made in writing and shall take effect at the
time specified therein, or, if no time be specified, at the time
of its receipt by the Chairman of the Board or Secretary. The
acceptance of a resignation shall not be necessary to make it
effective unless so specified therein.
SECTION 2.8 REMOVAL OF DIRECTORS
Subject to the rights of any class or series of stock having
a preference over the Common Stock as to dividends or upon
liquidation to elect Directors under specified circumstances, any
Director may be removed from office by a vote of the shareholders
entitled to vote thereon only for cause and any Director may be
removed from office by action of the Board only for cause.
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SECTION 2.9 COMPENSATION OF DIRECTORS
Members of the Board shall receive such fees and
compensation fixed from time to time by the Board and shall be
reimbursed for reasonable expenses for attending Board Meetings.
SECTION 2.10 TIME AND PLACE OF MEETINGS
Meetings of the Board of Directors shall be held in such
month on such day at such hour and at such place as the Board may
from time to time direct.
SECTION 2.11 SPECIAL MEETINGS
Special meetings of the Board may be held on the call of the
Chairman of the Board of Directors, the President or the
Secretary or upon written request of a majority of the Directors
at the time serving on the Board addressed to the Secretary. The
person or persons authorized to call special meetings of the
Board may fix the place and time of the meeting.
SECTION 2.12 TELEPHONIC MEETINGS
With the concurrence of the Chairman of the Board, any one
or more members of the Board or any committee of the Board may
participate in a meeting of the Board or committee by means of a
conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at
the same time; and participation by such means shall constitute
presence in person at a meeting.
ARTICLE III
COMMITTEES
SECTION 3.1 ORGANIZATION AND AUTHORITY
The Board of Directors, by resolution adopted by a majority
of the entire Board, may designate from among its members, such
committees as the Board of Directors may from time to time
determine, including the committee created by Section 3.2 of this
Article III, with such number of Directors as set forth in the
resolution, and each of which, to the extent provided in the
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resolution, shall have all the authority of the Board, except
that no such committee shall have authority as to (1) the
submission to shareholders of any action that needs shareholders'
approval; (2) the filling of vacancies in the Board or in any
committee thereof; (3) the fixing of compensation of the
Directors for serving on the Board or on any committee thereof;
(4) the amendment or repeal of the By-Laws, or the adoption of
new By-Laws; (5) the amendment or repeal of any resolution of the
Board which, by its terms, shall not be so amendable or
repealable; (6) the fixing or changing of the size of the Board;
or (7) the removal or indemnification of Directors. In the event
of the absence of any member(s) from a meeting of a committee,
replacements may be made from Directors designated as alternate
members of such committee by the Board. The Chairman of the
Board of Directors, or in his absence or should he so direct, the
President, or in his absence, a Vice President, if such officers
are members of the committee, shall preside at meetings of the
committee, otherwise the presiding officer shall be designated by
majority vote of the committee. Vacancies in the membership of
the committee shall be filled by the Board of Directors at a
regular or special meeting of the Board of Directors. Unless the
Board of Directors otherwise provides, each committee designated
by the Board may adopt, amend and repeal rules for the conduct of
its business.
SECTION 3.2 EXECUTIVE COMMITTEE
There shall be an Executive Committee of two (2) or more of
the Directors to be designated by the Board, which, together with
the Chairman of the Board of Directors and the President, shall
constitute an Executive Committee. The Executive Committee shall
have and may exercise all of the authority and powers of the
Board subject to limitations prescribed by law or these By-Laws.
The Secretary of the Company shall be the Secretary of the
Executive Committee.
SECTION 3.3 ACTION BY A COMMITTEE
The act of a majority of the members of a committee present
at any meeting at which a quorum is present shall be the act of
such committee. The members of a committee shall act only as a
committee, and the individual members thereof shall have no
individual powers as such. Each committee may make such rules as
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it may deem expedient for the regulation and carrying on of its
meetings and proceedings.
SECTION 3.4 QUORUM
A majority of the members of a committee shall constitute a
quorum.
SECTION 3.5 REPORTS TO BOARD OF DIRECTORS
Each such committee shall keep a record of its proceedings
and make reports to the Board at its next regular meeting.
SECTION 3.6 COMPENSATION OF COMMITTEE MEMBERS
Members of committees of the Board shall receive such fees
and compensation as fixed from time to time by the Board and
shall be reimbursed for reasonable expenses for attending
committee meetings.
SECTION 3.7 RESIGNATION AND REMOVAL OF COMMITTEE MEMBERS
Any member of any committee may resign at any time. Such
resignation shall be made in writing and shall take effect at the
time specified therein, or, if no time be specified, at the time
of its receipt by the Chairman of the Board of Directors or
Secretary. The acceptance of a resignation shall not be
necessary to make it effective unless so specified therein.
Committee members may be removed by action of the Board of
Directors, with or without cause.
SECTION 3.8 UNANIMOUS WRITTEN CONSENT
Any action authorized in writing, by all of the members of a
committee and filed with the minutes of the Company shall be the
act of that committee with the same force and effect as if the
same had been passed by unanimous vote at a duly called meeting
of such committee.
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SECTION 3.9 PLACE OF COMMITTEE MEETINGS
Meetings of each committee shall be held in such month on
such day at such hour and at such place as such committee may
from time to time direct.
