<PAGE> 1
As filed with the Securities and Exchange Commission on February 2, 1999
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------
CLECO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
LOUISIANA 4911 72-0244480
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
2030 DONAHUE FERRY ROAD
PINEVILLE, LOUISIANA 71360-5226
(318) 484-7400
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
----------------------
DAVID M. EPPLER Copy to:
PRESIDENT AND CHIEF OPERATING OFFICER ALAN C. WOLF
CLECO CORPORATION PHELPS DUNBAR, L.L.P.
2030 DONAHUE FERRY ROAD 400 POYDRAS STREET
PINEVILLE, LOUISIANA 71360-5226 NEW ORLEANS, LOUISIANA 70130-3245
(318) 484-7400 (504) 566-1311
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
----------------------
Approximate date of commencement of proposed sale to the public: Upon the
effective date of the share exchange described in this Registration Statement.
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: [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO BE PRICE PER OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $2.00 par value . . . . 22,511,280 shares $30.844 $694,337,920.32 $ 193,025.94
Preferred Stock, $100.00 par value . 353,919 shares $100.00 $ 35,391,900.00 $ 9,838.95
============================================================================================================================
</TABLE>
(1) With respect to shares of common stock, calculated pursuant to Rule 457(c)
using the average of the high and low prices of common stock for a date within
five business days prior to the date hereof. With respect to shares of
preferred stock, based upon the book value of the securities to be received by
the registrant or canceled in the exchange or transaction as of December 31,
1998, pursuant to Rule 457(f)(2).
----------------------
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
[CLECO LETTERHEAD]
March 10, 1999
To the Shareholders of Cleco Corporation:
The annual meeting of shareholders for 1999 will be held at the Radisson
Hotel Bentley, 200 DeSoto Street, Alexandria, Louisiana, on Friday, April 23,
1999, at 9:00 a.m., Central time. A notice of annual meeting of shareholders
and proxy statement is enclosed herewith, together with a proxy that may be
used by shareholders who are unable to attend the meeting in person.
The principal items of business to be transacted at the annual meeting
are:
o the adoption of a holding company proposal such that Cleco
Corporation and its current subsidiaries will each become
subsidiaries of a publicly-traded holding company, to be named
"Cleco Corporation";
o the election of three directors who will each serve a three-year
term expiring in 2002; and
o the appointment of PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 1999.
Your Board of Directors believes that the next few years will see a
significant change in the way utilities are regulated. It also believes that
one of the first steps necessary to succeed in such an environment is to
separate the regulated electric utility business from its other, less regulated
businesses. The formation of a holding company, more fully described in the
attached proxy statement and prospectus, will allow for this separation.
Consequently, your Board of Directors recommends a vote "FOR" the holding
company proposal. Your Board of Directors also recommends a vote "FOR"
election of the three nominees for director listed herein and a vote "FOR" the
appointment of PricewaterhouseCoopers LLP as the independent auditors.
You are cordially invited to attend the annual meeting of shareholders.
Even if you expect to attend the meeting, you are requested to sign, date and
return the accompanying proxy in the enclosed addressed envelope that requires
no postage if mailed in the United States. If you attend the meeting, you may
vote in person even though you have mailed in your proxy. We greatly
appreciate your continued interest and cooperation.
Sincerely,
Gregory L. Nesbitt
Chairman and Chief Executive Officer
<PAGE> 3
CLECO CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1999
To the Shareholders of Cleco Corporation:
Notice is hereby given that Cleco Corporation will hold its annual
meeting of shareholders on Friday, April 23, 1999, at 9:00 a.m., Central time,
at the Radisson Hotel Bentley, 200 DeSoto Street, Alexandria, Louisiana.
Holders of record of common stock and preferred stock of Cleco Corporation at
the close of business on February 23, 1999, are entitled to notice of the
annual meeting and to vote at the meeting. The meeting is for the following
purposes:
o to consider and act upon a proposal to form a holding company
structure for Cleco Corporation, including approval of a Plan of
Reorganization and Share Exchange Agreement pursuant to which
shares in Cleco Corporation will be exchanged for shares in a
newly-formed holding company, as described further in the
accompanying proxy statement and prospectus; the amendment of the
holding company's articles of incorporation; the appointment of
the current Cleco Corporation directors as directors of the
holding company; and all other actions appropriate to form and
operate the holding company and conduct the business of its
subsidiaries;
o to elect three directors who will each serve a three-year term
expiring in 2002;
o to consider and act upon a proposal to appoint the firm of
PricewaterhouseCoopers LLP, as independent auditors for the year
ending December 31, 1999; and
o to transact such other business as may properly come before the
meeting or any adjournments thereof.
The Plan of Reorganization and Share Exchange Agreement must be approved
by vote of at least two-thirds of the voting power present of each class or
series included in the share exchange, voting separately as a class. In
addition, the Plan of Reorganization and Share Exchange Agreement must be
approved by at least two-thirds of the outstanding shares of preferred stock.
With respect to each series of preferred stock, dissenting shareholders
who comply with the procedural requirements of the Business Corporation Law of
Louisiana will be entitled to receive payment of the fair cash value of their
shares if the share exchange is effected upon approval by less than eighty
percent of the total voting power in such series.
The Bylaws of Cleco Corporation require that the holders of shares of
capital stock representing a majority of the votes entitled to be cast be
represented in person or by proxy at the meeting in order to constitute a
quorum for the transaction of business. Therefore, it is important that your
stock be represented at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE DATE, SIGN
AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
By Order of the Board of Directors
Michael P. Prudhomme
Secretary-Treasurer
March 10, 1999
<PAGE> 4
PROXY STATEMENT AND PROSPECTUS
CLECO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 1999
______ SHARES OF COMMON STOCK ($2.00 PAR VALUE)
______ SHARES OF PREFERRED STOCK ($100.00 PAR VALUE)
Cleco Corporation ("Cleco") is furnishing you this Proxy Statement and
Prospectus because you are a holder of Cleco common stock or preferred stock.
The Cleco Board of Directors is soliciting proxies for use at the Cleco annual
meeting of shareholders and at any adjournments or postponements of the annual
meeting. The annual meeting will convene at 9:00 a.m., Central time, on April
23, 1999, at the Radisson Hotel Bentley, 200 DeSoto Street, Alexandria,
Louisiana.
At the annual meeting, holders of record of Cleco common stock and Cleco
preferred stock at the close of business on February 23, 1999, voting together
as a single class, will vote upon proposals relating to:
o the formation of a holding company structure including approval
of a Plan of Reorganization and Share Exchange Agreement pursuant
to which shares in Cleco will be exchanged for shares in a
publicly-held holding company; the amendment of the holding
company's articles of incorporation; the appointment of the
current Cleco directors as directors of the holding company; and
all other actions appropriate to form and operate the holding
company and conduct the business of its subsidiaries;
o the election of three directors who will each serve until the
annual meeting in 2002; and
o the appointment of PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 1999.
THE CLECO BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE HOLDING
COMPANY PROPOSAL AND RECOMMENDS THAT YOU VOTE "FOR" THE HOLDING COMPANY
PROPOSAL, "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR AND "FOR" THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS.
-----------------------
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.
-----------------------
THIS PROXY STATEMENT AND PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT CLECO THAT IS NOT INCLUDED OR DELIVERED WITH THE
DOCUMENT. SHAREHOLDERS MAY OBTAIN THIS INFORMATION WITHOUT CHARGE, UPON
WRITTEN OR ORAL REQUEST. YOU MAY MAKE SUCH REQUESTS TO RODNEY J. HAMILTON,
P.O. BOX 5000, PINEVILLE, LOUISIANA 71361-5000, TELEPHONE NUMBER 1-800-253-
2652. TO ENSURE TIMELY DELIVERY, SHAREHOLDERS MUST REQUEST THE INFORMATION NO
LATER THAN APRIL 19, 1999.
-----------------------
This Proxy Statement and Prospectus and the accompanying proxy card are
dated March 10, 1999, and are first being mailed on or about March 10, 1999, to
record shareholders of Cleco as of February 23, 1999.
-----------------------
<PAGE> 5
You should rely only on the information contained or incorporated by
reference in this Proxy Statement and Prospectus. We have not authorized
anyone to provide you with information that is different. This Proxy Statement
and Prospectus does not constitute an offer to sell, or a solicitation of an
offer to purchase, the securities offered hereby. This Proxy Statement and
Prospectus do not constitute the solicitation of a proxy, in any jurisdiction
in which, or to any person to whom, it is unlawful to make such offer or the
solicitation of an offer or a proxy. The delivery of this Proxy Statement and
Prospectus and any distribution of the securities offered hereby shall not,
under any circumstances, create any implication that there has not been a change
in the affairs of Cleco since March 10, 1999.
2
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
No.
