File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East 6th Street
Tulsa, Oklahoma 74119-1212
(Names of companies filing this statement and
address of principal executive office)
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CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
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William R. McKamey
General Manager
Public Service Company of Oklahoma
212 East 6th Street
Tulsa, Oklahoma 74119-1212
Wendy G. Hargus
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Name and addresses of agents for service)
<PAGE>
Public Service Company of Oklahoma ("PSO"), an Oklahoma corporation and
a wholly-owned electric utility subsidiary of Central and South West Corporation
("CSW"), and CSW, a Delaware corporation and a registered holding company
(together with PSO, the "Applicants") under the Public Utility Holding Company
Act of 1935, as amended (the "Act"), hereby file this Form U-1
Application-Declaration (the "Application") for authority to organize CSW
Ventures, Inc. ("CSW Ventures") as a new subsidiary of CSW and transfer to CSW
Ventures certain nonutility investments currently held by PSO (the
"Investments")and for other authority as set forth in Item 1 below.
Item 1. Description of Proposed Transactions.
The Applicants hereby request authority (1) for CSW to organize CSW
Ventures through an initial purchase of approximately 62,486 shares of common
stock of CSW Ventures for approximately $1,093,505 in cash; (2) for PSO to
transfer all of its interest in the Investments to CSW in the form of a
dividend; (3) for CSW to contribute to CSW Ventures the Investments; and (4) for
CSW Ventures to own and manage certain of the Investments under previous
Commission authority granted to PSO.
In view of the rapidly changing nature of the energy markets in the
United States, the organization of a new subsidiary dedicated to the management
of nonutility investments enables CSW, PSO and each of CSW's other electric
utility subsidiaries to focus on continuing to provide quality electric service
to their respective consumers and permits CSW and its affiliates to take full
advantage of new opportunities in energy-related industries.
A. New CSW Subsidiary.
The Applicants propose that CSW organize CSW Ventures under the laws of
the State of Delaware, with initial authorized capital stock of 100,000 shares
of common stock, par value $0.01 per share, for the purpose of holding certain
nonutility investments that are currently held by PSO (identified in Item 1.B.
below). CSW proposes to capitalize CSW Ventures through an initial purchase of
approximately 62,486 shares of CSW Ventures for approximately $1,093,505 in cash
and to contribute all of its interest in the Investments to CSW Ventures.
Specifically, the Applicants propose that PSO transfer, in the form of
a dividend, its entire interest in each of the Investments to CSW at the current
book value. Book value will be calculated as PSO's initial investment adjusted
to reflect PSO's portion of the retained earnings for each Investment. CSW will
then make a capital contribution to CSW Ventures of all such Investments. CSW
Ventures will be financed on an on-going basis through additional contributions
and loans from CSW. These loans and contributions will be provided through the
internally generated funds of the CSW system. CSW requests permission to
guarantee the obligations of CSW Ventures from time to time as needed. CSW
Ventures's business purpose will be to manage the Investments all of which are
closely related to CSW's core electric utility business.
The Applicants further request that the Commission grant CSW Ventures a
continuation of Commission authority that was either previously given, or given
during the pendancy of this Application, to PSO with respect to each of the
Investments as set forth below. CSW Ventures will have at least two full-time
employees and will maintain a debt to equity ratio of 95-to-5. B. PSO
Investments.
Set forth is a description of each of the Investments of PSO that the
Applicants propose to transfer to CSW Ventures.
a) NUMANCO COMPANIES.
By order dated December 30, 1996, the Securities and Exchange
Commission (the "Commission") authorized PSO to acquire up to 4.9% of the voting
interest of Nuvest, L.L.C. ("Nuvest"), which provides services to public utility
companies through its subsidiaries, Numanco, Inc. and Numanco L.L.C.
(collectively, together with Nuvest, "Numanco Companies"), and to guarantee the
obligations of the Numanco Companies up to an aggregate of $12 million. Public
Service Company of Oklahoma, Holding Co. Act Release No. 26638 (December 30,
1996). The aggregate amount of the guarantees authorized was based on the
projected financing and cash flow requirements of the Numanco Companies. Through
its filing of post-effective Amendment No. 3, which is currently pending at the
Commission, PSO is seeking authorization to increase the amount of its aggregate
equity investment from $700,000 to $5 million and to increase the aggregate
amount of guarantees that may be provided by PSO from $12,000,000 to
$18,000,000, based upon an increase in the operating capital requirements of the
Numanco Companies as described therein.
PSO holds 4.9% of the voting interests of Nuvest, representing 70% of
the total outstanding interests.
b) SCIENTECH, INC.
By order dated July 29, 1997, the Commission authorized PSO to acquire
up to 4.9% of the voting shares of Scientech, Inc. ("Scientech"), a privately
owned corporation that provides utility-related services (and some ancillary and
minor products such as replacement parts and components for commercial nuclear
facilities) to the nuclear utility industry and certain United States government
agencies. Public Service Company of Oklahoma, Holding Co. Act Release No. 26746
(July 29, 1997). PSO owns 3.5% of the voting shares of Scientech, representing
approximately 35.0% of the total outstanding shares of Scientech.
c) RIKA COMPANIES.
By order dated December 29, 1995, the Commission authorized PSO to make
equity and debt investments totaling $3,500,000 in RIKA Management Company,
L.L.C. ("Management"), which manages Universal Power Products Company, L.L.C.
("UPP"), Automated Substation Development Company, L.L.C. ("ASD") and RC
Training, L.L.C. ("RCT" and collectively, together with RIKA, the "RIKA
Companies"). The RIKA Companies are engaged in the development and
commercialization of computer automation technology for the electric power
industry. Public Service Company of Oklahoma, Holding Co. Act Release No. 26445
(December 29, 1995).
To date, PSO has made equity and debt investments totaling $3,500,000
and holds 4.0% of the voting interest of the RIKA Companies. PSO's interest in
each of the RIKA Companies is as follows: 50% of Management; 71% of ASD (which
will automatically reduce to 48% upon repayment of a certain outstanding note of
PSO); and 48% of each of UPP and RCT. Management owns 5% of UPP, ASD and RCT.
d) POWERWARE, INC.
Pursuant to Rule 58, PSO owns 2.8% of the voting shares of Powerware,
representing 28.56% of the total outstanding shares of Powerware. Powerware
provides energy and demand-side management technologies to water utilities.
e) AEMT, INC.
Pursuant to Rule 58, PSO owns 25.38% of the nonvoting shares of AEMT, and
of the total outstanding shares of AEMT. AEMT manufactures and distributes
electric power conditioning and surge protection equipment.
f) UTILITY DATA RESOURCES, INC.
Pursuant to Rule 58, PSO owns 2.84% of the voting shares of Utility
Data Resources, Inc. ("UDR"), which represents 52.34% of the total outstanding
shares of UDR. UDR is a consulting and service company specializing in utility
power billing and load research, data retrieval services and other related
computer services to utilities.
Item 2. Fees, Commissions and Expenses
The estimate of the approximate amount of fees and expenses payable in
connection with the transactions described herein is as follows:
Legal Fees and Expenses
Milbank, Tweed, Hadley & McCloy
New York, New York................... $5,000
Miscellaneous and incidental
expenses including travel,
telephone and postage................ $1,000
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$6,000
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Item 3. Applicable Statutory Provisions
Sections 6(a), 7, 9(a), 10, 11 and 12(b) of the Act and Rules 23, 24,
45 and 54 under the Act are or may be applicable to the proposed transactions
described herein. To the extent any other sections of or rules under the Act may
be applicable to the proposed transactions, the Applicants hereby request
appropriate orders thereunder.