SECTION 3.10 NOTICE
Unless otherwise provided by resolution of the Board or by
vote of a majority of the members of the relevant committee,
notice of committee meetings shall be given in the same manner as
notice of special meetings of the Board is to be given under
Section 2.4 of these By-Laws.
ARTICLE IV
OFFICERS AND THEIR DUTIES
SECTION 4.1 OFFICERS
The Board of Directors, at its regular annual meeting, shall
elect or appoint from their number a Chairman of the Board of
Directors, the Chairmen of Committees of the Board and may elect
or appoint a Vice Chairman of the Board of Directors and Vice
Chairmen of Committees of the Board, which officers shall be
officers of the Board; and it shall elect or appoint a President,
one or more Vice Presidents, a Secretary, a Treasurer, and a
Controller which officers shall be officers of the Company. Each
of said officers, subject to the provisions of Sections 4.2 and
4.3 hereof, shall hold officer, if elected, until the meeting of
the board following the next Annual Meeting of shareholders and
until his or her successor has been elected and qualified, or, if
appointed, for the term specified in the resolution appointing
him or her and until his or her successor has been elected or
appointed. Any two or more offices may be held by the same
person. Should any of the officers of the Board or the President
cease to be a director, he shall ipso facto cease to be such
officer.
SECTION 4.2 TERM OF OFFICE; RESIGNATION; REMOVAL;
VACANCIES
Except as otherwise provided in the resolution of the Board
of Directors electing or appointing any officer, all officers
shall be elected or appointed to hold office until the meeting of
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the Board of Directors following the next succeeding annual
meeting of shareholders. Each officer shall hold office for the
term for which he or she is elected or appointed, and until his
or her successor has been elected or appointed and qualified.
Any officer may resign at any time by giving written notice to
the Board or to the Chairman of the Board of Directors, if any,
or the President or the Secretary of the Company. Such
resignation shall take effect at the time specified therein, and
unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Any officer
may be removed by the Board, with or without cause, at any time.
Removal of an officer without cause shall be without prejudice to
his or her contract rights, if any, with the Company, but the
election or appointment of an officer shall not of itself create
contract rights. Any vacancy occurring in any office of the
Company by death, resignation, removal or otherwise may be filled
for the unexpired portion of the term by the Board.
SECTION 4.3 POWERS AND DUTIES
The officers of the Company shall have such authority and
perform such duties in the management of the Company as may be
prescribed by the Board of Directors and, to the extent not so
prescribed, as generally pertain to their respective offices,
subject to the control of the Board. Securities of other
companies held by the Company may be voted by any officer
designated by the Board and, in the absence of any such
designation, by the Chairman of the Board of Directors, the
President, any Vice President, the Secretary or the Treasurer.
The Board may require any officer, agent or employee to give
security for the faithful performance of his duties.
SECTION 4.4 SALARIES
Salaries of all officers of the Company shall be fixed by
the Board from time to time; and salaries of all other employees
of the Company shall be regulated by the Chief Executive Officer.
SECTION 4.5 CHAIRMAN OF THE BOARD OF DIRECTORS
The Chairman of the Board of Directors shall preside at all
meetings of the shareholders and the Board of Directors at which
he or she shall be present. When the Chairman of the Board of
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Directors is also designated the Chief Executive Officer, he or
she shall have general and active management of the business of
the Company and shall see that all orders and policies of the
Board of Directors are carried into effect.
SECTION 4.6 VICE CHAIRMAN
The Vice Chairman shall do and perform all such duties as
shall be assigned to him or her by the Chairman of the Board of
Directors. In the absence of the Chairman of the Board of
Directors, the Vice Chairman shall, when present, preside at all
meetings of the shareholders and the Board of Directors. He
shall have such powers and perform such duties as the Chairman of
the Board of Directors shall delegate to him.
SECTION 4.7 PRESIDENT
In the absence of a Chairman of the Board of Directors or
should the Chairman of the Board of Directors so direct, the
President shall preside at meetings of the shareholders and of
the Board of Directors at which he or she shall be present. In
the case of the Chairman of the Board of Directors having been
designated as Chief Executive Officer, the President shall
(subject to the direction of the Chairman of the Board of
Directors) exercise general control and supervision over all the
affairs of the Company and generally do and perform those duties
as usually appertain to the office of the President, or which may
be assigned to him or her by the Board of Directors. Should
there be no Chairman of the Board of Directors or should the
President be designated Chief Executive Officer of the Company,
the President shall have general and active management of the
business of the Company and shall see that all orders and
policies of the Board of Directors are carried into effect; and
the salaries of all employees of the Company, other than
officers, shall be regulated by him or her. If the office of the
Chairman of the Board of Directors is vacated, due to the
incumbent's death, retirement, or inability to act or otherwise,
or should the Directors elect to leave such office vacant, the
President shall be the Chief Executive Officer and shall assume
all the duties as outlined in Section 4.5, until directed
otherwise by the Board of Directors.