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<S> <C>
REFERENCE PAGES FOR DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
QUESTIONS AND ANSWERS ABOUT THE HOLDING COMPANY PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . 8
What Is the Holding Company Proposal? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
What Will the Holding Company Structure Look Like? . . . . . . . . . . . . . . . . . . . . . . . 9
What Are the Reasons for the Holding Company Proposal? . . . . . . . . . . . . . . . . . . . . . 9
What Will Be the Business of the Holding Company? . . . . . . . . . . . . . . . . . . . . . . . . 10
Who Will Manage the Holding Company? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
What Vote Is Required for Approval of the Holding Company Proposal and the Other Proposals? . . . 11
Who Votes on the Holding Company Proposal? . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Can My Broker Vote for Me? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
What Regulatory Approvals Are Required? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
How Will the Holding Company Proposal Be Implemented? . . . . . . . . . . . . . . . . . . . . . . 13
When Will the Holding Company Proposal Be Implemented? . . . . . . . . . . . . . . . . . . . . . 13
When Will the Name Change Be Effective? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
How Will My Rights as a Shareholder Be Affected? . . . . . . . . . . . . . . . . . . . . . . . . 14
How Will Dividends Be Affected? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Are There Federal Income Tax Consequences to the Holding Company, its Shareholders or Cleco? . . 15
Are There Louisiana Income Tax Consequences to the Holding Company, its Shareholders or Cleco? . 16
How Will My Participation in the Automatic Dividend Reinvestment Plan Be Affected? . . . . . . . 16
Will I Have Dissenters' Rights? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Will Holding Company Common Stock Be Traded on an Exchange? . . . . . . . . . . . . . . . . . . . 16
Will I Have to Exchange My Stock Certificates? . . . . . . . . . . . . . . . . . . . . . . . . . 17
Will Stock-Based Compensation Plans for Cleco Employees Be Affected? . . . . . . . . . . . . . . 17
How Will Other Employee Benefit Plans Be Affected? . . . . . . . . . . . . . . . . . . . . . . . 17
What is Cumulative Voting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
What Do I Need to Do Now? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Whom Should I Call if I Have Any Questions? . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Record Date and Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Execution and Revocation of Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Attendance and Procedures at the Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 21
Shareholder Proposals for the 2000 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C>
PROPOSAL NUMBER 1 -- THE HOLDING COMPANY PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Holding Company Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Reasons for the Holding Company Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Holding Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Holding Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Holding Company Articles and Holding Company Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 29
Holding Company Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Comparative Rights of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Authorized but Unissued Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Preferred Stock of Cleco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Debt of Cleco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Implementation of the Holding Company Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Conditions to the Share Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Listing of Holding Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Material Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Material Louisiana Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Validity of Holding Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
PROPOSAL NUMBER 2 -- ELECTION OF THREE CLASS II DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . 40
Class II Directors (nominees to be elected at the Annual Meeting; terms of office expire in 2002) . 40
Class I Directors (terms of office expire in 2001) . . . . . . . . . . . . . . . . . . . . . . . . 41
Class III Directors (terms of office expire in 2000) . . . . . . . . . . . . . . . . . . . . . . . 42
Organization and Compensation of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . 42
Interests of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 46
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Long-Term Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C>
Long-Term Incentive Plan - Awards in 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Savings and Investment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Long-Term Disability Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Severance Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Compensation Committee Report on Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 55
Compensation Philosophy and Overall Objective of Executive Compensation Programs . . . . . . . . . 56
Compensation Program Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Other Executive Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
1998 Compensation for the President and Chief Executive Officer . . . . . . . . . . . . . . . . . . 59
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
The Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
PROPOSAL NUMBER 3 -- APPOINTMENT OF INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ANNUAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
PROPOSALS BY SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SCHEDULE C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
SCHEDULE D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
</TABLE>
5
<PAGE> 9
REFERENCE PAGES FOR DEFINED TERMS
<TABLE>
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No.
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<S> <C>
Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Awarded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
CLE Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Cleco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Cleco Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Cleco Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Cleco Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Cleco Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cleco Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Cleco Evangeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Cleco Midstream . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Cleco Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cleco Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Cleco Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Department of Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
DRIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Edison Electric Institute Index . . . . . . . . . . . . . . . . . . . . . . . . 57
ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Holding Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Holding Company Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Holding Company Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Holding Company Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Holding Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 8
Holding Company Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . 8
Holding Company Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
LBCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Long-Term Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
LPSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
LPSC Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Morrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Named Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
6
<PAGE> 10
<TABLE>
<S> <C>
Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Phelps Dunbar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Plan of Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Savings and Investment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 16(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Share Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Total Return to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 50
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1935 Public Utility Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<PAGE> 11
QUESTIONS AND ANSWERS ABOUT THE HOLDING COMPANY PROPOSAL
The following questions and answers address the formation of a holding
company (the "Holding Company Proposal") that will be voted on at the annual
meeting of shareholders (the "Annual Meeting") to be held on Friday, April 23,
1999, at 9:00 a.m., Central time, 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 Appendices and
the other documents referred to in this document. See "QUESTIONS AND ANSWERS
ABOUT THE HOLDING COMPANY PROPOSAL - Whom Should I Call if I Have Any
Questions?" on page __ of this Proxy Statement and Prospectus.
WHAT IS THE HOLDING COMPANY PROPOSAL?
The Holding Company Proposal is a proposal to adopt a public utility
holding company structure for Cleco and its subsidiaries.
The Holding Company Proposal will be effected through a Plan of
Reorganization and Share Exchange Agreement (the "Plan of Exchange"), pursuant
to which shares of Cleco common stock, $2.00 par value (the "Cleco Common
Stock"), will be exchanged for shares of Holding Company common stock, $2.00
par value (the "Holding Company Common Stock"). Shares of any series of Cleco
preferred stock, $100.00 par value (the "Cleco Preferred Stock") that approve
the Plan of Exchange will be exchanged for shares of Holding Company preferred
stock with identical terms and preferences as those of such series of Cleco
Preferred Stock (the "Holding Company Preferred Stock"). Approval of the
Holding Company Proposal includes approval of the Plan of Exchange, the
amendment of the holding company's articles of incorporation (the "Holding
Company Articles"), the appointment of the current Cleco directors as
directors of the holding company and all other actions appropriate to form and
operate the holding company and conduct the businesses of its subsidiaries.
Currently, Cleco is a publicly-owned utility that has various
subsidiaries. Cleco is a utility involved in the generation, transmission and
distribution of electricity. Such business is directly regulated by, among
others, the Louisiana Public Service Commission (the "LPSC") and the Federal
Energy Regulatory Commission (the "FERC"). Cleco's subsidiaries are engaged in
various lines of businesses complementary or incidental to electric generation,
transmission and distribution. None of these subsidiaries is directly
regulated by the LPSC. Some of these subsidiaries, but not all, are directly
regulated by the FERC.
Under the Holding Company Proposal, Cleco no longer will be
publicly-owned and it no longer will own its subsidiaries. Instead, Cleco will
become a subsidiary of a holding company, which will own all of the common
stock of Cleco. Cleco will also transfer its subsidiaries to the holding
company so that they will become subsidiaries of the holding company. As a
result, the income, financing, assets and other aspects of the subsidiaries'
operations no longer will be subject to the direct control of the LPSC because
they no longer will be owned by Cleco.
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<PAGE> 12
The holding company will be publicly-owned, like Cleco currently is, but
it will not be a public utility; it will be a holding company with no business
operations of its own. The holding company will use the name "Cleco
Corporation" and the current Cleco Corporation will be renamed Cleco Utility
Group Inc.
For purposes of this Proxy Statement and Prospectus:
o the current Cleco will be referred to as "Cleco"
o the holding company will be referred to as the "Holding Company"
o the Holding Company and its affiliates (including Cleco and its
current subsidiaries) will be referred to collectively as the
"System"
Upon implementation of the Holding Company Proposal, shares of Holding
Company Common Stock will be held by the former holders of Cleco Common Stock.
Each series of Cleco Preferred Stock will vote separately as a class to
determine if such series will be exchanged for a series of Holding Company
Preferred Stock having identical terms and preferences as the series of Cleco
Preferred Stock. If a series does not vote for the exchange, the shares will
continue as outstanding shares of Cleco Preferred Stock.
WHAT WILL THE HOLDING COMPANY STRUCTURE LOOK LIKE?
PRESENT STRUCTURE
Attached as Appendix A to this Proxy Statement and Prospectus.
PROPOSED STRUCTURE*
Attached as Appendix B to this Proxy Statement and Prospectus.
*The Holding Company may establish other subsidiaries periodically. Any new
Cleco subsidiary established before or after the Holding Company Proposal is
implemented also will become a subsidiary of the Holding Company or of
one of its subsidiaries.
WHAT ARE THE REASONS FOR THE HOLDING COMPANY PROPOSAL?
The Cleco Board of Directors (the "Cleco Board") considers the proposed
restructuring to be in the best interests of Cleco and its shareholders because
it will insulate Cleco's utility business from its non-utility businesses. At
the same time, it will permit greater financing flexibility to respond to the
changing business environment in the electric utility industry. Many of the
major electric utility companies in the United States (and all of the other
publicly-owned electric utilities in Louisiana) have adopted a public utility
holding company structure.
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<PAGE> 13
Nationwide, many of the traditional facets of the utility business,
such as electric generation, wholesale sales, and retail sales, are becoming
unregulated or less regulated and more competitive. The energy options for the
nation's utility customers are expanding and the challenges to utility
operations are intensifying. At the same time that the regulatory framework and
energy markets are changing, industry change inside and outside Cleco's
Louisiana service territory is presenting new business opportunities.
A holding company structure will increase the System's ability to
respond to the changing operational, regulatory, and economic environment for
electric utilities due to the corporate separation of Cleco from its
non-regulated subsidiaries and allow greater financing flexibility. A holding
company structure will facilitate separation of ancillary components of Cleco's
business from the core utility business, while allowing for common ownership of
these businesses through the Holding Company. This separation of business
functions will facilitate the development of complementary lines of businesses,
while helping to insulate Cleco from the risks associated with these activities.
When new business opportunities arise, the new businesses could be operated
through Holding Company subsidiaries, rather than through Cleco subsidiaries.
This will enhance the separation between Cleco and those businesses and will
permit a more effective and flexible use of financing techniques that are
directly suited to the particular requirements, characteristics, and risks of
the other affiliated businesses. It is believed that the holding company
structure will support Cleco's ability to continue to meet its customers' needs
efficiently, while permitting the Holding Company and its subsidiaries to
respond competitively to the changing business environment of the electric
industry.
The Cleco Board unanimously approved the Holding Company Proposal and
recommends that you vote "FOR" the proposal at the Annual Meeting.
WHAT WILL BE THE BUSINESS OF THE HOLDING COMPANY?