Section 9(a) of the Act makes unlawful the acquisition by a subsidiary
of a registered holding company of "any . . . interest in any business" without
the prior approval of the Commission under Section 10 of the Act. Under Section
10(c)(1), the Commission may not approve the acquisition of any interest in any
business if the proposed acquisition is "detrimental to the carrying out of the
provisions of Section 11" of the Act. Under Section 11(b)(1), the Commission
must limit the operations of a public utility holding company and its
subsidiaries to a single integrated public utility system, and to such other
businesses as are reasonably incidental, or economically necessary or
appropriate, to the operations of such integrated public utility system. The
Commission may permit as reasonably incidental, or economically necessary or
appropriate, to the operations of an integrated public utility system the
retention of an interest in any business (other than the business of a public
utility company as such) which the Commission shall find necessary or
appropriate in the public interest or for the protection of investors or
consumers and not detrimental to the proper functioning of such system.
As set forth in Item 1 above, the Commission has previously determined
that PSO's investments in each of the Numanco Companies, Scientech and the RIKA
Companies meet the criteria specified in the Act. The Commission has also
determined that a registered holding company and its affiliates do not need
prior Commission approval to invest in those investments satisfying the
requirements of Rule 58, as those investments per se meet the functional
relationship test of Section 11 of the Act. Each of PSO's Investments in
Powerware, AEMT and UDR therefore satisfy the requirements of Section 11 as
investments made pursuant to Rule 58 of the Act.
The Applicants will file certificates pursuant to Rule 24 of the Act on
a semi-annual basis setting forth (1) a narrative report of activities and
investments undertaken by CSW Ventures, (2) a description of the types of
services performed by each of the non-Rule 58 Investments and any additional
investments during the period, (3) a statement of any dividends or interest paid
or other distributions made to CSW Ventures by each of the non-Rule 58
Investments and any additional investments during the period and cumulatively
and (4) a description of any transactions between any of the Investments and CSW
Ventures or any associate company within CSW.
In addition, no proceeds from the proposed transactions will be used by CSW
or any subsidiary thereof for the direct or indirect acquisition of an interest
in an exempt wholesale generator, as defined in Section 32 of the Act ("EWG"),
or a foreign utility company, as defined in Section 33 of the Act ("FUCO"). Rule
54 promulgated under the Act states that in determining whether to approve the
issue or sale of a security by a registered holding company for purposes other
than the acquisition of an exempt wholesale generator ("EWG") or a foreign
utility company ("FUCO"), or other transactions by such registered holding
company or its subsidiaries other than with respect to EWGs or FUCOs, the
Commission shall not consider the effect of the capitalization or earnings of
any subsidiary which is an EWG or a FUCO upon the registered holding company
system if Rule 53(a), (b) and (c) are satisfied. The Applicants currently meet
all of the criteria of Rule 53(a), except for clause (1). At June 30, 1998,
CSW's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was
approximately $917 million, or approximately 51.51% of CSW's average
"consolidated retained earnings," as defined in Rule 53(a)(1), for the four
quarters ended June 30, 1998 (approximately $1.781 billion), which exceeds the
50% "safe harbor" limitation contained in that rule.
By order dated January 24, 1997, (HCAR No. 26653) ("January
1997 Order"), the Commission authorized CSW to increase to 100% of average
"consolidated retained earnings," as defined in Rule 53(a)(1), the aggregate
amount which it may invest in EWGs and FUCOs. Although CSW's aggregate
investment exceeds the 50% "safe harbor" limitation contained in Rule 53, CSW's
aggregate investment is below the 100% limitation authorized under the January
1997 Order.
As of September 30, 1996, the most recent period for which
financial statement information was evaluated in the January 1997 Order, CSW's
consolidated capitalization consisted of 43.5% equity and 56.5% debt. CSW's
consolidated pro forma capitalization as of June 30, 1998, taking into account
the effect of the proposed transactions, is 41.8% equity and 58.2 % debt.
CSW asserts that since the date of the January 1997 Order,
there has been no material change in its consolidated capitalization ratio. CSW
further states that this ratio remains within acceptable ranges and limits, as
evidenced by CSW's corporate consolidated "A2" short term credit rating, which
has remained the same since the January 1997 Order.
In 1997, the government of Great Britain imposed a windfall
profits tax of $176 million on Seeboard, plc, a FUCO in the United Kingdom
wholly owned by CSW. Notwithstanding the imposition of this tax, earnings
attributable to CSW's interests in EWGs and FUCOs contributed positively to
consolidated earnings in the calendar year ending after the January 1997 Order.
Accordingly, since the date of the January 1997 Order, the earnings attributable
to CSW's investments in EWGs and FUCOs have not had any adverse impact on CSW's
financial integrity.
CSW will continue to maintain in conformity with United States
generally accepted accounting principles and make available the books and
records required by Rule 53(a)(2). CSW does, and will continue to, comply with
the requirement that no more than 2% of the employees of CSW's operating
subsidiaries shall, at any one time, directly or indirectly, render services to
an EWG or FUCO in which CSW directly or indirectly owns an interest, satisfying
Rule 53(a)(3). And lastly, CSW will continue to submit a copy of Item 9 and
Exhibits G and H of CSW's Form U5S to each of the public service commissions
having jurisdiction over the retail rates of CSW's operating utility
subsidiaries, satisfying Rule 53(a)(4). None of the conditions described in Rule
53(b) exist with respect to CSW or any of its subsidiaries, thereby satisfying
said Rule and making Rule 53(c) inapplicable.
Item 4. Regulatory Approval
No state regulatory authority and no federal regulatory authority,
other than the Commission under the Act, have jurisdiction over the proposed
transactions.
Item 5. Procedure
It is requested that the Commission issue and publish no later than
November 20, 1998, the requisite notice under Rule 23 with respect to the filing
of this Application, such notice to specify a date not later than December 14,
1998, as the date after which an order granting and permitting this Application
to become effective may be entered by the Commission and the Commission enter
not later than December 15, 1998, an appropriate order granting and permitting
this Application to become effective.
No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The Division
of Investment Management of the Commission may assist in the preparation of the
Commission's decision in this matter. There should be no thirty-day waiting
period between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectfully requested that any such order
be made effective immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements
Exhibit 1 - Preliminary Opinion of Milbank, Tweed, Hadley & McCloy, counsel
to the Applicants.
Exhibit 2 - Proposed Notice of Proceeding.
Exhibit 3 - Financial Statements of each of Public Service Company of
Oklahoma and Central and South West Corporation, each as of June 30, 1998.
Exhibit 4 - Form of Certificate of Incorporation of CSW Ventures, Inc.
Exhibit 5 - Form of By-laws of CSW Ventures, Inc.
Item 7. Environmental Effects
The proposed transaction does not involve major federal action having a
significant effect on the human environment. To the best of the Applicants'
knowledge no federal agency has prepared or is preparing an environmental impact
statement with respect to the proposed transaction.