SECTION 4.8 VICE PRESIDENT
The Vice Presidents, respectively, shall do and perform all
such duties as shall be assigned to them by the Chairman of the
Board of Directors or the President or required of them by the
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Board of Directors. If designated by the Board of Directors as a
member of the Executive Committee, a Vice President shall perform
the duties of President in case of the President's absence or
inability to act or in case of a vacancy in that office. An
Assistant Vice President in the absence or disability of a Vice
President may at the discretion of the Chairman of the Board of
Directors or the President perform the duties of a Vice President
and shall perform such other duties as may be assigned to him or
her.
SECTION 4.9 SECRETARY
It shall be the duty of the Secretary to keep and attest
true records of the proceedings of all meetings of the Board and
Executive Committee, to see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by
law and safely keep and account for all documents, papers and
property of the Company which may come into his or her
possession. He or she shall be the custodian of the Corporate
Seal of the Company and shall affix and attest the same whenever
it is necessary and proper so to do, and shall perform such other
duties as may be assigned to him or her by the Board. In the
absence or disability of the Secretary, an Assistant Secretary or
any Vice President shall perform his or her duties and such other
duties as may be assigned to him or her.
SECTION 4.10 TREASURER
The Treasurer shall have the custody of all money, funds and
securities of the Company. He or she shall furnish such security
for the faithful performance of his or her duties as may be
required by the Board of Directors. He or she shall receive all
money due to the Company and deposit the same in its corporate
name in such banks or trust companies as the Board of Directors
shall determine. He or she shall sign all checks, drafts or
orders for the payment of money; and perform such other duties as
may be required of him or her by the Board of Directors. An
Assistant Treasurer shall, in the absence or disability of the
Treasurer, perform his or her duties and such other duties as may
be assigned to him or her. In the absence or disability of the
Treasurer and Assistant Treasurers, any Vice President shall
perform his or her duties and such other duties as may be
assigned to him or her. The Treasurer shall, when directed by
the Board of Directors, open special accounts in the Company's
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depositories; all checks, drafts or orders for the payment of
money out of such special accounts shall be signed in such manner
and by such officers or employees of the Company as the Board of
Directors shall designate; such checks, drafts or orders for the
payment of money shall also be signed, if, as and when so
directed by resolution of the Board of Directors, by such persons
and in such manner as the Board of Directors shall determine.
SECTION 4.11 CONTROLLER
The Controller shall:
(a) Keep at the office of the Company correct books of
account of all its business and transactions;
(b) Exhibit at all reasonable times his or her books of
accounts and records to any of the directors upon application
during business hours at the office of the Company where such
books and records are kept;
(c) Render a full statement of the financial condition of
the Company whenever requested so to do by the Board of
Directors, the Chairman of the Board or the President; and
(d) In general, perform such duties as may be from time to
time assigned to him or her by the Board of Directors, the
Chairman of the Board or the President.
SECTION 4.12 OTHER OFFICERS
Other officers, including one or more additional Vice
Presidents, may from time to time be appointed by the Board of
Directors or by any officer or committee upon whom a power of
appointment may be conferred by the Board of Directors, which
other officers shall have such powers and perform such duties as
may be assigned to them by the Board of Directors, the Chairman
of the Board of Directors or the President and shall hold office
for such terms as may be designated by the Board of Directors or
the officer or committee appointing them.
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ARTICLE V
SHARES
CERTIFICATED SHARES
SECTION 5.1 CERTIFICATES, REGISTRAR AND TRANSFER AGENT
Certificates for shares of the capital stock of the Company
shall be in such form as shall be approved by the Board of
Directors. The certificates shall be numbered, as nearly as may
be, in the order of their issue and shall be signed by the
Chairman of the Board of Directors or by the President or a Vice
President, and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and sealed with the seal of
the Company.
SECTION 5.2 AUTHORIZATION OF FACSIMILE SIGNATURES AND
SEAL
The signatures of the officers upon a certificate, and the
seal of the Company, may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar
other than Company itself or its employee.
SECTION 5.3 TRANSFER OF CERTIFICATED SHARES
Shares of the capital stock of the Company shall be
transferable by the holder thereof in person or by duly
authorized attorney upon surrender of the certificate or
certificates for such shares properly endorsed. Every
certificate of stock exchanged or returned to the Company shall
be appropriately canceled. A person in whose name shares of
stock stand on the books of the Company shall be deemed the owner
thereof as regards the Company. The Board of Directors may make
such other and further rules and regulations as they may deem
necessary or proper concerning the issue, transfer and
registration of stock certificates.
SECTION 5.4 LOST, STOLEN OR DESTROYED SHARE CERTIFICATES
The Company may issue a new certificate for shares in place
of any certificate theretofore issued by it, alleged to have been
lost or destroyed, and the Company may require the owner of the
lost or destroyed certificate, or such owner's legal
representative, to give the Company a bond sufficient to
indemnify it against any claim that may be made against it on
account of the alleged loss or destruction of any such
certificate or the issuance of any such new certificate.