Upon implementation of the Holding Company Proposal, Cleco will become a
subsidiary of the Holding Company and Holding Company Common Stock will be held
by the former holders of Cleco Common Stock. In addition to Cleco, four
current first tier Cleco subsidiaries, CLE Resources, Inc. ("CLE Resources"),
Cleco Midstream Resources LLC ("Cleco Midstream"), Cleco Services LLC ("Cleco
Services") and Cleco Support Group LLC ("Cleco Support"), will become first
tier subsidiaries of the Holding Company.
Cleco Midstream currently owns subsidiaries or has ownership interests
in other entities or ventures and will continue to hold such interests. The
Holding Company may establish other subsidiaries in the future and, in turn,
these subsidiaries or Cleco's current subsidiaries may establish further
subsidiaries or obtain other business interests. The investment performance of
Holding Company Common Stock will depend on the results of operations of Cleco
and the Holding Company's other subsidiaries. See "PROPOSAL NUMBER 1 -- THE
HOLDING COMPANY PROPOSAL - Dividends" on page __ of this Proxy Statement and
Prospectus.
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<PAGE> 14
Cleco will continue to operate its utility business subject to direct
regulation by the LPSC, the FERC, and other governmental agencies. The LPSC
regulates, among other things, Cleco's rates for electric sales, rates for
service at retail, and its long-term debt and equity financings. The FERC
regulates, among other things, Cleco's rates for electric sales at wholesale,
rates for electric transmission, interconnections with other utilities, and
short-term debt and equity financings.
At this time the Holding Company will not be regulated by the LPSC or
the FERC except to the extent that the rules or orders of these agencies impose
restrictions on the Holding Company's relationships with Cleco or Cleco's
relationships with the Holding Company's other subsidiaries. The Holding
Company will be exempt from regulation as a public utility holding company
under the Public Utility Holding Company Act of 1935 (the "1935 Public Utility
Act"). The exemption is based on two grounds:
o First, the Holding Company and Cleco are organized and will carry
on their businesses substantially in the State of Louisiana.
o Second, neither the Holding Company nor Cleco will derive any
material part of its income from a public utility company
subsidiary either organized or carrying on its business
predominantly outside of the State of Louisiana.
WHO WILL MANAGE THE HOLDING COMPANY?
If the Holding Company Proposal is adopted, the same persons elected to
the Cleco Board will serve as the directors of the Holding Company. Although
there are no current plans to alter either Board of Directors, in the future
the directors of Cleco and the directors of the Holding Company may or may not
be the same persons.
Initially, the senior officers of the Holding Company also will be
officers of Cleco or one or more other subsidiaries of the Holding Company.
The Holding Company will have few employees. In the future, the Holding
Company may employ additional officers and employees. See "PROPOSAL NUMBER 1 -
- - THE HOLDING COMPANY PROPOSAL - Directors and Officers" on page __ of this
Proxy Statement and Prospectus.
WHAT VOTE IS REQUIRED FOR APPROVAL OF THE HOLDING COMPANY PROPOSAL AND THE
OTHER PROPOSALS?
The Holding Company Proposal must be approved by vote of at least
two-thirds of the voting power present of each class or series included in the
share exchange, voting separately as a class. In addition, the Holding Company
Proposal must be approved by at least two-thirds of the outstanding shares of
Cleco Preferred Stock. If the outstanding shares of Cleco Preferred Stock do
not approve the Holding Company Proposal, Cleco will likely redeem such shares
and proceed to implement the Holding Company Proposal.
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<PAGE> 15
In addition, each series of Cleco Preferred Stock will vote as a
separate class as to whether such series will be exchanged for a series of
Holding Company Preferred Stock having identical terms and preferences as such
series of Cleco Preferred Stock. The exchange of such series must be approved
by at least two-thirds of the shares of such series present at the Annual
Meeting. If any series does not approve the exchange, such series will remain
as a series of Cleco Preferred Stock, without affecting the exchange of shares
of Cleco Common Stock or any other series of Cleco Preferred Stock that
approves the exchange.
o Two-thirds of each class participating in the Share Exchange must
be voted "FOR" the Holding Company Proposal to approve the
proposal with respect to such class. With respect to the vote of
the Cleco Common Stock class, each share of Cleco Preferred Stock
is also entitled to vote in such class on the basis of one vote
per share, because the shares of Cleco Preferred Stock are
convertible into Cleco Common Stock. In addition to each class
vote, at least two-thirds of the outstanding shares of Cleco
Preferred Stock, voting as a separate class, must approve the
Holding Company Proposal, unless such shares of Cleco Preferred
Stock are redeemed in accordance with their terms. If the
Holding Company Proposal is approved by the common stock class,
but not by a series of Cleco Preferred Stock, such series will
remain as a series of Cleco Preferred Stock.
o Directors will be elected by plurality, with holders of Cleco
Common Stock being able to cumulate their votes.
o The appointment of the independent accountants requires a
majority vote of the Cleco Common Stock and Cleco Preferred Stock
(together, the "Voting Stock") present.
WHAT IS CUMULATIVE VOTING?
In the election of directors (but not in any other proposal contained in
this Proxy Statement and Prospectus) holders of Cleco Common Stock (but not
holders of Cleco Preferred Stock) are entitled to "cumulate" their votes and
give all such votes to one or more directors. For example, if a shareholder
owns 100 shares of common stock, and three directors are being elected, one
shareholder has 300 votes, which such shareholder may distribute among the
three nominees in any way the shareholder desires.
WHO VOTES ON THE HOLDING COMPANY PROPOSAL?
Holders of record at the close of business on February 23, 1999 (the
"Record Date") of Voting Stock will vote as a single class on the Holding
Company Proposal. In addition, the holders of all outstanding Preferred Stock
will vote together as a single class on the Holding Company Proposal. Finally,
the holders of each series of Cleco Preferred Stock will vote on whether that
series of Cleco Preferred Stock should be exchanged for Holding Company
Preferred Stock if the Holding Company Proposal is approved.
CAN MY BROKER VOTE FOR ME?
Your broker may not vote your stock on the Holding Company Proposal
because a vote to form a holding company is "non-discretionary" under the New
York Stock Exchange ("NYSE") rules. Only you or someone authorized in writing
by you to do so can vote your stock.
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<PAGE> 16
Your broker can vote your stock for the other proposals discussed in
this Proxy Statement and Prospectus.
HOW DO I VOTE SHARES HELD IN THE CLECO 401(K) SAVINGS AND INVESTMENT PLAN?
If you participate in the Cleco 401(k) Savings and Investment Plan (the
"Savings and Investment Plan"), you may vote the number of shares of Cleco
Common Stock equivalent to your interest in the Cleco Common Stock fund as of
the Record Date. In addition, you may vote the number of shares of Cleco
Preferred Stock equivalent to the interest in such preferred stock credited to
you under the Savings and Investment Plan as of the Record Date. You may vote
by instructing the trustee pursuant to the instruction card being mailed with
this Proxy Statement and Prospectus to all plan participants. The trustee will
vote your shares in accordance with your executed instructions. If you do not
timely send instructions, the share equivalents credited to your accounts will
not be voted.
WHAT REGULATORY APPROVALS ARE REQUIRED?
LPSC and FERC approvals are required. On October 30, 1998, the Holding
Company and Cleco filed an application with the LPSC for approval of the
Holding Company Proposal. The LPSC approved the application, as amended, on
December 18, 1998 (the "LPSC Order"). On November 18, 1998, Cleco filed an
application with the FERC for approval of the Holding Company Proposal. The
FERC approved the application on January 29, 1999. The Holding Company
Proposal remains subject to the continued effectiveness of these regulatory
approvals.
In addition, after implementation of the Holding Company Proposal, and
before March 1, 2000, the Holding Company will file with the Securities and
Exchange Commission ("SEC") an exemption from the 1935 Public Utility Act.
HOW WILL THE HOLDING COMPANY PROPOSAL BE IMPLEMENTED?
The Holding Company Proposal will be implemented pursuant to the Plan of
Exchange, attached as Appendix C to this Proxy Statement and Prospectus. The
Plan of Exchange provides that all of the outstanding shares of Cleco Common
Stock will be exchanged automatically on a share-for-share basis (the "Share
Exchange") for an equal number of new shares of Holding Company Common Stock.
Following the Share Exchange, the Holding Company will own all of the
outstanding Cleco Common Stock. Each person who owned Cleco Common Stock
immediately prior to the Share Exchange will own the same number of shares of
Holding Company Common Stock immediately following the Share Exchange.
In addition, each series of Cleco Preferred Stock will be entitled to
vote as to whether to have that series exchanged for shares of Holding Company
Preferred Stock with the same terms and preferences as the Cleco Preferred
Stock. If two-thirds or more of the shares of a series
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<PAGE> 17
present at the Annual Meeting approves such exchange, then such shares will be
exchanged automatically on a share-for-share basis for an equal number of
shares of Holding Company Preferred Stock. If the holders of a series of Cleco
Preferred Stock do not approve the exchange of such shares, then the shares
will remain as shares of Cleco Preferred Stock without affecting the terms and
preferences thereof.
WHEN WILL THE HOLDING COMPANY PROPOSAL BE IMPLEMENTED?
It is anticipated that the Holding Company Proposal will be implemented
on or about May 1, 1999. However, implementation is subject to certain
conditions, including shareholder approval, the continued effectiveness of the
regulatory approvals, the listing of Holding Company Common Stock on the NYSE,
and the filing of an amendment to the Holding Company Articles with the
Louisiana Secretary of State. See "PROPOSAL NUMBER 1 -- THE HOLDING COMPANY
PROPOSAL - Conditions to the Share Exchange" on page __ of this Proxy
Statement and Prospectus.