<PAGE>
S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, each of the undersigned companies has duly caused this
document to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: November 13, 1998
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:/s/ William R. McKamey
William R. McKamey
General Manager
CENTRAL AND SOUTH WEST
CORPORATION
By:/s/ Wendy G. Hargus
Wendy G. Hargus
Treasurer
<PAGE>
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
1 Preliminary Opinion of Milbank, Electronic
Tweed, Hadley & McCloy, counsel
to the Applicants.
2 Proposed Notice of Proceeding. Electronic
3 Financial Statements of each of Public Electronic
Service Company of Oklahoma and Central
and South West Corporation, each as of
June 30, 1998.
4 Form of Certificate of Incorporation Electronic
of CSW Ventures, Inc.
5 Form of By-laws of CSW Ventures, Inc. Electronic
EXHIBIT 2
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
_______________, 1998 Notice is hereby given that the following
filing(s) has/have been made with the Commission
pursuant to provisions of the Act and rules promulgated thereunder. All
interested persons are referred to the application(s) and/or declaration(s) for
complete statements of the proposed transaction(s) summarized below. The
application(s) and/or declaration(s) and any amendment(s) thereto is/are
available for public inspection through the Commission's Office of Public
Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
December 14, 1998 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the address(es) specified below. Proof of service (by affidavit
or, in case of an attorney at law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the issues of fact
or law that are disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or order issued in
the manner. After said date, the application(s) and/or declaration(s), as filed
or as amended, may be granted and/or permitted to become effective.
Central and South West Corporation
Public Service Company of Oklahoma (70- )
Public Service Company of Oklahoma ("PSO"), an Oklahoma
corporation and a wholly-owned electric utility subsidiary of Central and South
West Corporation ("CSW"), located at 212 East 6th Street, Tulsa, Oklahoma 74119,
and CSW, a Delaware corporation and a registered holding company (together with
PSO, the "Applicants") under the Public Utility Holding Company Act of 1935, as
amended (the "Act"), located at 1616 Woodall Rodgers Freeway, Dallas, Texas
75202, have filed an application pursuant to Sections 6(a), 7, 9(a), 10, 11 and
12 of the Act and Rules 23, 24, 45 and 54 thereunder.
The Applicants request authority (1) for CSW to organize CSW Ventures
through an initial purchase of approximately 62,486 shares of common stock of
CSW Ventures for approximately $1,093,505 in cash; (2) for PSO to transfer all
of its interest in certain nonutility investments, as described in the
application (the "Investments"), to CSW in the form of a dividend; (3) for CSW
to contribute to CSW Ventures the Investments; and (4) for CSW Ventures to own
and manage certain of the Investments under previous Commission authority
granted to PSO.
In view of the rapidly changing nature of the energy markets in the
United States, the organization of a new subsidiary dedicated to the management
of nonutility investments enables CSW, PSO and each of CSW's other electric
utility subsidiaries to focus on continuing to provide quality electric service
to their respective consumers and permits CSW and its affiliates to take full
advantage of new opportunities in energy-related industries.
CSW proposes to capitalize CSW Ventures through an initial purchase of
approximately 62,486 shares of CSW Ventures for approximately $1,093,505 in cash
and to contribute all of its interest in the Investments to CSW Ventures.
Specifically, the Applicants propose that PSO transfer, in the form of
a dividend, its entire interest in each of the Investments to CSW at the current
book value. Book value will be calculated as PSO's initial investment adjusted
to reflect PSO's portion of the retained earnings for each Investment. CSW will
then make a capital contribution to CSW Ventures of all such Investments. CSW
Ventures will be financed on an on-going basis through additional contributions
and loans from CSW. These loans and contributions will be provided through the
internally generated funds of the CSW system. CSW requests permission to
guarantee the obligations of CSW Ventures from time to time as needed. CSW
Ventures's business purpose will be to manage the Investments all of which are
closely related to CSW's core electric utility business. CSW Ventures will have
at least two full-time employees and will maintain a debt to equity ratio of
95-to-5.
The Applicants further request that the Commission grant CSW
Ventures a continuation of Commission authority that was either previously
given, or given during the pendancy of this Application, to PSO with respect to
each of the Investments as described in the application. Specifically, the
Applicants request a continuation of Commission authority given with respect to
its investment in (1) Nuvest, L.L.C., which provides services to public utility
companies through its subsidiaries, Public Service Company of Oklahoma, Holding
Co. Act Release No. 26638 (December 30, 1996) (Through its filing of
post-effective Amendment No. 3, which is currently pending at the Commission,
PSO is seeking authorization to increase the amount of its aggregate equity
investment from $700,000 to $5 million and to increase the aggregate amount of
guarantees that may be provided by PSO from $12,000,000 to $18,000,000); (2)
Scientech, Inc., which provides utility-related services (and some ancillary and
minor products such as replacement parts and components for commercial nuclear
facilities) to the nuclear utility industry and certain United States government
agencies, Public Service Company of Oklahoma, Holding Co. Act Release No. 26746
(July 29, 1997); and (3) RIKA Management Company, L.L.C., which is engaged in
the development and commercialization of computer automation technology for the
electric power industry, Public Service Company of Oklahoma, Holding Co. Act
Release No. 26445 (December 29, 1995).
The Applicants also intend to transfer to CSW Ventures the
following investments of PSO made pursuant to Rule 58: (1) Powerware, Inc.,
which provides energy and demand-side management technologies to water
utilities; (2) AEMT, Inc., which manufactures and distributes electric power
conditioning and surge protection equipment; and (3) Utility Data Resources,
Inc., a consulting and service company specializing in utility power billing and
load research, data retrieval services and other related computer services to
utilities.
The Applicants will file certificates pursuant to Rule 24 of the Act on
a semi-annual basis setting forth (1) a narrative report of activities and
investments undertaken by CSW Ventures, (2) a description of the types of
services performed by each of the non-Rule 58 Investments and any additional
investments during the period, (3) a statement of any dividends or interest paid
or other distributions made to CSW Ventures by each of the non-Rule 58
Investments and any additional investments during the period and cumulatively
and (4) a description of any transactions between any of the Investments and CSW
Ventures or any associate company within CSW.
In addition, no proceeds from the proposed transactions will be used by CSW
or any subsidiary thereof for the direct or indirect acquisition of an interest
in an exempt wholesale generator, as defined in Section 32 of the Act ("EWG"),
or a foreign utility company, as defined in Section 33 of the Act ("FUCO"). Rule
54 promulgated under the Act states that in determining whether to approve the
issue or sale of a security by a registered holding company for purposes other
than the acquisition of an exempt wholesale generator ("EWG") or a foreign
utility company ("FUCO"), or other transactions by such registered holding
company or its subsidiaries other than with respect to EWGs or FUCOs, the
Commission shall not consider the effect of the capitalization or earnings of
any subsidiary which is an EWG or a FUCO upon the registered holding company
system if Rule 53(a), (b) and (c) are satisfied. The Applicants currently meet
all of the criteria of Rule 53(a), except for clause (1). At June 30, 1998,
CSW's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was
approximately $917 million, or approximately 51.51% of CSW's average
"consolidated retained earnings," as defined in Rule 53(a)(1), for the four
quarters ended June 30, 1998 (approximately $1.781 billion), which exceeds the
50% "safe harbor" limitation contained in that rule.