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ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL APPLICABILITY
Except to the extent expressly prohibited by the New York
Business Corporation Law, the Company shall indemnify each person
made, or threatened to be made, a party to or involved in any
action, suit or proceeding, whether criminal, civil,
administrative or investigative by reason of the fact that such
person or such person's testator or intestate is or was a
Director or Officer of the Company, against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses,
including attorney's fees and expenses, reasonably incurred in
enforcing such person's right to indemnification, incurred in
connection with such action or proceeding, or any appeal therein,
provided that no such indemnification shall be made if a judgment
or other final adjudication adverse to such person establishes
that such person's acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to
the cause of action so adjudicated, or that such person
personally gained in fact a financial profit or other advantage
to which such person was not legally entitled, and provided
further that no such indemnification shall be required with
respect to any settlement or other nonadjudicated disposition of
any threatened or pending action or proceeding unless the Company
has given its prior consent to such settlement or other
disposition.
SECTION 6.2 SCOPE OF INDEMNIFICATION
The Company shall advance or reimburse upon request, within
20 days after receipt by the Company of a statement or statements
from the claimant requesting such advance or advances of
reimbursements, to any person entitled to indemnification
hereunder all reasonable expenses, including attorney's fees and
expenses, reasonably incurred in defending any action or
proceeding in advance of the final disposition thereof upon
receipt of an undertaking by or on behalf of such person to repay
such amount if such person is ultimately found not to be entitled
to indemnification or, where indemnification is granted, to the
extent the expenses so advanced or reimbursed exceed the amount
to which such person is entitled; provided, however, that such
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person shall cooperate in good faith with any request by the
Company that common counsel be used by the parties to an action
or proceeding who are similarly situated unless to do so would be
inappropriate due to actual or potential differing interests
between or among such parties.
SECTION 6.3 OTHER INDEMNIFICATION PROVISIONS
Nothing herein shall limit or affect any right of any
Director, Officer or other corporate personnel otherwise than
hereunder to indemnification or expenses, including attorney's
fees, under any statute, rule, regulation, certificate of
incorporation, By-Law, insurance policy, contract or otherwise;
without affecting or limiting the rights of any Director, Officer
or other corporate personnel pursuant to this Article VI, the
Company is authorized to enter into agreements with any of its
Directors, Officers or other corporate personnel extending rights
to indemnification and advancement of expenses to the fullest
extent permitted by applicable law.
Unless limited by resolution of the Board of Directors or
otherwise, the Company shall advance the payment of expenses to
the fullest extent permitted by applicable law to, and shall
indemnify, any Director, Officer or other corporate person who is
or was serving at the request of the Company, as a director,
officer, partner, trustee, employee or agent of another
corporation, whether for profit or not-for-profit, or a
partnership, joint venture, trust or other enterprise, whether or
not such other enterprise shall be obligated to indemnify such
person.
SECTION 6.4 SURVIVAL OF INDEMNIFICATION
Anything in these By-Laws to the contrary notwithstanding,
no elimination or amendment of this Article VI adversely
affecting the right of any person to indemnification or
advancement of expenses hereunder shall be effective until the
60th day following notice to such person of such action, and no
elimination of or amendment to this Article VI shall deprive any
such person's rights hereunder arising out of alleged or actual
occurrences, acts or failures to act prior to such 60th day.
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SECTION 6.5 INABILITY TO LIMIT INDEMNIFICATION
The Company shall not, except by elimination or amendment of
this Article VI in a manner consistent with the preceding Section
6.4 and with the provisions of Article VIII ("Amendments to
By-Laws"), take any corporate action or enter into any agreement
which prohibits, or otherwise limits the rights of any person to,
indemnification in accordance with the provisions of this Article
VI. The indemnification of any person provided by this Article
VI shall continue after such person has ceased to be a Director
or Officer of the Company and shall inure to the benefit of such
person's heirs, executors, administrators and legal
representatives.
SECTION 6.6 SEVERABILITY
In case any provision in this Article VI shall be determined
at any time to be unenforceable in any respect, the other
provisions of this Article VI shall not in any way be affected or
impaired thereby, and the affected provision shall be given the
fullest possible enforcement in the circumstances, it being the
intention of the Company to afford indemnification and
advancement of expenses to its Directors or Officers, acting in
such capacities or in the other capacities mentioned herein, to
the fullest extent permitted by law.
ARTICLE VII
OTHER MATTERS
SECTION 7.1 BOOKS TO BE KEPT
The Company shall keep (a) correct and complete books and
records of account, (b) minutes of the proceedings of the
shareholders, Board of Directors and Executive Committee, if any,
and (c) a current list of the Directors and Officers and their
residence addresses. The Company shall also keep, at its office
located in the County of Dutchess in the State of New York or at
the office of its transfer agent or registrar in the State of New
York, if any, a record containing the names and addresses of all
shareholders, the number and class of shares held by each and the
dates when they respectively became the owners of record thereof.
Any of the foregoing books, minutes or records may be in written
form or in any other form capable of being converted into written
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form within a reasonable time. The Board of Directors shall,
subject to the laws of the State of New York, have power to
determine from time to time, whether, to what extent, and under
what conditions and regulations the accounts and books of the
Corporation or any of them shall be open to the inspection of the
shareholders, and no shareholder shall have any right to inspect
any account book or document of the Corporation except as
conferred by the laws of the State of New York unless and until
authorized so to do by resolution of the Board of Directors or
shareholders of the Corporation.
SECTION 7.2 CORPORATE SEAL
The Board of Directors may adopt a corporate seal, alter
such seal at pleasure, and authorize it to be used by causing it
or a facsimile to be affixed or impressed or reproduced in any
other manner.