The Cleco Board may amend or terminate the Plan of Exchange, or amend
the Holding Company Articles, at any time before or after approval of the
Holding Company Proposal by holders of the Voting Stock. No amendment,
however, may materially and adversely affect the rights of common or preferred
shareholders, as determined in the judgment of the Cleco Board. See "PROPOSAL
NUMBER 1 -- THE HOLDING COMPANY PROPOSAL - Amendment or Termination" on page
__ __ of this Proxy Statement and Prospectus.
WHEN WILL THE NAME CHANGE BE EFFECTIVE?
Simultaneously with the implementation of the Holding Company Proposal,
Cleco's name will be changed to Cleco Utility Group Inc. and the Holding
Company's name will be changed to Cleco Corporation.
HOW WILL MY RIGHTS AS A SHAREHOLDER BE AFFECTED?
Following implementation of the Holding Company Proposal, the former
holders of Cleco Common Stock will automatically become holders of Holding
Company Common Stock. Their rights will be governed by the Holding Company
Articles, attached as Appendix D to this Proxy Statement and Prospectus, and
the Holding Company's Bylaws (the "Holding Company Bylaws"), attached as an
exhibit to the Registration Statement. See "ADDITIONAL INFORMATION" on page
___ of this Proxy Statement and Prospectus.
Although they are virtually identical, there are a few differences
between the Cleco Restated Articles of Incorporation, as amended (the "Cleco
Articles"), and the Holding Company Articles. Those differences are discussed
under "Comparative Rights of Shareholders"on page __ of this Proxy Statement
and Prospectus.
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<PAGE> 18
Shares of Cleco Preferred Stock that are exchanged for shares of Holding
Company Preferred Stock will similarly be governed by the Holding Company
Articles and the Holding Company Bylaws. The provisions relating to the
Holding Company Preferred Stock will be identical in all material respects to
those in the Cleco Articles and the Cleco Bylaws (the "Cleco Bylaws").
HOW WILL DIVIDENDS BE AFFECTED?
Following implementation of the Holding Company Proposal, former Cleco
common shareholders, who will then be Holding Company common shareholders, will
receive the dividends on Holding Company Common Stock declared by the Holding
Company Board of Directors (the "Holding Company Board"). Dividends declared
on Cleco Common Stock will be paid to the Holding Company, which will own all
of the shares of Cleco. Dividends declared on Holding Company Preferred Stock
(which will include each series of Cleco Preferred Stock that approves the
exchange) will similarly be declared by the Holding Company Board and then paid
by the Holding Company. If a series of Cleco Preferred Stock does not approve
the exchange, the dividends will continue to be declared by the Cleco Board and
then paid by Cleco. However, the former subsidiaries of Cleco will become
subsidiaries of the Holding Company, which may affect the dividends declared on
Cleco Preferred Stock.
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
Cleco Common Stock. The most recent dividend paid on Cleco Common Stock was
$.405 per share, which was paid on February 15, 1999.
Dividends on Holding Company Common Stock will depend primarily on two
factors:
o the dividends and other distributions that Cleco and the other
Holding Company subsidiaries pay to the Holding Company; and
o the capital requirements of the Holding Company and its
subsidiaries.
Pursuant to certain of Cleco's financing arrangements, the Cleco Articles and
applicable law, Cleco's ability to pay dividends on Cleco Common Stock is
restricted to payments based on its earned surplus (retained earnings) and on
maintenance of minimum capitalization requirements. These restrictions will
continue after the holding company structure is implemented.
There can not be any assurance that the Holding Company subsidiaries,
including Cleco, will have earnings or pay any dividends to the Holding
Company. Further, the Holding Company may decide to hold any dividends from
its subsidiaries for its own capital needs or may use such dividends in the
business of its subsidiaries or other affiliates.
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<PAGE> 19
ARE THERE FEDERAL INCOME TAX CONSEQUENCES TO THE HOLDING COMPANY, ITS
SHAREHOLDERS OR CLECO?
Phelps Dunbar, L.L.P. ("Phelps Dunbar"), Cleco's special tax counsel,
has opined that no gain or loss will be recognized by the Holding Company, its
shareholders, or Cleco under federal income tax laws as a result of the
implementation of the Holding Company Proposal.
Immediately following implementation, the aggregate tax basis for any
future gain or loss to shareholders on the sale of Holding Company Common Stock
or Holding Company Preferred Stock will be the same as the aggregate tax basis
in Cleco Common Stock and Cleco Preferred Stock immediately before
implementation. See "PROPOSAL NUMBER 1 -- THE HOLDING COMPANY PROPOSAL -
Material Federal Income Tax Consequences" on page __ of this Proxy Statement
and Prospectus.
ARE THERE LOUISIANA INCOME TAX CONSEQUENCES TO THE HOLDING COMPANY, ITS
SHAREHOLDERS OR CLECO?
Phelps Dunbar also has opined (or the Louisiana Department of Revenue
(the "Department of Revenue") has issued a ruling letter) that no gain or loss
will be recognized by the Holding Company, its shareholders, or Cleco under
Louisiana income tax laws as a result of the implementation of the Holding
Company Proposal. This opinion is predicated on the assumption that Cleco's
Louisiana earnings and profits are greater than or equal to the fair market
value of the assets, stock interests, and limited liability company interests
distributed by Cleco to the Holding Company. Immediately following
implementation, the aggregate tax basis for any future gain or loss to
shareholders on the sale of Holding Company Common Stock or Holding Company
Preferred Stock will be the same as the aggregate tax basis in Cleco Common
Stock or Cleco Preferred Stock immediately before implementation. See
"PROPOSAL NUMBER 1 -- The Holding Company Proposal - Material Louisiana Income
Tax Consequences" on page __ of this Proxy Statement and Prospectus.
HOW WILL MY PARTICIPATION IN THE AUTOMATIC DIVIDEND REINVESTMENT PLAN BE
AFFECTED?
All shares of Cleco Common Stock held under the Automatic Dividend
Reinvestment Plan ("DRIP") for common shareholders will be exchanged
automatically for an equal number of shares of Holding Company Common Stock.
Following implementation of the Holding Company Proposal, the DRIP will provide
for transactions in Holding Company Common Stock.
WILL I HAVE DISSENTERS' RIGHTS?
Persons who object to corporate actions are sometimes awarded
"dissenters' rights", whereby they can receive in cash the fair value for their
shares if they dissent from the particular actions taken. Holders of Cleco
Common Stock will not have such dissenters' rights if the Holding Company
Proposal is approved because such shares are publicly traded. However,
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<PAGE> 20
because shares of Cleco Preferred Stock are not publicly traded, holders of a
series of Cleco Preferred Stock will have the right to dissent if the exchange
of such series is approved by less than eighty percent of the total shares of
such series issued and outstanding. In order to perfect dissenters' rights,
such shareholders will be required to follow certain procedures outlined in the
section of this Proxy Statement and Prospectus entitled "Dissenters' Rights."
See "PROPOSAL NUMBER 1 -- The Holding Company Proposal - Dissenters' Rights" on
page ___ of this Proxy Statement and Prospectus.
WILL HOLDING COMPANY COMMON STOCK BE TRADED ON AN EXCHANGE?
Holding Company Common Stock will be listed on the NYSE and the Pacific
Stock Exchange and will trade under the ticker symbol "CNL" at prices that will
be reported in newspapers. Cleco Common Stock currently is listed and traded on
the NYSE and the Pacific Stock Exchange under the symbol "CNL" at prices that
are reported in newspapers. The closing price of Cleco Common Stock on the NYSE
on _______________, 1999 was $_____ per share. Following the implementation of
the Holding Company Proposal, Cleco Common Stock, which will then be owned by
the Holding Company, no longer will trade on any stock exchange, and it will be
delisted and deregistered.
WILL I HAVE TO EXCHANGE MY STOCK CERTIFICATES?
No. Your Cleco Common Stock certificate automatically will represent an
equal number of shares of Holding Company Common Stock when the Holding Company
Proposal is implemented and no longer will represent shares of Cleco Common
Stock. If you own shares of Cleco Preferred Stock that are exchanged for
shares of Holding Company Preferred Stock, your Cleco Preferred Stock
certificate will similarly represent an equal number of such series of Holding
Company Preferred Stock and no longer will represent shares of Cleco Preferred
Stock.
However, if the Holding Company Proposal is approved and you would like
to receive a new stock certificate, we will be happy to provide you with one.
To request a new certificate, please call Cleco's office of Shareholder
Assistance at 1-800-253-2652.
WILL STOCK-BASED COMPENSATION PLANS FOR CLECO EMPLOYEES BE AFFECTED?
Yes. In connection with the implementation of the Holding Company
Proposal, the 1990 Long-Term Incentive Compensation Plan (the "Long-Term
Incentive Plan") will be adopted by the Holding Company. Future grants and
awards made under the plan will be made in the form of Holding Company Common
Stock. Outstanding grants and awards made under the Long-Term Incentive Plan
and the 1981 Incentive Stock Option Plan (the "Stock Option Plan"), which are
currently in the form of Cleco Common Stock, will be converted to grants or
awards in the form of Holding Company Common Stock. Approval of the Holding
Company Proposal will be considered approval of this change to the plans.
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HOW WILL OTHER EMPLOYEE BENEFIT PLANS BE AFFECTED?
The Savings and Investment Plan currently holds Cleco Common Stock and a
series of Cleco Preferred Stock which is convertible to Cleco Common Stock. If
the Holding Company Proposal is implemented the Cleco Common Stock will be
exchanged for the Holding Company Common Stock. If the holders of Cleco
Preferred Stock held by the Savings and Investment Plan approve the exchange
for Holding Company Preferred Stock, such series will be exchanged for shares
of Holding Company Preferred Stock which are convertible into Holding Company
Common Stock. The exchange of such preferred shares will ensure that the
employee stock ownership feature of the Savings and Investment Plan (the
"ESOP") and the ESOP participants continue to possess an interest in publicly-
traded securities.