By order dated January 24, 1997, (HCAR No. 26653) ("January
1997 Order"), the Commission authorized CSW to increase to 100% of average
"consolidated retained earnings," as defined in Rule 53(a)(1), the aggregate
amount which it may invest in EWGs and FUCOs. Although CSW's aggregate
investment exceeds the 50% "safe harbor" limitation contained in Rule 53, CSW's
aggregate investment is below the 100% limitation authorized under the January
1997 Order.
As of September 30, 1996, the most recent period for which
financial statement information was evaluated in the January 1997 Order, CSW's
consolidated capitalization consisted of 43.5% equity and 56.5% debt. CSW's
consolidated pro forma capitalization as of June 30, 1998, taking into account
the effect of the proposed transactions, is 41.8% equity and 58.2 % debt.
CSW asserts that since the date of the January 1997 Order,
there has been no material change in its consolidated capitalization ratio. CSW
further states that this ratio remains within acceptable ranges and limits, as
evidenced by CSW's corporate consolidated "A2" short term credit rating, which
has remained the same since the January 1997 Order.
In 1997, the government of Great Britain imposed a windfall
profits tax of $176 million on Seeboard, plc, a FUCO in the United Kingdom
wholly owned by CSW. Notwithstanding the imposition of this tax, earnings
attributable to CSW's interests in EWGs and FUCOs contributed positively to
consolidated earnings in the calendar year ending after the January 1997 Order.
Accordingly, since the date of the January 1997 Order, the earnings attributable
to CSW's investments in EWGs and FUCOs have not had any adverse impact on CSW's
financial integrity.
CSW will continue to maintain in conformity with United States
generally accepted accounting principles and make available the books and
records required by Rule 53(a)(2). CSW does, and will continue to, comply with
the requirement that no more than 2% of the employees of CSW's operating
subsidiaries shall, at any one time, directly or indirectly, render services to
an EWG or FUCO in which CSW directly or indirectly owns an interest, satisfying
Rule 53(a)(3). And lastly, CSW will continue to submit a copy of Item 9 and
Exhibits G and H of CSW's Form U5S to each of the public service commissions
having jurisdiction over the retail rates of CSW's operating utility
subsidiaries, satisfying Rule 53(a)(4). None of the conditions described in Rule
53(b) exist with respect to CSW or any of its subsidiaries, thereby satisfying
said Rule and making Rule 53(c) inapplicable.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
EXHIBIT 1
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
November 12, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Central and South West Corporation and Public Service Company of
Oklahoma Form U-1 Application-Declaration in File No. 70-_____
Dear Sirs:
We refer to the Form U-1 Application in File No. 70-____ (the
"Application") under the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act"), filed by Central and South West Corporation ("CSW"), a
Delaware Corporation and a registered holding company under the 1935 Act and
Public Service Company of Oklahoma ("PSO" and, collectively with CSW, the
"Applicants"), an Oklahoma corporation and a wholly owned electric utility
subsidiary of CSW, seeking authority for (a) CSW to organize CSW Ventures
through an initial purchase of approximately 62,486 shares of common stock of
CSW Ventures for approximately $1,093,505 in cash; (b) PSO to transfer all of
its interest in the Investments to CSW in the form of a dividend; (c) CSW to
contribute to CSW Ventures the Investments; and (d) CSW Ventures to own and
manage certain of the Investments under previous Commission authority granted to
PSO (collectively, the "Transactions"), as more fully described in the
Application. We have acted as counsel for the Applicants in connection with the
filing of the Application.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Applicants, certificates of
public officials, certificates of officers and representatives of the Applicants
and other documents as we have deemed it necessary to require as a basis for the
opinions hereinafter expressed. In such examination we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals and the conformity with the originals of all documents submitted
to us as copies. As to various questions of fact material to such opinions we
have, when relevant facts were not independently established, relied upon
certificates by officers of Applicants and other appropriate persons and
statements contained in the Application.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that, in the event
that the proposed Transactions are consummated in accordance with the
Application, as may be amended, and subject to the assumptions and conditions
set forth below:
1. All state laws applicable to the proposed Transactions as described in
the Application will have been complied with.
2. The consummation of the proposed Transactions as described in the
Application will not violate the legal rights of the lawful holders of any
securities issued by the Applicants or any associate company of the Applicants.
3. Any debt securities issued or guaranteed by CSW or PSO in accordance
with an order permitting the Application to become effective will be valid and
binding obligations of CSW or PSO, as the case may be, in accordance with their
terms, except to the extent such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by applicable
principles of equity (regardless of whether such enforceability is sought in a
proceeding at law or in equity).
4. Each of CSW and PSO is validly incorporated and duly existing under the
law of its respective state of incorporation.
The opinions expressed above in respect of the proposed Transactions as
described in the Application are subject to the following assumptions or
conditions:
a. The Transactions shall have been duly authorized and
approved to the extent required by state law by the
Board of Directors of the Applicants.
b. The Securities and Exchange Commission shall have
duly entered an appropriate order or orders granting
and permitting the Application to become effective
with respect to the Transactions described therein.
c. The Transactions shall have been accomplished in
accordance with required approvals, authorizations,
consents, certificates and orders of any state
commission or regulatory authority with respect
thereto and all such required approvals,
authorizations, consents, certificates and orders
shall have been obtained and remain in effect at the
closing thereof.
d. No act or event other than as described herein shall
have occurred subsequent to the date hereof which
would change the opinions expressed above.
We hereby consent to the use of this opinion as an exhibit to
the Application.