SECTION 7.3 WHEN NOTICE OR LAPSE OF TIME UNNECESSARY
Whenever for any reason the Company or the Board of
Directors or any committee thereof is authorized to take any
action after notice to any person or persons or after the lapse
of a prescribed period of time, such action may be taken without
notice and without the lapse of such period of time if at any
time before or after such action is completed the person or
persons entitled to such notice or entitled to participate in the
action to be taken or, in the case of a shareholder, his or her
attorney-in-fact, submit a signed waiver of notice of such
requirements.
SECTION 7.4 CONTRACTS, ETC., HOW EXECUTED.
The Board of Directors, except as in these By-Laws otherwise
provide, may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument
in the name of and on behalf of the Company, and such authority
may be general or confined to specific instances, and, unless so
authorized by the Board of Directors, no officer or agent or
employee shall have any power or authority to bind the Company by
any contract or engagement or to pledge its credits or to render
it liable pecuniarily for any purpose or to any amount.
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SECTION 7.5 LOANS.
No loans shall be contracted on behalf of the Company and no
negotiable paper shall be issued in its name, unless authorized
by the vote of the Board of Directors. When so authorized, any
officer or agent of the Company may effect loans and advances for
the Company from any bank, trust company or other institution, or
from any firm, Company or individual and for such loans and
advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Company. When so
authorized any officer or agent of the Company, as security for
the payment of any and all loans, advances, indebtedness and
liabilities of the Company, may pledge, hypothecate or transfer
any and all stocks, securities and other personal property at any
time held by the Company, and to that end endorse, assign and
deliver the same. Such authority may be general or confined to
specific instances. The Board of Directors may authorize any
mortgage or pledge of, or the creation of a security interest in,
all or any part of the corporate property, or any interest
therein, wherever situated.
SECTION 7.6. DEPOSITS.
All funds of the Company shall be deposited from time to
time to its credit in such banks, trust companies or other
depositaries as the Board of Directors may select, or as may be
selected by an officer or officers, agent or agents of the
Company to whom such power, from time to time, may be delegated
by the Board of Directors and, for the purpose of such deposit,
checks, drafts and other orders for the payment of money which
are payable to the order of the Company may be endorsed, assigned
and delivered by the President or a Vice President, or the
Treasurer or the Secretary, or by any officer, agent or employee
of the Company to whom any of said officers, or the Board of
Directors, by resolution, shall have delegated such power.
SECTION 7.7. GENERAL AND SPECIAL BANK ACCOUNTS.
The Board of Directors may from time to time authorize the
opening and keeping of general and special bank accounts with
such banks, trust companies or other depositaries as the Board
may select and may make such special rules and regulations with
respect thereto, as it may deem expedient.
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SECTION 7.8. FISCAL YEAR.
The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
AMENDMENTS TO BY-LAWS
SECTION 8.1 BY DIRECTORS
These By-Laws may be adopted, amended, or repealed or new
By-Laws may be adopted by the vote of a majority of the entire
Board of Directors at any regular or special meeting of the Board
at which a quorum is present; provided, however, that any
adoption of, amendment to or repeal of any new By-Law or
provision inconsistent with Article I (Section 1.2 - "Special
meetings", 1.4 - "Presiding at Meetings" or 1.12 - "Notice of
Shareholder Business and Nominations"), Article II (Section 2.1 -
"Number of Directors", 2.2 - "Elections, Terms and Vacancies" or
2.8 - "Removal of Directors"), Article VI - "Indemnification" or
this Article VIII -"Amendments to By-Laws" hereof, if by action
of the Board, shall be only upon the approval of not less than
75% of the entire Board at any such regular or special meeting of
the Board of Directors.
SECTION 8.2 BY SHAREHOLDERS
These By-Laws may be adopted, amended, or repealed by the
vote of a majority of the shareholders entitled to vote in the
election of any Directors (as herein provided) at any annual or
special shareholders' meeting at which a quorum is present, if
notice of such proposed action shall have been given in
accordance with the notice requirements of Section 1.12 of these
By-laws; provided, however, that any adoption of, amendment to or
repeal of any new By-Laws or provision inconsistent with Article
I (Section 1.2 -"Special meetings", 1.4 - "Presiding at Meetings"
or 1.12 - "Notice of Shareholder Business and Nominations"),
Article II (Section 2.1 - "Number of Directors", 2.2 - -
"Elections, Terms and Vacancies" or 2.8 - "Removal of
Directors"), Article VI - - "Indemnification" or this Article
VIII - "Amendments to By-Laws" hereof, if by action of
shareholders, shall be only upon the affirmative vote of not less
than 75% of the shares entitled to vote thereon at such annual or
special shareholders' meeting at which any such action is
proposed.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
(a) Indemnification.