WHAT DO I NEED TO DO NOW?
Please read this Proxy Statement and Prospectus and mail your signed
proxy card in the enclosed postage-paid return envelope as soon as possible, so
that your shares will be represented at the Annual Meeting. You need not take
any further action, although you are welcome to attend the Annual Meeting.
WHOM SHOULD I CALL IF I HAVE ANY QUESTIONS?
Please call Cleco's office of Shareholder Assistance at 1-800-253-2652
with any questions relating to the Holding Company Proposal or other matters to
be considered at the Annual Meeting.
--------------------------
You should rely only on the information contained or incorporated by
reference in this Proxy Statement and Prospectus. We have not authorized
anyone to provide you with different information. This document is dated March
10, 1999. Do not assume that the information contained or incorporated by
reference in this document is accurate as of any date other than March 10,
1999. The mailing of this document and the issuance of Holding Company Common
Stock or Holding Company Preferred Stock, if the Holding Company Proposal is
approved, shall not create any implication to the contrary.
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INTRODUCTION
The enclosed proxy is solicited on behalf of the Cleco Board, to be
voted at the Annual Meeting to be held at the time and place and for the
purposes described in the enclosed Notice of Annual Meeting of Shareholders.
This solicitation of proxies for the Annual Meeting is being made by the
management of Cleco on behalf of the Cleco Board and will be made by mail and
by telephone, facsimile or overnight delivery. Proxies also may be solicited
in advertisements and in person by officers and employees of Cleco. Also,
Cleco has hired Morrow & Company, Inc. ("Morrow") to assist in the solicitation
of proxies. Morrow's fee is approximately $12,000, plus expenses. Other than
Morrow, no specially engaged solicitors will be retained to solicit proxies.
Cleco is responsible for payment of all expenses of the solicitation, including
the cost of preparing and mailing this Proxy Statement and Prospectus and the
reimbursement of brokerage firms and other nominees for their reasonable
expenses in forwarding proxy material to beneficial owners of Cleco capital
stock. This Proxy Statement and Prospectus and the accompanying proxy are
being mailed to record shareholders as of the close of business on February 23,
1999, beginning on or about March 10, 1999.
All duly executed proxies will be voted in accordance with their
instructions. If no instructions have been given in a proxy, the shares
represented by such proxy will be voted at the Annual Meeting or any
adjournments thereof "FOR" each of the proposals and, in the discretion of the
persons named in the proxy, on any other business that may properly come before
the Annual Meeting.
Shareholders who execute proxies retain the right to revoke them at any
time before they are voted at the Annual Meeting. A shareholder who attends
the Annual Meeting may vote in person even though such shareholder has mailed
in a proxy. A proxy also may be revoked by a proxy bearing a later date. The
revocation of a proxy will not be effective until written notice of such
revocation has been given to the Secretary of Cleco, unless the person granting
such proxy votes in person.
Cleco has its principal executive offices at 2030 Donahue Ferry Road,
Pineville, Louisiana 71360, telephone number: (318) 484-7400.
RECORD DATE AND VOTING RIGHTS
Holders of record of outstanding Voting Stock as of the close of business
on the Record Date are entitled to receive notice of the Annual Meeting. As of
February 23, 1999, there were _______________ shares of Cleco Preferred Stock
outstanding and _______________ shares of Cleco Common Stock outstanding, each
entitled to one vote per share on matters for which such classes are entitled to
vote. As of the Record Date, all officers and directors of Cleco, as a group,
beneficially owned ___________ percent of the outstanding shares of Cleco Common
Stock and _____ percent of the outstanding shares of Cleco Preferred Stock. See
"SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT" on page __ of this Proxy
Statement and Prospectus.
The proxy enclosed for record holders of Voting Stock is for the number
of shares registered in your name with Cleco, together with any additional full
shares held in your name in Cleco's DRIP. The instructions on the proxy card
provide that any shares registered in your name and any full shares held for
your account in such plan will be voted in the same manner.
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This proxy provides you with the opportunity to specify your approval or
disapproval of, or abstention with respect to, the following proposals:
o the Holding Company Proposal;
o the election of three directors; and
o the retention of independent auditors for 1999.
Under Louisiana law, the Cleco Articles, and the Cleco Bylaws, an
abstention from voting on a matter by a shareholder who is either present in
person at its Annual Meeting or represented by proxy is not a vote "cast" and
is counted neither "for" nor "against" the matter subject to the abstention.
Broker non-votes on matters are treated as shares as to which voting power has
been withheld by the beneficial holders of those shares. Consequently, on any
matter upon which the required vote is a percentage of shares outstanding, an
abstention or broker non-vote would be the same as a vote against the proposal.
Under Louisiana law and the Cleco Bylaws, a quorum is based upon the
number of outstanding shares of Voting Stock, including shares relating to
abstentions. Broker non-votes are not counted for quorum purposes.
The Holding Company Proposal must be approved by at least two-thirds of
the Voting Stock present at the Annual Meeting and by at least two-thirds of
the issued and outstanding shares of Cleco Preferred Stock. Election of
directors shall be by plurality, with the holders of Cleco Common Stock being
able to cumulate their votes. The appointment of the independent auditors will
be determined by a vote of a majority of the votes cast by holders of Voting
Stock at the Annual Meeting.
EXECUTION AND REVOCATION OF PROXY
Shares represented by proxies properly signed and returned will be voted
at the Annual Meeting in accordance with the shareholder's specifications. If
a proxy is signed but no voting specification is made, then the shares
represented by the proxy will be voted "FOR" the Holding Company Proposal,
"FOR" the election of the nominees for director, and "FOR" the appointment of
PricewaterhouseCoopers LLP as the independent auditors and in accordance with
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<PAGE> 24
the recommendations of the Cleco Board on any other proposals that may properly
come before the Annual Meeting. Cleco Preferred Stock also will be voted in
favor of the exchange of such series for shares of Holding Company Preferred
Stock if no voting specification is made.
A shareholder who gives a proxy may revoke it at any time before the
proxy is voted at the Annual Meeting. To revoke a proxy, a written instrument
signed in the same manner as the proxy must be delivered to the Secretary of
Cleco at or before the Annual Meeting. Also, a shareholder who attends the
Annual Meeting in person may vote by ballot at the meeting, thereby canceling
his or her proxy.
ATTENDANCE AND PROCEDURES AT THE ANNUAL MEETING
Attendance at the Annual Meeting will be limited to shareholders of
record, beneficial owners of Voting Stock having evidence of ownership, the
authorized representative (one only) of an absent record shareholder of Cleco,
and invited guests of the management of Cleco. Any person claiming to be an
authorized representative of a shareholder must, upon request, produce written
evidence of the authorization. In order to assure a fair and orderly meeting
and to accommodate as many shareholders as possible who may wish to speak at
the meeting, management will permit only record shareholders or their
authorized representatives to address the meeting. In addition, management
will require that any signs, banners, placards and similar materials be left
outside the meeting room.
Cleco may adjourn the Annual Meeting one or more times, and continue to
solicit proxies under certain circumstances. Such circumstances include the
failure to obtain a quorum as well as insufficient affirmative votes to approve
the Holding Company Proposal, the election of the nominees for director, or the
appointment of PricewaterhouseCoopers LLP as the independent auditors.
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Proposals of shareholders intended to be presented at the annual
meeting in 2000 of the shareholders of the Holding Company, if the Holding
Company Proposal passes, or if not, then of Cleco, and otherwise eligible, must
be received no later than November 10, 1999 (subject to certain provisions of
the Holding Company Bylaws, if the Holding Company Proposal passes, or if not,
then of the Cleco Bylaws, which require that certain proposals be submitted 180
days before such meeting) to be included in the proxy material and form of proxy
relating to such meeting, at the following address: Cleco Corporation, P. O. Box
5000, Pineville, Louisiana 71361-5000, Attn: Secretary. If a proposal meeting
all applicable requirements is not received on or prior to January 31, 2000,
management may exercise its discretion in voting proxies for the 2000 annual
meeting of shareholders on any matter raised at such meeting without a
discussion of such matter in the proxy statement for such meeting.
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PROPOSAL NUMBER 1 -- THE HOLDING COMPANY PROPOSAL
THE HOLDING COMPANY PROPOSAL
The Holding Company Proposal is a proposal to adopt a public utility
holding company structure for Cleco. Pursuant to the Plan of Exchange, Cleco
will be renamed Cleco Utility Group Inc. and become a subsidiary of the Holding
Company. The common stock of the Holding Company will be publicly traded.
Cleco's stock will not be publicly traded any longer. The former owners of
Cleco Common Stock will then own Holding Company Common Stock.
The primary purpose of the Holding Company Proposal is to allow Cleco to
separate its LPSC regulated electric utility business from its other
businesses. As a subsidiary of the Holding Company, Cleco will continue to
operate its LPSC regulated electric utility business and to engage in FERC
regulated wholesale sales and transmission services. In addition, Cleco's
current subsidiaries will become subsidiaries of the Holding Company. Some of
these subsidiaries and their affiliates engage in FERC regulated electric
utility businesses as well as other electric utility-related businesses. In
the future, the Holding Company may add other subsidiaries or affiliates that
are FERC regulated electric utilities or that engage in other lines of business
that are incidental or complementary to its functional enterprises or Cleco's
lines of businesses.
The Cleco Board has unanimously approved the Holding Company Proposal,
and recommends that you vote "FOR" the proposal.