Very truly yours,
MILBANK, TWEED, HADLEY & McCLOY
INDEX EXHIBIT 3
TO
FINANCIAL STATEMENTS
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Consolidated Balance Sheets - Per Books and Pro Forma
as of June 30, 1998
Consolidated Statement of Income for the Twelve Months Ended
June 30, 1998
Consolidated Statement of Retained Earnings for the Twelve Months Ended
June 30, 1998
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
Balance Sheets - Per Books and Pro Forma as of June 30, 1998
Statement of Income for the Twelve Months Ended June 30, 1998
PUBLIC SERVICE COMPANY OF OKLAHOMA
Balance Sheets - Per Books and Pro Forma as of June 30, 1998
Statement of Income for the Twelve Months Ended June 30, 1998
Statement of Retained Earnings for the Twelve Months Ended
June 30, 1998
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
STATEMENT OF CHANGES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1998
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-----------------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $5,845 $5,845
Transmission 1,580 1,580
Distribution 4,630 4,630
General 1,359 1,359
Construction work in progress 185 185
Nuclear fuel 202 202
Other Diversified 299 299
-----------------------------------------
14,100 14,100
Less - Accumulated depreciation 5,476 5,476
-----------------------------------------
8,624 8,624
-----------------------------------------
CURRENT ASSETS
Cash and temporary cash investments 218 218
Accounts receivable 1,051 1,051
Materials and supplies, at
average cost 157 157
Electric fuel inventory 83 83
Under-recovered fuel costs 34 34
Notes receivable 71 71
Prepayments and other 76 76
-----------------------------------------
1,690 1,690
-----------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred plant costs 500 500
Mirror CWIP asset - net 279 279
Other non-utility investments 430 430
Securities available for sale 74 74
Income tax related regulatory
assets, net 321 321
Goodwill 1,428 1,428
Other 437 437
-----------------------------------------
3,469 3,469
-----------------------------------------
$13,783 $0 $13,783
=========================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1998
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-----------------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value,
authorized 350,000,000 shares;
issued and outstanding 212,450,000
shares $744 $744
Paid-in capital 1,045 1,045
Retained earnings 1,732 1,732
Accumulated other comprhensive
income 16 16
----------------------------------------
Total Common Stock Equity 3,537 3,537
----------------------------------------
Preferred stock
Not subject to mandatory redemption 176 176
Subject to mandatory redemption 0 0
Certain Subsidiary-obligated,
mandatorily redeemable preferred
securities of subsidiary trusts
holding solely Junior Subordinated
Debentures of such Subsidiaries 335 335
Long-term debt 3,783 3,783
----------------------------------------
Total Capitalization 7,831 7,831
----------------------------------------
CURRENT LIABILITIES
Long-term debt/preferred stock
due within twelve months 94 94
Short-term debt 890 890
Short-term debt - CSW Credit 814 814
Loan Notes 58 58
Accounts payable 634 634
Accrued taxes 232 232
Accrued interest 103 103
Other 160 160
----------------------------------------
2,985 2,985
----------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 2,459 2,459
Investment tax credits 272 272
Other 236 236
----------------------------------------
2,967 2,967
----------------------------------------
$13,783 $0 $13,783
========================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED JUNE 30, 1998
UNAUDITED
(Millions)
OPERATING REVENUES $5,407
---------------
OPERATING EXPENSES AND TAXES
U.S. Electric fuel 1,206
U.S. Electric purchased power 93
United Kingdom Cost of Sales 1,294
Other operating 961
Maintenance 153
Depreciation and amortization 507
Taxes, other than income 202
Income taxes 175
---------------
4,591
---------------
OPERATING INCOME 816
---------------
OTHER INCOME AND DEDUCTIONS
Other 41
Non-operating income taxes 3
---------------
44
---------------
INCOME BEFORE INTEREST CHARGES 860
---------------
INTEREST AND OTHER CHARGES
Interest on long-term debt 326
Distributions on trust preferred securities 26
Interest on short-term debt and other 113
Preferred stock dividends 9
---------------
474
---------------
INCOME BEFORE EXTRAORDINARY ITEM 386
---------------
EXTRAORDINARY ITEM - UK Windfall Profits Tax (176)
---------------
NET INCOME FOR COMMON STOCK $210
===============
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1998
UNAUDITED
(Millions)
RETAINED EARNINGS AT JUNE 30, 1997 $1,887
Add: Net income for common stock 210
---------------
2,097
---------------
Deduct: Common stock dividends 369
Retained earnings adjustment (4)
---------------
RETAINED EARNINGS AT JUNE 30, 1998 $1,732
===============
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1998
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
General $1 $1
Less - Accumulated depreciation (1) (1)
--------------------------------------
NET PLANT 0 0
INVESTMENTS IN COMMON STOCK
OF SUBSIDIARY COMPANIES (at equity) 3,937 3,937
--------------------------------------
CURRENT ASSETS
Cash and temporary cash investments 309 309
Accounts and interest receivable
- Affiliated 231 231
Prepayments and other 5 5
--------------------------------------
545 545
--------------------------------------
DEFERRED CHARGES AND OTHER ASSETS 36 36
--------------------------------------
$4,518 $0 $4,518
======================================
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value;
authorized 350,000,000 shares;
issued and outstanding 212,300,000
shares $744 $744
Paid-in capital 1,045 1,045
Retained earnings 1,732 1,732
Unrealized holding gains and losses (5) (5)
--------------------------------------
Total Common Stock Equity 3,516 3,516
--------------------------------------
Long-term debt 0 0
--------------------------------------
Total Capitalization 3,516 3,516
--------------------------------------
CURRENT LIABILITIES
Short-term debt 890 890
Accounts payable and other 54 54
--------------------------------------
944 944
--------------------------------------
DEFERRED CREDITS 58 58
--------------------------------------
$4,518 $0 $4,518
======================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED JUNE 30, 1998
UNAUDITED
(Millions)
INCOME
Equity in earnings of subsidiaries
Central Power and Light Company $147
Public Service Company of Oklahoma 48
Southwestern Electric Power Company 93
West Texas Utilities Company 26
SEEBOARD U.S.A. (47)
CSW Credit, Inc. 12
CSW Energy, Inc. 7
CSW Leasing, Inc. 1
CSW International, Inc. (6)
CSW Communications, Inc. (15)
Enershop Inc. (4)
CSW Energy Services, Inc. (2)
Other Income 25
---------------
285
---------------
EXPENSES AND TAXES
General and administrative expenses 33
Depreciation and amortization expense --
Interest expense 53
Taxes, other than income 4
Federal income taxes (15)
---------------
75
---------------
NET INCOME $210
===============
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1998
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
---------------------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $913 $913
Transmission 377 377
Distribution 838 838
General 204 204
Construction work in progress 36 36
---------------------------------------------
2,368 2,368
Less - Accumulated depreciation 1,066 1,066
---------------------------------------------
1,302 1,302
---------------------------------------------
CURRENT ASSETS
Cash 6 6
Accounts receivable 41 41
Materials and supplies, at
average cost 33 33
Fuel inventory 15 15
Accumulated deferred income taxes 2 2
Prepayments and other 7 7
---------------------------------------------
104 104
---------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS 83 83
---------------------------------------------
$1,489 $0 $1,489
=============================================
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1998
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
---------------------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $15 par value;
authorized 11,000,000 shares;
issued 10,482,000 shares;
outstanding 9,013,000 shares $157 $157
Paid-in capital 180 180
Retained earnings 142 142
---------------------------------------------
Total common stock equity 479 479
Preferred stock 5 5
PSO-obligated, mandatorily redeemable
preferred securities of subsidiary
trusts holding solely Junior
Subordinated Debentures of PSO 75 75
Long-term debt 398 398
---------------------------------------------
Total capitalization 957 957
---------------------------------------------
CURRENT LIABILITIES
Long-term debt due within twelve
months 25 25
Advances from affiliates 4 4
Payables to affilliates 7 7
Accounts payable 55 55
Payables to customers 17 17
Accrued taxes (1) (1)
Accrued interest 9 9
Other 8 8
---------------------------------------------
124 124
---------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 278 278
Investment tax credits 40 40
Income tax related regulatory
liabilities, net 67 67
Other 23 23
---------------------------------------------
408 408
---------------------------------------------
$1,489 $0 $1,489
=============================================
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED JUNE 30, 1998
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $734
---------------
OPERATING EXPENSES AND TAXES
Fuel 295
Purchased power 55
Other operating 133
Maintenance 34
Depreciation and amortization 78
Taxes, other than income 30
Income taxes 23
---------------
648
---------------
OPERATING INCOME 86
---------------
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds used during construction 1
Other (2)
Non-operating income 2
---------------
1
---------------
INCOME BEFORE INTEREST CHARGES 87
---------------
INTEREST AND OTHER CHARGES
Interest on long-term debt 30
Distributions on trust preferred securities 6
Interest on short-term debt and other 4
Allowance for borrowed funds used during construction (1)
---------------
39
---------------
NET INCOME 48
Less: preferred stock dividends --
Gain on reacquisition of preferred stock --
NET INCOME FOR COMMON STOCK $48
===============
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1998
UNAUDITED
(Millions)
RETAINED EARNINGS AT JUNE 30, 1997 $155
Add: Net income (loss) for common stock 48
---------------
203
Deduct: Common stock dividends 61
---------------
RETAINED EARNINGS AT JUNE 30, 1998 $142
===============
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
JUNE 30, 1998
UNAUDITED
(Millions)
DR CR
------------------
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
None
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
None
PUBLIC SERVICE COMPANY OF OKLAHOMA
None
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES
There have been no significant changes in the financial statements of
Central and South West Corporation and subsidiary companies subsequent to June
30, 1998, other than in the ordinary course of business. On May 28, 1998 CSW's
shareholders voted on and approved the proposed merger with American Electric
Power Company, Inc.