Pursuant to Article 6 of the Holding Company Charter,
no director of Holding Company shall have personal liability to
the Holding Company or its shareholders for damages for any
breach of duty in such capacity, except for liability imposed by
the law of New York State. Any amendment or repeal of such
Article 6 may not apply to or have any effect on the liability or
alleged liability of any director of the Holding Company for or
with respect to any acts or omissions of such director occurring
prior to such amendment or repeal. Article VI, Section 6.1 of
the Holding Company By-Laws provides that the Holding Company
shall indemnify to the full extent permitted by law any person
made, or threatened to be made, a party to any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person or such
person's testator or intestate is or was a director, officer or
employee of the Holding Company, or serves or served at the
request of the Holding Company with any other enterprise as a
director, officer or employee; expenses incurred by any such
person in defending any such action, suit or proceeding shall be
paid or reimbursed by the Holding Company promptly upon receipt
by it of an undertaking of such person to repay such expenses if
it shall ultimately be determined that such person is not
entitled to be indemnified by the Holding Company. No amendment
of this by-law provision shall impair the rights of any person
arising at any time with respect to events occurring prior to
such amendment. In addition, the Holding Company intends to
enter into indemnification agreements with its officers and
directors which provide for indemnification to the maximum extent
permitted by law. These agreements will set forth certain
procedures for the advancement by the Holding Company of certain
expenses to indemnities.
(b) Insurance.
The Holding Company (with respect to indemnification
liability) and its directors and officers (in their capacities as
such) are insured against liability for wrongful acts (to the
extent defined) under insurance policies.
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Item 21. Exhibits and Financial Statement Schedules.
See Exhibit Index
Item 22. Undertakings.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(2) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to Items
4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of
responding to the request.
(3) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
(4) To remove from registration by means of a post-effective
amendment any shares of Holding Company Common Stock
which are not issued in the Share Exchange.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions described in Item 20, or otherwise (other than by
insurance), the registrant has been advised that in the opinion
II-2
of the Securities and Exchange Commission such indemnification is
against public policy as expressed in that Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than under insurance policies and
other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Amendment No. 1 to this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Poughkeepsie, State of New York on this 24th day of July, 1998.
CH ENERGY GROUP, INC.
By: (SGD.) JOHN E. MACK III
Name: John E. Mack III
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the Requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities indicated, on this 24th day
of July, 1998.
Signature Title
(a) Principal Executive
Officer or Officers: CHAIRMAN OF
BOARD & CHIEF
JOHN E. MACK III EXECUTIVE OFFICER
(b) Principal Accounting
Officer:
DONNA S. DOYLE *CONTROLLER
(c) Principal Financial
Officer:
STEVEN V. LANT *TREASURER
(d) A majority of Directors:
John E. Mack, III (Sole Director)
By: (SGD.) JOHN E. MACK, III
(John E. Mack, III)
* By: (SGD.) JOHN E. MACK, III
(John E. Mack, III, Attorney in Fact)
II-4
EXHIBIT INDEX
(a) The following exhibits are filed herewith:
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
________ __________________________
2.1 Agreement and Plan of Exchange (attached to the
Proxy Statement and Prospectus as Exhibit A).
3.1 Form of Restated Certificate of Incorporation of
CH Energy Group, Inc. to be in effect at Effective
Time of Share Exchange (attached to Proxy
Statement and Prospectus as Exhibit B).
3.2 Form of By-Laws of CH Energy Group, Inc. to be in
effect at Effective Time of Share Exchange
(attached to the Proxy Statement and Prospectus as
Exhibit C).
3.3 Restated Certificate of Incorporation of Central
Hudson Gas & Electric Corporation under Section
807 of the Business Corporation Law, filed August
14, 1989. (1)
3.4 Certificate of Amendment to the Restated
Certificate of Incorporation of Central Hudson Gas
& Electric Corporation under Section 805 of the
Business Corporation Law, filed April 5, 1990.(2)
__________
The following are notes to the Exhibits listed above:
(1) Incorporated herein by reference to Exhibit (3)1 of
Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1993 (File No. 1-3268).
(2) Incorporated herein by reference to Exhibit (3)2 of
Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1993 (File No. 1-3268).
II-5<PAGE>
3.5 Certificate of Amendment to the Restated
Certificate of Incorporation of Central Hudson Gas
& Electric Corporation under Section 805 of the
Business Corporation Law, filed October 19, 1993.
(3)
3.6 By-Laws of Central Hudson Gas & Electric
Corporation in effect on the date of this
Registration Statement. (4)
5 Opinion of Gould & Wilkie with respect to the
legality of the securities registered hereunder
[filed herewith].
8 Tax Opinion of Gould & Wilkie [filed herewith].
23.1 Consents of Gould & Wilkie (included in Exhibits 5
and 8).
23.2 Consent of Price Waterhouse, LLP [filed herewith].
24 Power of Attorney for each director and officer
signing the Registration Statement [previously
filed].
99.1 Three (3) Reminder Letters [filed herewith] and
Form of Proxy Card [previously filed].
______
(3) Incorporated herein by reference to Exhibit (3)3 of
Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1993 (File No. 1-3268).
(4) Incorporated herein by reference to Exhibit 10 (2) of
Registrant's Current Report on Form 8-K, dated July 24, 1998
(File No. 1-3268).