REASONS FOR THE HOLDING COMPANY PROPOSAL
General. A holding company structure will provide Cleco with the
financial and regulatory flexibility needed to engage effectively in
competitive businesses, while separately operating its continuing LPSC
regulated electric utility business. The holding company structure is a
well-established form of organization for companies engaging in multiple lines
of business, and is increasingly prevalent in the electric utility industry.
Many electric utilities, and all other publicly-owned electric utilities in
Louisiana, are organized under a public utility holding company structure.
Changing Regulatory Environment. The principal reason for the proposed
restructuring is to respond more effectively and efficiently to regulatory and
competitive changes taking place in the electric utility industry. Cleco
believes that this will benefit both shareholders and customers by allowing
Cleco to operate its LPSC regulated retail utility business more efficiently
while at the same time allowing the Holding Company and its affiliates to
respond more flexibly to industry changes that are presenting not only new
business opportunities but also challenges. The proposed restructuring also
will insulate Cleco's utility operations from financial risks associated with
its affiliated other businesses. Meanwhile, the affiliate companies will have
greater financing flexibility because they will no longer be subject to LPSC
regulation.
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<PAGE> 26
Cleco has operated primarily as a traditional utility, responsible for
constructing, owning, and operating the utility generation, transmission, and
distribution facilities needed to serve its retail and wholesale customers in
Louisiana. However, the regulation of utilities and the markets that Cleco has
traditionally served are changing. The generation and sales facets of the
traditional utility business are becoming less regulated and more competitive;
the energy options for customers are expanding; and the challenges to existing
utility operations are intensifying.
In recent years, federal and state initiatives throughout the United
States have promoted the development of competition in the generation,
transmission and sale of electricity. In general, these initiatives have
sought to unbundle the vertically integrated services that electric utilities
traditionally have provided and to enable customers to purchase electricity
directly from suppliers other than their local transmission or distribution
utilities. For example, in 1996 and 1997, the FERC issued its orders requiring
electric utilities, including Cleco and its neighboring electric utilities, to
file open access transmission tariffs that will make the utility transmission
systems available to wholesale sellers and buyers of electric energy on a
non-discriminatory basis. Also, in recent years the LPSC has been studying
alternatives for restructuring the retail electric industry in Louisiana,
including proposals to allow for residential, commercial, and industrial
customer choice of retail electric suppliers, in an effort to lower customer
rates. These studies, while unpredictable in outcome, must be taken seriously
as potential precursors of competitive open markets in Louisiana for retail
electric sales.
At the same time that facets of Cleco's traditional utility business are
becoming less regulated and more competitive, industry changes inside and
outside Cleco's Louisiana service territory are presenting the System with new
business opportunities. Two of Cleco's subsidiaries have begun to take
advantage of these new business opportunities.
o Cleco Energy LLC ("Cleco Energy"), a Cleco Midstream subsidiary
that markets natural gas energy at the wholesale level, continues
to expand its activities in competitive markets in the south
central region of the United States.
o Cleco Evangeline LLC ("Cleco Evangeline") is developing the first
new power plant in Cleco's service area in over a decade to meet
native load requirements and to enable the System to efficiently
and effectively compete with non-utility generators and
independent power producers in installing the region's new
generating plants.
Cleco's management is considering other opportunities for participating in the
construction, ownership and operation of new electric generation projects to
meet demands for new generating capacity in Cleco's operating region. New and
competitive power plant projects are expected to continue to offer the
opportunity for expansion of the System's investments within and outside
Louisiana. Initially, Cleco will likely enter into such investments through
joint ventures and other, non-wholly owned, investments. A holding company
structure will allow profits from these projects to be retained for the benefit
of the System and Holding Company shareholders.
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<PAGE> 27
The corporate separation and financing flexibility afforded by a holding
company structure will increase the System's ability to respond to changes in
the electric industry, markets and regulation. A holding company structure
will accommodate the separation of Cleco's ancillary lines of business from
Cleco's remaining core utility business, while allowing common ownership of
these businesses under the Holding Company. Similarly, when new business
opportunities arise, new lines of businesses can be operated through the
Holding Company subsidiaries, rather than through Cleco subsidiaries, thereby
enhancing the separation between Cleco and those businesses. Such separation
of business functions will facilitate the development of these other
businesses, while helping to insulate Cleco and its customers from the risks
associated with the operations of these other businesses.
In contrast to a holding company structure, Cleco's current corporate
structure cannot accommodate the same degree of financial separation because
all business activities must either be part of the utility itself or be
conducted in entities owned by the utility. As a result, any volatility in
earnings associated with these other businesses will continue to be reflected
in the present utility's financial results. In a holding company structure,
these other businesses may be operated in or under sister companies of Cleco.
One of the major benefits of a holding company structure is that Cleco will be
more effectively insulated from the potential volatility of these other
businesses for two reasons.
o First, the activities of sister companies of Cleco will not be
reflected in the utility's financial statements.
o Second, any unfavorable financial results of these companies
generally will not adversely affect Cleco's equity capital.
Management anticipates that the holding company structure also will
permit the use of financing techniques that are more directly suited to the
particular requirements, characteristics, and risks of the System's other
businesses, without any impact on the capital structure of Cleco.
o The Holding Company, in addition to receiving dividends from
Cleco, will be able to obtain funds through its own debt or
equity financings.
o Cleco will be able to obtain funds through its own financings
(which may include the issuance of debt or preferred stock, as
well as the issuance of additional shares of Cleco Common Stock
to the Holding Company).
o The other businesses may obtain funds from the Holding Company,
from affiliates other than Cleco, or from their own outside
financings.
Of course, any financings will depend upon the financial and other conditions
of the entities involved and market conditions. In addition, the LPSC Order
authorizing the implementation of
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the Holding Company Proposal prohibits Cleco from encumbering its LPSC
jurisdictional assets as collateral for any obligations incurred by the Holding
Company or any other affiliate of Cleco.
The proposed restructuring provides for a holding company that will not
be a utility. Under the expected regulatory treatment, neither the Holding
Company, nor debt or equity it incurs or issues, will be subject to direct
regulation by the LPSC or the FERC.
Following the restructuring, Cleco will continue to operate as a public
utility subject to LPSC and FERC regulation. Cleco's utility business is
expected to constitute the principal part of the Holding Company's earnings for
the foreseeable future after the restructuring.
THE HOLDING COMPANY
The Holding Company is a Louisiana corporation incorporated for purposes
of implementing the Holding Company Proposal. The principal executive offices
of the Holding Company are located at 2030 Donahue Ferry Road, Pineville,
Louisiana 71360-5226, and its telephone number is 318-484-7400. The Holding
Company has not had any previous business operations. The currently
outstanding shares of Holding Company Common Stock are owned by Cleco and will
be canceled when the Holding Company Proposal is implemented.
Following implementation of the Holding Company Proposal, the Holding
Company will own all the outstanding Cleco Common Stock and it also will own
Cleco's subsidiaries. Management anticipates that the Holding Company, directly
or indirectly, also will own any other subsidiaries created in the future in
connection with the operation of the System's business. New businesses may also
be operated as subsidiaries of, or as joint ventures or under other
arrangements with, the Holding Company's subsidiaries and their affiliates.
See "PROPOSAL NUMBER 1 -- THE HOLDING COMPANY PROPOSAL - Holding Company
Subsidiaries" on page __ of this Proxy Statement and Prospectus. The
investment performance of Holding Company Common Stock will depend on the
results of operations of Cleco and the Holding Company's other subsidiaries and
affiliates.
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 its
subsidiaries, including Cleco, borrowings, and the sale of equity or debt
securities. As is the case under Cleco's present corporate structure, there
can be no assurance that the subsidiaries of the Holding Company, including
Cleco, will have earnings or pay any dividends to the Holding Company.
The Holding Company currently will not be subject to regulation by the
LPSC or the FERC, except to the extent that the rules or orders of these
agencies impose restrictions on the Holding Company's relationship with Cleco
or Cleco's relationships with the Holding
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Company's other subsidiaries. The Holding Company will be a "public utility
holding company" under the 1935 Public Utility Act.
The Staff of the SEC administers the 1935 Public Utility Act. It has
recommended that the 1935 Public Utility Act be repealed. Several bills have
been introduced in Congress to do this, but none has been enacted to date.
Unless or until the 1935 Public Utility Act is repealed, the Holding Company
will invoke an exemption under Section 3(a)(1) of the 1935 Public Utility Act
on two grounds:
o First, both the Holding Company and Cleco are organized and will
carry on their businesses substantially in the State of
Louisiana.
o Second, neither the Holding Company nor Cleco will derive any
material part of its income from a public utility company
subsidiary either organized or carrying on its business
predominantly outside of the State of Louisiana.
This exemption is available even though Holding Company subsidiaries will
engage in interstate commerce. The exemption will exempt the Holding Company
from the provisions of the 1935 Public Utility Act, except Section 9(a)(2),
which requires SEC approval for a direct or indirect acquisition of five
percent 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 for the following reasons:
o if a substantial question of law or fact exists as to whether the
Holding Company is within the parameters of the exemption; or
o if it appears that the exemption may be detrimental to the public
interest or the interest of investors or consumers.