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The notes to consolidated financial statements included in Central and
South West Corporation's 1997 Combined Annual Report on Form 10-K are hereby
incorporated by reference and made a part of this report.
Page
Reference
1997 Combined Annual Report on Form 10-K pages 2-40 through 2-75
Exhibit 4
STATEMENT OF ORGANIZATION BY INCORPORATOR
OF
CSW VENTURES, INC.
The undersigned sole incorporator of CSW Ventures, Inc.
(hereinafter referred to as the "Corporation"), a Delaware corporation, pursuant
to Section 108(c) of the General Corporation Law, makes the following statement
and takes the following action to organize said corporation:
FIRST: The Certificate of Incorporation of the Corporation was filed with
the Secretary of State of Delaware on the __ day of __________ 1998.
SECOND: The By-Laws annexed hereto are hereby adopted as the By-Laws of the
Corporation.
THIRD: The following named persons are hereby elected as the directors of
the Corporation to hold office until the first annual meeting of stockholders
and until their successors are elected or appointed and have qualified:
[-----------]
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this __
day of __________ 1998.
_________________________
Joris M. Hogan
Sole Incorporator
Exhibit 5
BYLAWS
OF
CSW VENTURES, INC.
BYLAWS
OF
CSW VENTURES, INC.
ARTICLE I
Office and Records
Section 1.1 Delaware Office. The principal office of the
Corporation in the State of Delaware shall be located in the City of Wilmington,
County of New Castle, and the name and address of its registered agent is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware.
Section 1.2 Other Offices. The Corporation may have such other
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.
Section 1.3 Books and Records. The books and records of the
Corporation may be kept at the Corporation's principal executive offices in
Dallas, Texas or at such other locations outside the State of Delaware as may
from time to time be designated by the Board of Directors.
ARTICLE II
Stockholders
Section 2.1 Annual Meeting. Except as otherwise provided in
Section 2.8 of these Bylaws, an annual meeting of stockholders of the
Corporation shall be held at such time and date in each year as the Board of
Directors, the Chairman of the Board, if any, or the President may from time to
time determine. The annual meeting in each year shall be held at such place
within or without the State of Delaware as may be fixed by the Board of
Directors, or if not so fixed, at 10 A.M., local time, at the principal
executive offices of the Corporation.
Section 2.2 Special Meetings. A special meeting of the holders
of stock of the Corporation entitled to vote on any business to be considered at
any such meeting may be called only by the Chairman of the Board, if any, or the
President or any Vice President, and shall be called by the Chairman of the
Board, if any, or the President or the Secretary when directed to do so by
resolution of the Board of Directors or at the written request of directors
representing a majority of the total number of directors which the Corporation
would at the time have if there were no vacancies (the "Whole Board"). Any such
request shall state the purpose or purposes of the proposed meeting. The Board
of Directors may designate the place of meeting for any special meeting of
stockholders, and if no such designation is made, the place of meeting shall be
the principal executive offices of the Corporation.
Section 2.3 Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, unless notice is waived
as provided in Section 8.1 of these Bylaws, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called.
Unless otherwise provided by law, and except as to any
stockholder duly waiving notice, the written notice of any meeting shall be
given personally or by mail, not less than ten nor more than sixty (60) days
before the date of the meeting to each stockholder entitled to vote at such
meeting. If mailed, notice shall be deemed given when deposited in the mail,
postage prepaid, directed to the stockholder at his or her address as it appears
on the records of the Corporation.
When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the Corporation may transact any business which might have been
transacted at the original meeting. If, however, the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.4 Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation or by these Bylaws, at any meeting of
stockholders the holders of a majority of the outstanding stock entitled to vote
thereat, either present or represented by proxy, shall constitute a quorum for
the transaction of any business, but the stockholders present, although less
than a quorum, may adjourn the meeting to another time or place and, except as
provided in the last paragraph of Section 2.3 of these Bylaws, notice need not
be given of the adjourned meeting.
Section 2.5 Voting. Whenever directors are to be elected at a
meeting, they shall be elected by a plurality of the votes cast at the meeting
by the holders of stock entitled to vote. Whenever any corporate action, other
than the election of directors, is to be taken by vote of stockholders at a
meeting, it shall, except as otherwise required by law or by the Certificate of
Incorporation or by these Bylaws, be authorized by a majority of the votes cast
with respect thereto at the meeting (including abstentions) by the holders of
stock entitled to vote thereon.
Except as otherwise provided by law, or by the Certificate of
Incorporation, each holder of record of stock of the Corporation entitled to
vote on any matter at any meeting of stockholders shall be entitled to one vote
for each share of such stock standing in the name of such holder on the stock
ledger of the Corporation on the record date for the determination of the
stockholders entitled to vote at the meeting.
Upon the demand of any stockholder entitled to vote, the vote
for directors or the vote on any other matter at a meeting shall be by written
ballot, but otherwise the method of voting and the manner in which votes are
counted shall be discretionary with the presiding officer at the meeting.
Section 2.6 Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
or her by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period. Every proxy
shall be signed by the stockholder or by his duly authorized attorney.
Section 2.7 List of Stockholders. The officer who has charge
of the stock ledger of the Corporation shall prepare and make, at least ten (10)
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section or the books of the Corporation, or to vote in person or by proxy at any
meeting of stockholders.
Section 2.8 Written Consent of Stockholders in Lieu of
Meeting. Any action required by the General Corporation Law of the State of
Delaware (the "GCL") to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt written notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Any such written consent may be
given by one or any number of substantially concurrent written instruments of
substantially similar tenor signed by such stockholders, in person or by
attorney or proxy duly appointed in writing, and filed with the Secretary or an
Assistant Secretary of the Corporation. Any such written consent shall be
effective as of the effective date thereof as specified therein, provided that
such date is not more than sixty (60) days prior to the date such written
consent is filed as aforesaid, or, if no such date is so specified, on the date
such written consent is filed as aforesaid.
ARTICLE III
Directors
Section 3.1 Number of Directors. The Board of Directors shall
consist of three directors until changed as provided in this Section. The number
of directors may be changed at any time and from time to time by vote at a
meeting or by written consent of the holders of stock entitled to vote on the
election of directors, or by a resolution of the Board of Directors passed by a
majority of the Whole Board, except that no decrease shall shorten the term of
any incumbent director unless such director is specifically removed pursuant to
Section 3.5 of these Bylaws at the time of such decrease.