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99.2 Amended and Restated Settlement Agreement, dated
January 2, 1998, among the Registrant, the staff
of the Public Service Commission of the State of
New York and the New York State Department of
Economic Development.(5)
99.3 Abbreviated Order of the Public Service Commission
of the State of New York, issued and effective
February 19, 1998, adopting the terms of the
Registrant's Amended Settlement Agreement. (6)
99.4 Modification to the Amended and Restated
Settlement Agreement, dated February 26, 1998,
signed by the Registrant, the staff of the Public
Service Commission of the State of New York, the
New York State Consumer Protection Board and Pace
Energy Project. (7)
99.5 Order of the Public Service Commission of the
State of New York issued and effective June 30,
1998, explaining in greater detail and reaffirming
its abbreviated Order, issued and effective
February 19, 1998. (8)
(b) The financial statement schedules are incorporated
by reference from the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
__________
(5) Incorporated herein by reference to Exhibit 10 of
Registrant's Current Report on Form 8-K, dated January 7,
1998.
(6) Incorporated herein by reference to Exhibit 10(1) of
Registrant's Current Report on Form 8-K, dated February 10,
1998.
(7) Incorporated herein by reference to Exhibit 10(2) of
Registrant's Current Report on Form 8-K, dated February 10,
1998.
(8) Incorporated herein by reference to Exhibit 10(1) of
Registrant's Current Report on Form 8-K, dated July 24,
1998.
II-7
<PAGE>
Exhibit 5
[Gould & Wilkie Letterhead]
July 24, 1998
CH Energy Group, Inc.
284 South Avenue
Poughkeepsie, New York 12601-4879
Ladies and Gentlemen:
We have acted as counsel for CH Energy Group, Inc. (the
"Holding Company") in connection with the preparation of a
Registration Statement on Form S-4 (Registration No. 33-35279)
(the "Registration Statement"), filed with the Securities and
Exchange Commission for the purpose of registering under the
Securities Act of 1933, as amended (the "Securities Act"),
16,700,000 shares of Common Stock, $.10 par value, of the Holding
Company (the "Holding Company Common Stock") which are proposed
to be issued upon the consummation of, and subsequent to, the
share exchange contemplated by that certain Agreement and Plan of
Exchange between the Holding Company and Central Hudson Gas &
Electric Corporation, dated as of April 24, 1998 (the "Plan of
Exchange"), filed as Exhibit A to the Proxy Statement and
Prospectus, which forms a part of the Registration Statement.
All capitalized terms not otherwise defined hereunder have the
same meanings as defined in the Registration Statement.
As counsel to the Holding Company, we are generally familiar
with its corporate proceedings and have examined the Registration
Statement and the Plan of Exchange and such other documents as we
have deemed relevant and necessary as a basis for the opinion
hereinafter set forth. In addition, we have made such other and
further investigations as we have deemed relevant and necessary
as a basis for the opinion hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us
as certified or photostatic copies, and the authenticity of the
originals of such latter documents.
Based on the foregoing and upon such further examination of
corporate records and documents and matters of law as we have
considered necessary or desirable for the purposes of this
opinion, it is our opinion that the Holding Company Common Stock,
when issued in accordance with the terms of the Plan of Exchange,
CH Energy Group, Inc.
July 24, 1998
Page 2
at the Effective Time of the Share Exchange, will be validly
issued, fully paid and non-assessable.
We express no opinion other than as to the federal laws of
the United States of America and the law of the State of New
York.
We hereby consent to the filing of this opinion as Exhibit 5
to the Registration Statement and the reference to us under the
heading "Validity of the Holding Company Common Stock" in the
Proxy Statement and Prospectus included in the Registration
Statement.
Very truly yours,
Gould & Wilkie<PAGE>
Exhibit 8
[Gould & Wilkie Letterhead]
July 24, 1998
CH Energy Group, Inc.
284 South Avenue
Poughkeepsie, New York 12601-4879
Ladies and Gentlemen:
We have acted as counsel for CH Energy Group, Inc. (the
"Holding Company") in connection with the preparation of a
Registration Statement on Form S-4 (Registration No. 33-35279)
(the "Registration Statement"), filed with the Securities and
Exchange Commission for the purpose of registering under the
Securities Act of 1933, as amended (the "Securities Act"),
16,700,000 shares of Common Stock, $.10 par value, of the Holding
Company (the "Holding Company Common Stock") which are proposed
to be issued upon the consummation of, and subsequent to, the
share exchange contemplated by that certain Agreement and Plan of
Exchange between the Holding Company and Central Hudson Gas &
Electric Corporation, dated as of April 24, 1998 (the "Plan of
Exchange"), filed as Exhibit A to the Proxy Statement and
Prospectus, which forms a part of the Registration Statement.
All capitalized terms not otherwise defined hereunder have the
same meanings as defined in the Registration Statement.
As counsel to the Holding Company, we are generally familiar
with its corporate proceedings and have examined the Registration
Statement and the Plan of Exchange and such other documents as we
have deemed relevant and necessary as a basis for the opinion
hereinafter set forth. In addition, we have made such other and
further investigations as we have deemed relevant and necessary
as a basis for the opinion hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us
as certified or photostatic copies, and the authenticity of the
originals of such latter documents.
CH Energy Group, Inc.
July 24, 1998
Page 2
Based on the foregoing and upon such further examination of
corporate records and documents and matters of law as we have
considered necessary or desirable for the purposes of this
opinion, it is our opinion that the statements made in the
Registration Statement under the caption "THE SHARE EXCHANGE--Certain
Federal Income Tax Consequences," insofar as they purport
to constitute summaries of matters of United States federal tax
law and regulations or legal conclusions with respect thereto,
constitute our opinion as the matters described therein.