HOLDING COMPANY SUBSIDIARIES
Under the proposed Holding Company structure, the Holding Company will
own five companies: Cleco (to be renamed Cleco Utility Group Inc.), CLE
Resources, Cleco Midstream, Cleco Services, and Cleco Support. Cleco currently
owns CLE Resources, Cleco Midstream, Cleco Services, and Cleco Support.
o Cleco will continue to provide generation, transmission, and
distribution functions necessary to meet present-day Cleco's
public utility service obligations pursuant to its tariffs and
rate schedules on file with the LPSC and the FERC.
o Since CLE Resources' present-day function of providing some of
the financing for Cleco's affiliates will be replaced by the
Holding Company, it is anticipated
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that CLE Resources will be dissolved at an appropriate time after
the Holding Company is formed.
o CLE Intrastate Pipeline Company, Inc., which is currently owned
by Cleco but upon implementation of the Holding Company Proposal
will become a Cleco Midstream subsidiary, owns and operates a set
of intrastate natural gas transmission pipelines connecting
Cleco's natural gas-fired power plants to the interstate natural
gas transmission grid.
o Cleco Midstream will continue to serve as an intermediary company
for the System with its own subsidiaries engaged in energy
procurement, generation, and commodity sales businesses. These
subsidiaries will no longer be subject to the LPSC's
jurisdiction. These businesses of Cleco Midstream are now, and
at the time of the implementation of the Holding Company Proposal
are anticipated to continue to be, organized as subsidiaries of
Cleco Midstream. Cleco Midstream's current subsidiaries are:
o Cleco Columbian LLC - a potential electric co-generation
and wholesale electric marketing project, located within
Cleco's service area, that is in an embryonic
developmental stage
o Cleco Energy - a joint venture with two other parties,
primarily engaging in the wholesale marketing of natural
gas and natural gas transmission
o Cleco Evangeline - an electric generation and wholesale
marketing project now in a developmental stage
o Cleco Generation Services LLC - a services company that
plans to provide electric power plant operations,
maintenance, and engineering expertise as well as labor
support to the System's power plants and potentially to
other generation owners, such as municipalities and
manufacturing industries
o Cleco Trading & Marketing LLC - a services company that
plans to engage in the marketing of electricity in
competitive wholesale markets
o Cleco Services will continue to develop and operate lines of
business that are related to the distribution and retail sales
functions of Cleco, but which are not regulated by the LPSC.
o Cleco Support will continue to provide joint and common office
support services to its affiliates in the areas of information
technology support; financial, accounting and auditing services;
human resources and corporate communications.
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The pricing, essential fairness and documentation of commercial
transactions between Cleco and its affiliates are governed by Cleco's "Inter-
Affiliate Policies". The primary purpose of these policies is to allow for
synergies to be achieved in the internal sharing of human resources and
material between affiliates, while insisting that these arrangements be
commercially reasonable and consistent with public utility regulatory rules
against affiliate abuse. Internal compliance with these written policies also
assures that there is not cross-subsidization between affiliates, for example,
by public utility affiliates of non-public utility affiliates. These policies
will continue in effect with the holding company structure.
In the future, the Holding Company also may form other subsidiaries,
which in turn may form subsidiaries or enter into joint ventures or other
business relationships in order to engage in competitive businesses. Currently,
the competitive businesses are related to electric generation and wholesale
sales, electric distribution and retail sales, operation and maintenance of
electric generation, transmission and distribution systems, as well as natural
gas marketing. In addition to these competitive businesses, the Holding Company
may expand into other businesses that are incidental or complementary to its
functional expertises or Cleco's lines of business.
With the exception of Cleco, the Holding Company subsidiaries may
encounter competitive and other business factors and different, and perhaps
greater, investment risks than those involved in the utility business of Cleco
(over time, however, Cleco likely also will be affected by competitive factors
and regulatory changes). There can be no assurance that these subsidiaries
will be successful, or if unsuccessful, that they will not have an adverse
effect on the Holding Company.
DIRECTORS AND OFFICERS
Upon implementation of the holding company structure, the directors
elected at the Annual Meeting and any other directors serving on the Cleco
Board will automatically become directors of the Holding Company. These
directors will initially serve as the directors of both companies. In the
future, the directors of Cleco and the directors of the Holding Company may or
may not be the same persons.
Initially the senior officers of the Holding Company also will be
officers of Cleco or one or more other subsidiaries of the Holding Company.
The Holding Company will have few employees. In the future, the Holding
Company may employ additional officers and employees.
DIVIDENDS
Following implementation of the Holding Company Proposal, former holders
of Cleco Common Stock will then hold Holding Company Common Stock and receive
dividends on Holding Company Common Stock when, as, and if declared by the
Holding Company Board. Dividends declared on Cleco Common Stock will be paid
to the Holding Company. If a series of Cleco Preferred Stock votes in favor of
the exchange of shares for shares of Holding Company
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<PAGE> 32
Preferred Stock, such shares will be exchanged for shares of Holding Company
Preferred Stock, and dividends will be paid by the Holding Company when, as,
and if declared by the Holding Company Board. If a series does not approve of
such exchange, dividends on Cleco Preferred Stock will continue to be declared
by the Cleco Board and paid by Cleco when so declared.
Dividends on Holding Company Common Stock are expected to be paid
initially at least at the same rate on the same schedule as are now paid on
Cleco Common Stock. The most recent dividend paid on Cleco Common Stock was
$.405 per share, which was paid on February 15, 1999.
Dividends on Holding Company Common Stock will depend primarily on the
dividends and other distributions that Cleco and the other Holding Company
subsidiaries pay to the Holding Company as well as the capital requirements of
the Holding Company and its subsidiaries. Pursuant to certain of Cleco's
financing arrangements and applicable law, Cleco's ability to pay dividends on
Cleco Common Stock is restricted to payments based on its earned surplus and on
maintenance of minimum capitalization requirements. These restrictions will
continue after the holding company structure is implemented. As long as shares
of Cleco Preferred Stock are outstanding, dividends also are subject to certain
limits based on the amount of equity represented in the outstanding shares on
Cleco Common Stock and on Cleco's capitalization. There can be no assurance
that in the future the Holding Company subsidiaries, including Cleco, will have
earnings sufficient to pay any dividends to the Holding Company. Further, the
Holding Company may determine to hold any dividends it receives from its
subsidiaries for its own capital needs or may use such dividends in the business
of its subsidiaries or other affiliates.
Cleco and the Holding Company each may issue additional preferred stock
in the future to meet their capital requirements. Any Holding Company
Preferred Stock and any Cleco Preferred Stock will have preferential dividend
rights over common stock of such entities.
HOLDING COMPANY ARTICLES AND HOLDING COMPANY BYLAWS
Upon implementation of the Holding Company Proposal, holders of Cleco
Common Stock will become holders of Holding Company Common Stock, and their
rights will be governed by the Holding Company Articles and the Holding Company
Bylaws, rather than the Cleco Articles and the Cleco Bylaws. Approval of the
Holding Company Proposal by the holders of the Voting Stock also will be
considered approval and ratification of the Holding Company Articles, as
proposed to be amended. The Holding Company Articles may be amended at any
time prior to implementation of the Holding Company Proposal. See "PROPOSAL
NUMBER 1 -- THE HOLDING COMPANY PROPOSAL - Amendment or Termination" on page __
of this Proxy Statement and Prospectus. References in this Proxy Statement and
Prospectus to the Holding Company Articles, attached as Appendix D to this
Proxy Statement and Prospectus, and the Holding Company Bylaws are qualified in
their entirety by reference to the forms thereof.
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HOLDING COMPANY CAPITAL STOCK
The Holding Company Articles authorize the Holding Company to issue
_______________ shares of Holding Company Common Stock and _______________
shares of Holding Company Preferred Stock. The Holding Company Board is
authorized to issue Holding Company Preferred Stock periodically in any series.
In connection with the creation of each such series, the Holding Company Board
is to determine the number of shares of the series, and the designations,
relative rights, preferences and limitations of the series.
Shares of Holding Company Common Stock and any shares of Holding Company
Preferred Stock will be fully paid and nonassessable when issued in the Share
Exchange. Holders of Holding Company Common Stock and any shares of Holding
Company Preferred Stock are not entitled to preemptive rights. Preemptive
rights allow a shareholder to subscribe for its proportionate share of any
subsequent stock offering. Few, if any, publicly traded companies allow
preemptive rights, because they make it more difficult to raise capital.
Dividends. Subject to any prior rights of Holding Company Preferred
Stock (if any should become outstanding) and restrictions contained in the
Holding Company Articles, Holding Company Common Stock is entitled to dividends
when, as, and if declared by the Holding Company Board. Subject to the same
prohibitions, the Holding Company may purchase or otherwise acquire outstanding
shares of Holding Company Common Stock out of funds legally available therefor.
See "PROPOSAL NUMBER 1 -- THE HOLDING COMPANY PROPOSAL - Dividends" on page __
of this Proxy Statement and Prospectus.
Liquidation Rights. Subject to any prior rights of Holding Company
Preferred Stock, upon liquidation of the Holding Company, any remaining net
assets of the Holding Company are distributable pro rata to the holders of
Holding Company Common Stock.
Voting Rights. Holders of Holding Company Common Stock and Holding
Company Preferred Stock are each entitled to one vote for each share, except in
the election of directors, in which case holders of Holding Company Common
Stock have cumulative voting rights. Holders of any additional shares of
Holding Company Preferred Stock will have no voting rights unless, in
connection with the issuance of a series of Holding Company Preferred Stock,
the Holding Company Board provides voting rights or unless otherwise required
by law.
Transfer Agent, Registrar and Dividend Agent. The transfer agent,
registrar and dividend agent for Holding Company Common Stock will be First
Chicago Trust Company of New York, P.O. Box 2500, Jersey City, New Jersey
07303-2500.
COMPARATIVE RIGHTS OF SHAREHOLDERS
Certain differences between the rights of holders of Holding Company
Common Stock and those of holders of Cleco Common Stock are summarized below.
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Authorized Shares. _______________ shares of Holding Company Common
Stock are authorized. 50,000,000 shares of Cleco Common Stock are authorized.
As of February 23, 1999, there were _______________ shares of Cleco Common
Stock outstanding.