Section 3.2 Election and Term of Directors. Directors shall be
elected annually, by election at the annual meeting of stockholders or by
written consent of the holders of stock entitled to vote thereon in lieu of such
meeting. If the annual election of directors is not held on the date designated
therefor, the directors shall cause such election to be held as soon thereafter
as convenient. Each director shall hold office from the time of his or her
election and qualification until his successor is elected and qualified or until
his or her earlier resignation, or removal.
Section 3.3 Vacancies and Newly Created Directorships.
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by election at a meeting of
stockholders or by written consent of the holders of stock entitled to vote
thereon in lieu of a meeting. Except as otherwise provided by law, vacancies and
such newly created directorships may also be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director.
Section 3.4 Resignation. Any director may resign at any time
upon written notice to the Corporation. Any such resignation shall take effect
at the time specified therein or, if the time be not specified, upon receipt
thereof, and the acceptance of such resignation, unless required by the terms
thereof, shall not be necessary to make such resignation effective.
Section 3.5 Removal. Any or all of the directors may be
removed at any time, with or without cause, by vote at a meeting or by written
consent of the holders of stock entitled to vote on the election of directors.
Section 3.6 Meetings. Meetings of the Board of Directors,
regular or special, may be held at any place within or without the State of
Delaware. Members of the Board of Directors, or of any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors
or such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting by such means shall constitute
presence in person at such meeting. An annual meeting of the Board of Directors
shall be held after each annual election of directors. If such election occurs
at an annual meeting of stockholders, the annual meeting of the Board of
Directors shall be held at the same place and immediately following such meeting
of stockholders, and no further notice thereof need be given other than this
Bylaw. If an annual election of directors occurs by written consent in lieu of
the annual meeting of stockholders, the annual meeting of the Board of Directors
shall take place as soon after such written consent is duly filed with the
Corporation as is practicable, either at the next regular meeting of the Board
of Directors or at a special meeting. The Board of Directors may fix times and
places for additional regular meetings of the Board of Directors and no notice
of such meetings need be given. A special meeting of the Board of Directors
shall be held whenever called by the Chairman of the Board, if any, or by the
President or by at least one-third of the directors for the time being in
office, at such time and place as shall be specified in the notice or waiver
thereof. Notice of each special meeting shall be given by the Secretary or by a
person calling the meeting to each director by mailing the same, postage
prepaid, not later than the second day before the meeting, or personally or by
telegraphing or telephoning the same not later than the day before the meeting.
Section 3.7 Quorum and Voting. A whole number of directors
equal to at least a majority of the Whole Board shall constitute a quorum for
the transaction of business, but if there be less than a quorum at any meeting
of the Board of Directors, a majority of the directors present may adjourn the
meeting from time to time, and no further notice thereof need be given other
than announcement at the meeting which shall be so adjourned. Except as
otherwise provided by law, by the Certificate of Incorporation, or by these
Bylaws, the vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
Section 3.8 Written Consent of Directors in Lieu of a Meeting.
Any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if all
members of the Board of Directors or of such committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or such committee.
Section 3.9 Compensation. Directors may receive compensation
for services to the Corporation in their capacities as directors or otherwise in
such manner and in such amounts as may be fixed from time to time by the Board
of Directors.
Section 3.10 Committees of the Board of Directors. The Board
of Directors may from time to time, by resolution passed by majority of the
Whole Board, designate one or more committees, each committee to consist of one
or more directors of the Corporation. The Board of Directors may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. The resolution of
the Board of Directors may, in addition or alternatively, provide that in the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he, she or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it, except as otherwise provided by law.
Unless the resolution of the Board of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Any such committee may adopt rules governing
the method of calling and time and place of holding its meetings. Unless
otherwise provided by the Board of Directors, a majority of any such committee
(or the member thereof, if only one) shall constitute a quorum for the
transaction of business, and the vote of a majority of the members of such
committee present at a meeting at which a quorum is present shall be the act of
such committee. Each such committee shall keep a record of its acts and
proceedings and shall report thereon to the Board of Directors whenever
requested so to do. Any or all members of any such committee may be removed,
with or without cause, by resolution of the Board of Directors, passed by a
majority of the whole Board.
ARTICLE IV
Officers, Agents and Employees
Section 4.1 Appointment and Term of Office. The officers of
the Corporation may include a President, a Secretary and a Treasurer, and may
also include a Chairman of the Board, one or more Vice Presidents, one or more
Assistant Secretaries and one or more Assistant Treasurers. All such officers
shall be appointed by the Board of Directors or by a duly authorized committee
thereof, and shall each have such powers and duties as generally pertain to
their respective offices, subject to the specific provisions of this Article IV,
together with such other powers and duties as from time to time may be conferred
by the Board of Directors or any committee thereof. Any number of such offices
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity. Except as may be prescribed
otherwise by the Board of Directors or a committee thereof in a particular case,
all such officers shall hold their offices at the pleasure of the Board of
Directors for an unlimited term and need not be reappointed annually or at any
other periodic interval. The Board of Directors may appoint, and may delegate
power to appoint, such other officers, agents and employees as it may deem
necessary or proper, who shall hold their offices or positions for such terms,
have such authority and perform such duties as may from time to time be
determined by or pursuant to authorization of the Board of Directors.
Section 4.2 Resignation and Removal. Any officer may resign at
any time upon written notice to the Corporation. Any officer, agent or employee
of the Corporation may be removed by the Board of Directors, or by a duly
authorized committee thereof, with or without cause at any time. The Board of
Directors or such a committee thereof may delegate such power of removal as to
officers, agents and employees not appointed by the Board of Directors or such a
committee. Such removal shall be without prejudice to a person's contract
rights, if any, but the appointment of any person as an officer, agent or
employee of the Corporation shall not of itself create contract rights.
Section 4.3 Compensation and Bond. The compensation of the
officers of the Corporation shall be fixed by the Board of Directors, but this
power may be delegated to any officer in respect of other officers under his or
her control. The Corporation may secure the fidelity of any or all of its
officers, agents or employees by bond or otherwise.
Section 4.4 Chairman of the Board. The Chairman of the Board,
if there be one, shall preside at all meetings of stockholders and of the Board
of Directors, and shall have such other powers and duties as may be delegated to
him or her by the Board of Directors.
Section 4.5 President. The President shall be the chief
executive officer of the Corporation. In the absence of the Chairman of the
Board (or if there be none), he or she shall preside at all meetings of the
stockholders and of the Board of Directors. He or she shall have general charge
of the business affairs of the Corporation. He or she may employ and discharge
employees and agents of the Corporation, except such as shall be appointed by
the Board of Directors, and he or she may delegate these powers. The President
may vote the stock or other securities of any other domestic or foreign
corporation of any type or kind which may at any time be owned by the
Corporation, may execute any stockholders' or other consents in respect thereof
and may in his or her discretion delegate such powers by executing proxies, or
otherwise, on behalf of the Corporation. The Board of Directors by resolution
from time to time may confer like powers upon any other person or persons.
Section 4.6 Vice Presidents. Each Vice President shall have
such powers and perform such duties as the Board of Directors or the President
may from time to time prescribe. In the absence or inability to act of the
President, unless the Board of Directors shall otherwise provide, the Vice
President who has served in that capacity for the longest time and who shall be
present and able to act, shall perform all the duties and may exercise any of
the powers of the President.