The opinion expressed herein is limited to applicable United
States federal law and we express no opinion as the laws of any
other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 8
to the Registration Statement and to the reference to us under
the heading "THE SHARE EXCHANGE--Certain Federal Income Tax
Consequences" in the Proxy Statement and Prospectus included int
he Registration Statement.
Very truly yours,
Gould & Wilkie
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on
Form S-4 of our report dated January 23, 1998(except as to Note 1
of the Consolidated Financial Statements which is as of February
4, 1998) appearing in the Annual Report of Central Hudson Gas &
Electric Corporation on Form 10-K for the year ended December 31,
1997. We also consent to the reference to us under the headings
"Experts" in such Prospectus.
Price WaterhouseCoopers LLP
New York, New York
July 24, 1998
<PAGE>
[CENTRAL HUDSON GAS & ELECTRIC LETTERHEAD]
EXHIBIT 99.1
August 14, 1998
Dear Shareholder:
On July 31, 1998, Proxy material for the Special Meeting of
Shareholders of the Central Hudson Gas & Electric Corporation,
relating to a proposal to form a holding company, was mailed to
you.
According to our records, your proxy for this meeting has
not yet been received.
We are confident that the holding company structure, which
has been unanimously approved by Central Hudson's Board of
Directors, will provide a number of benefits, which are fully
described in the material we sent to you. But, briefly, the
formation of a holding company, to be named CH Energy Group,
Inc., will enable us to take advantage of the opportunities
developing in our changing business environment. It will also
provide us the financial and regulatory flexibility we need to
engage in competitive businesses in the future.
I encourage you to vote "FOR" the proposal to form a holding
company.
Since approval of the proposal requires the affirmative vote
of holders of two-thirds of Central Hudson's outstanding shares
of common stock, EVERY VOTE COUNTS. If you have not already done
so, please sign and return the enclosed card TODAY!
Any questions you may have about our proposal can be
directed to Ellen Ahearn, Corporate Secretary, at (914) 486-5757
or Steven V. Lant, Treasurer, at (914) 486-5254.
Your interest and participation in the affairs of the
Company are sincerely appreciated.
Sincerely yours,
Enc.<PAGE>
[CENTRAL HUDSON GAS & ELECTRIC LETTERHEAD]
EXHIBIT 99.1
August 14, 1998
Dear Fellow Employee and Shareholder:
On July 31, 1998, Proxy material for the Special Meeting of
Shareholders of the Central Hudson Gas & Electric Corporation,
relating to a proposal to form a holding company, was mailed to
you.
According to our records, your proxy for this meeting has
not yet been received.
We are confident that the holding company structure, which
has been unanimously approved by Central Hudson's Board of
Directors, will provide a number of benefits, which are fully
described in the material we sent to you. But, briefly, the
formation of a holding company, to be named CH Energy Group,
Inc., will enable us to take advantage of the opportunities
developing in our changing business environment. It will also
provide us the financial and regulatory flexibility we need to
engage in competitive businesses in the future.
I encourage you to vote "FOR" the proposal to form a holding
company.
Since approval of the proposal requires the affirmative vote
of holders of two-thirds of Central Hudson's outstanding shares
of common stock, EVERY VOTE COUNTS. If you have not already done
so, please sign and return the enclosed proxy card TODAY!
Any questions you may have about our proposal can be
directed to Ellen Ahearn, Corporate Secretary, at 486-5757, or
our Shareholder Relations Division, at 486-5204.
Your interest and participation in the affairs of the
Company are sincerely appreciated.
Sincerely yours,
Enc.<PAGE>
[CENTRAL HUDSON GAS & ELECTRIC LETTERHEAD]
EXHIBIT 99.1
July 31, 1998
Dear :
Since __________ is a substantial investor in the Common
Stock of the Central Hudson Gas & Electric Corporation, I am
enclosing with this letter a copy of the Proxy Statement for our
upcoming Special Meeting of Shareholders, to be held on September
25, 1998. The Proxy Statement contains a proposal related to the
formation of a holding company structure.
The shares of Central Hudson Common Stock you own are held
through a custodian bank, and therefore, your receipt of this
material, through the normal distribution channel, could be
somewhat delayed. So, I thought it important to send a copy of
the enclosed material directly to you, and at the same time it is
being sent to holders of record.
With respect to the proposal, we are confident that the
holding company structure, which has been unanimously approved by
Central Hudson's Board of Directors, will provide a number of
benefits which are fully described in the Proxy Statement. But,
briefly, the formation of a holding company, to be named CH
Energy Group, Inc., will enable us to take advantage of the
opportunities developing in our changing business environment.
It will also provide us the financial and regulatory flexibility
we need to engage in competitive businesses in the future.
We welcome your comments or questions concerning the
proposal and are available, at your convenience, to discuss the
proposal with you personally. Please feel free to call
Ellen Ahearn, Corporate Secretary, at (914) 486-5757, or Steven
V. Lant, Treasurer, at(914) 486-5254.
On behalf of our Board of Directors and management of
Central Hudson, thank you for your continued interest and
support.
Sincerely,
Enc.
</PAGE>