Section 4.7 Treasurer. The Treasurer shall have charge of all
funds and securities of the Corporation, shall endorse the same for deposit or
collection when necessary and deposit the same to the credit of the Corporation
in such banks or depositaries as the Board of Directors may authorize. He or she
may endorse all commercial documents requiring endorsements for or on behalf of
the Corporation and may sign all receipts and vouchers for payments made to the
Corporation. He or she shall have all such further powers and duties as
generally are incident to the position of Treasurer or as may be assigned to him
or her by the President or the Board of Directors.
Section 4.8 Secretary. The Secretary shall record all the
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose and shall also record therein all action taken by written
consent of the stockholders or directors in lieu of a meeting. He or she shall
attend to the giving and serving of all notices of the Corporation. He or she
shall have custody of the seal of the Corporation and shall attest the same by
his or her signature whenever required. He or she shall have charge of the stock
ledger and such other books and papers as the Board of Directors may direct, but
he or she may delegate responsibility for maintaining the stock ledger to any
transfer agent appointed by the Board of Directors. He or she shall have all
such further powers and duties as generally are incident to the position of
Secretary or as may be assigned to him or her by the President or the Board of
Directors.
Section 4.9 Assistant Treasurers. In the absence or inability
to act of the Treasurer, any Assistant Treasurer may perform all the duties and
exercise all the powers of the Treasurer. An Assistant Treasurer shall also
perform such other duties as the Treasurer or the Board of Directors may assign
to him or her.
Section 4.10 Assistant Secretaries. In the absence or
inability to act of the Secretary, any Assistant Secretary may perform all the
duties and exercise all the powers of the Secretary. An Assistant Secretary
shall also perform such other duties as the Secretary or the Board of Directors
may assign to him or her.
Section 4.11 Delegation of Duties. In case of the absence of
any officer of the Corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board of Directors may confer for the time
being the powers or duties, or any of them, of such officer upon any other
officer or upon any director.
ARTICLE V
Indemnification and Insurance
Section 5.1 Right to Indemnification. Each person who was or
is made a party or is threatened to be made a party to or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
or a person of whom he or she is the legal representative is or was a director
or an officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of any other corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to any employee benefit plan (hereinafter an "indemnitee"), whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the GCL, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, excise taxes or penalties under
the Employee Retirement Income Security Act of 1974, as amended, and amounts
paid or to be paid in settlement) reasonably incurred by such indemnitee in
connection therewith; provided, however, that except as provided in Section 5.3
with respect to proceedings seeking to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee seeking indemnification in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors.
Section 5.2 Right to Advancement of Expenses. The right to
indemnification conferred in Section 5.1 shall include the right to be paid by
the Corporation the expenses (including attorneys' fees) incurred in defending
any such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the GCL requires, an
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such indemnitee is not entitled to be indemnified for
such expenses under this Section 5.2 or otherwise.
Section 5.3 Right of Indemnitee to Bring Suit. If a claim
under Section 5.1 or Section 5.2 is not paid in full by the Corporation within
thirty (30) days after a written claim has been received by the Corporation,
except in the case of a claim for an advancement of expenses, in which case the
applicable period shall be twenty (20) days, the indemnitee may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right of an advancement of expenses) it
shall be a defense that, and (ii) in any suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon a final adjudication
that, the indemnitee has not met any applicable standard for indemnification set
forth in the GCL. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the GCL, nor an actual determination
by the Corporation (including its Board of Directors, independent legal counsel
or stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article V or otherwise shall be on the Corporation.
Section 5.4 Non-Exclusivity of Rights. The right to
indemnification and the advancement of expenses conferred in this Article V
shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation,
provision of these Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
Section 5.5 Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the GCL.
Section 5.6 Indemnification of Employees and Agents of the
Corporation. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification, and rights to the
advancement of expenses, to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article V with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
Section 5.7 Contract Rights. The rights to indemnification and
to the advancement of expenses conferred in Section 5.1 and Section 5.2 shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
ARTICLE VI
Common Stock
Section 6.1 Certificates. Certificates for stock of the
Corporation shall be in such form as shall be approved by the Board of Directors
and shall be signed in the name of the Corporation by the Chairman of the Board,
if any, or the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary. Such
certificates may be sealed with the seal of the Corporation or a facsimile
thereof. Any of or all the signatures on a certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the date of issue.
Section 6.2 Transfers of Stock. Transfers of stock shall be
made only upon the books of the Corporation by the holder, in person or by duly
authorized attorney, and on the surrender of the certificate or certificates for
the same number of shares, properly endorsed. The Board of Directors shall have
the power to make all such rules and regulations, not inconsistent with the
Certificate of Incorporation and these Bylaws and the GCL, as the Board of
Directors may deem appropriate concerning the issue, transfer and registration
of certificates for stock of the Corporation. The Board of Directors may appoint
one or more transfer agents or registrars of transfers, or both, and may require
all stock certificates to bear the signature of either or both.
Section 6.3 Lost, Stolen or Destroyed Certificates. The
Corporation may issue a new stock certificate in the place of any certificate
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Corporation may require the owner of the lost, stolen or destroyed
certificate or his or her legal representative to give the Corporation a bond
sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of any such new certificate. The Board of Directors may require such
owner to satisfy other reasonable requirements as it deems appropriate under the
circumstances.
Section 6.4 Stockholder Record Date. In order that the
Corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted by the Board of Directors, and
which shall not be more than sixty nor less than ten (10) days before the date
of such meeting, nor more than sixty (60) days prior to any other action.
If no record date is fixed by the Board of Directors, (l) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the date on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held, (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is necessary, shall be at the close of business on the
day on which the first written consent is expressed by the filing thereof with
the Corporation as provided in Section 2.8 of these Bylaws, and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to notice of, and to vote at, such meeting
and any adjournment thereof, or to give such consent, or to receive payment of
such dividend or other distribution, or to exercise such rights in respect of
any such change, conversion or exchange of stock, or to participate in such
action, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any record date so fixed.
ARTICLE VII
Seal
Section 7.1 Seal. The seal of the Corporation shall be
circular in form and shall bear, in addition to any other emblem or device
approved by the Board of Directors, the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware". The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
ARTICLE VIII
Waiver of Notice
Section 8.1 Waiver of Notice. Whenever notice is required to
be given to any stockholder or director of the Corporation under any provision
of the GCL or the Certificate of Incorporation or these Bylaws, a written waiver
thereof, signed by the person or persons entitled to notice, whether before or
after the time stated therein, shall be deemed equivalent to the giving of such
notice. In the case of a stockholder, such waiver of notice may be signed by
such stockholder's attorney or proxy duly appointed in writing. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors or members of a committee of directors need be specified in any
written waiver of notice.
ARTICLE IX
Checks, Notes, Drafts, Etc.
Section 9.1 Checks, Notes, Drafts, Etc. Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as the
Board of Directors or a duly authorized committee thereof may from time to time
designate.
ARTICLE X
Amendments
Section 10.1 Amendments. These Bylaws or any of them may be
altered or repealed, and new Bylaws may be adopted, by the stockholders by vote
at a meeting or by written consent without a meeting. The Board of Directors
shall also have power, by a majority vote of the Whole Board, to alter or repeal
any of these Bylaws, and to adopt new Bylaws.