The authorized shares of Cleco include 1,491,400 shares of preferred
stock of the par value of $100 per share and 3,000,000 shares of preferred
stock of the par value of $25 per share. As of February 23, 1999, there were
______ shares of $100 preferred stock outstanding and no shares of $25
preferred stock outstanding. The authorized shares of Holding Company include
_______________ shares of Preferred Stock, none of which currently are
outstanding.
Purpose. The Cleco Articles have a number of stated purposes. The
Holding Company Articles allow the Holding Company to engage in any lawful
activity for which corporations may be formed under Louisiana Business
Corporation Law ("LBCL").
Duration. The Cleco Articles provide for a duration of 99 years,
expiring in January 2034. The Holding Company Articles provide for a perpetual
existence.
AUTHORIZED BUT UNISSUED SHARES
Based upon the number of shares outstanding on February 23, 1999, upon
implementation of the Holding Company Proposal (and assuming the different
series of Cleco Preferred Stock approve the exchange of such shares for Holding
Company Preferred Stock), _______________ shares of Holding Company Common
Stock and _______________ shares of Holding Company Preferred Stock will be
authorized but unissued. As of February 23, 1999, there were _______________
shares of Cleco Common Stock and _______________ shares of Cleco Preferred
Stock authorized but unissued.
The existence of authorized but unissued shares may either discourage or
make it more difficult for a third party to attempt to obtain control of the
Holding Company. These shares may be issued without shareholder approval to
prevent or render more difficult or costly the completion of a takeover
transaction. In this regard, the Holding Company Articles grant the Holding
Company Board, as the Cleco Articles grant the Cleco Board, broad corporate
power to establish the rights and preferences of the Holding Company Preferred
Stock. The Holding Company Articles provide, as do the Cleco Articles, that
one or more classes or series of Holding Company Preferred Stock can be issued
which will entitle holders to exercise rights which could have the effect of
impeding a takeover. These rights include the following:
o the rights to convert or exchange the stock into shares of
Holding Company Common Stock or other securities; and
o the right to demand redemption of the stock at a specified price
under prescribed circumstances related to a change of control.
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PREFERRED STOCK OF CLECO
Shares of Holding Company Preferred Stock will have the same rights,
preferences and privileges as shares of Cleco Preferred Stock. Holders of
Cleco Preferred Stock will vote, by series, as to whether the shares of such
series of Cleco Preferred Stock will be exchanged for shares of Holding Company
Preferred Stock. If a series votes against such exchange, and the Holding
Company Proposal is adopted, dividends on that series of Cleco Preferred Stock
will be solely dependent upon the results of operations at Cleco, as Cleco will
no longer be entitled to dividends from its former subsidiaries.
DEBT OF CLECO
The debts of Cleco will continue as obligations of Cleco following
implementation of the Holding Company Proposal. These debts will not be
obligations of the Holding Company or the Holding Company's other subsidiaries.
The LPSC Order authorizing the implementation of the Holding Company Proposal
prohibits Cleco from encumbering its LPSC jurisdictional assets to provide
collateral for any obligations incurred by the Holding Company or any other
affiliate of Cleco.
IMPLEMENTATION OF THE HOLDING COMPANY PROPOSAL
The Holding Company Proposal will be implemented pursuant to the Plan of
Exchange, attached as Appendix C to this Proxy Statement and Prospectus, should
the Holding Company Proposal be approved. The Plan Exchange provides that each
share of Cleco Common Stock outstanding immediately prior to the Share Exchange
will be automatically exchanged for one share of Holding Company Common Stock.
Each person who owns Cleco Common Stock immediately prior to the Share Exchange
will own the same number of shares of Holding Company Common Stock immediately
following the Share Exchange. The Holding Company will become the owner of all
outstanding Cleco Common Stock and the shares of Holding Company Common Stock
held by Cleco immediately prior to the Share Exchange will be canceled.
Simultaneously with the implementation of the Holding Company Proposal,
Cleco's name will be changed to Cleco Utility Group Inc. and the Holding
Company's name will be changed to Cleco Corporation. Also, simultaneously with
the implementation of the Holding Company Proposal, all subsidiaries of Cleco
will be transferred to the Holding Company such that they are subsidiaries of
the Holding Company rather than Cleco. Both the Cleco Board and the Holding
Company Board have unanimously approved the implementation of the Plan of
Exchange.
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VOTE REQUIRED
The affirmative vote of the holders of record on the Record Date of
two-thirds of the Voting Stock present at the Annual Meeting is required to
approve the Holding Company Proposal. In addition, the Holding Company
Proposal must be approved by at least two-thirds of the outstanding Cleco
Preferred Stock. Because a requirement for this proposal is the affirmative
vote of two-thirds of the Voting Stock present at the Annual Meeting, broker
non-votes and abstentions will not have an effect on such vote so long as a
quorum is present. However, with respect to the vote of the Cleco Preferred
Stock, the required vote is two-thirds of the outstanding shares.
Consequently, broker non-votes and abstentions will have the effect of a vote
against the proposal.
CONDITIONS TO THE SHARE EXCHANGE
In addition to approval of the Holding Company Proposal by the holders
of Voting Stock, the Share Exchange is subject to the satisfaction of the
following conditions:
o regulatory approvals: all necessary orders, authorizations,
approvals or waivers from the LPSC and all other applicable
regulatory bodies, boards, or agencies shall have been received
and remain in full force and effect, and shall not include, in
the sole judgment of the Cleco Board, unacceptable conditions;
o shares of Holding Company Common Stock to be issued in connection
with the exchange shall have been listed, subject to official
notice of issuance, by the NYSE;
o the Holding Company Articles shall have been filed with the
Louisiana Secretary of State pursuant to Section 25 of the LBCL;
and
o a certificate of exchange with respect to the Share Exchange
shall have been filed with the Louisiana Secretary of State
pursuant to Section 116 of the LBCL.
With respect to the regulatory approvals, Cleco and the Holding Company
filed an application for LPSC approval of the Holding Company Proposal. The
LPSC approved the application, as amended, on December 18, 1998. The FERC has
held that the transfer of a public utility's common stock from its existing
shareholders to a holding company constitutes a transfer of the ownership and
control of the utility's jurisdictional facilities and is thus a "disposition
of facilities" subject to FERC review and approval under Section 203 of the
Federal Power Act of 1920. On January 29, 1999, the FERC issued an order
authorizing Cleco to adopt the proposed holding company structure.
The Holding Company Articles were filed October 30, 1998, with the
Louisiana Secretary of State. The Holding Company Articles will be amended
upon effectiveness of the Share
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Exchange, unless amended or altered by the Cleco Board subsequent to the date
of this Proxy Statement and Prospectus.
AMENDMENT OR TERMINATION
The Cleco Board and the Holding Company Board may amend or terminate the
Plan of Exchange or amend the Holding Company Articles or the Holding Company
Bylaws at any time prior to the implementation of the Holding Company Proposal.
No amendment, however, may materially and adversely affect the rights of
Cleco's shareholders, as determined in the sole judgment of the Cleco Board.
Following implementation of the Holding Company Proposal, the Holding Company
Articles and the Holding Company Bylaws may be amended in accordance with their
terms, and subject to applicable law.
EXCHANGE OF STOCK CERTIFICATES
If the Holding Company Proposal is implemented, it will not be necessary
for holders of Cleco Common Stock or any series of Cleco Preferred Stock
participating in the Share Exchange to exchange their existing stock
certificates for certificates of applicable Holding Company Common Stock or
Holding Company Preferred Stock. The certificates which represent shares of
Cleco Common Stock or Cleco Preferred Stock outstanding immediately prior to
the implementation of the Holding Company Proposal will automatically represent
an equal number of shares of applicable Holding Company Common Stock or Holding
Company Preferred Stock, immediately after the implementation and will no
longer represent Cleco Common Stock or Cleco Preferred Stock. Thereafter, new
certificates bearing the name of the Holding Company will be issued if and as
certificates representing shares of Cleco Common Stock or Cleco Preferred Stock
outstanding immediately prior to the implementation of the Holding Company
Proposal are presented for exchange or transfer.
The holders of a series of Cleco Preferred Stock who do not approve the
exchange of shares will continue to retain existing stock certificates which
will remain as shares of that series of Cleco Preferred Stock, subject to the
existing terms and preferences.
LISTING OF HOLDING COMPANY COMMON STOCK
The Holding Company is applying to have Holding Company Common Stock
listed on the NYSE to trade under the symbol "CNL". It is expected that such
listing will become effective when the Holding Company Proposal is implemented.
Quotations will be carried in newspapers as they have been for Cleco Common
Stock. Following implementation of the Holding Company Proposal, Cleco Common
Stock will no longer trade on any stock exchange, and will be delisted and
deregistered pursuant to Section 12 of the Securities Exchange Act of 1934 (the
"Exchange Act"). No shares of Cleco Preferred Stock currently trade in the
public markets or are listed on any exchange, and no shares of Holding Company
Preferred Stock will be so traded or listed.
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Pursuant to the Plan of Exchange, all shares of Cleco Common Stock
(including uncertificated whole and fractional shares) held under Cleco's DRIP
and the Savings and Investment Plan, and all options on shares under the Long-
Term Incentive Plan and Stock Option Plan will be automatically exchanged for
an equal number of shares, or options on shares, of Holding Company Common
Stock. The plans will be amended to provide for transactions in Holding
Company Common Stock instead of Cleco Common Stock. Approval of the Holding
Company Proposal by the holders of the Voting Stock will also be considered
approval of this amendment to each of the plans.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
Cleco and the Holding Company have received an opinion from Phelps
Dunbar, their special tax counsel, regarding material federal income tax
consequences of the implementation of the Holding Company Proposal.
The following is a summary of Phelps Dunbar's opinion as to material
federal income tax consequences, which is based on certain assumptions and
factual representations:
(i) no gain or loss will be recognized by a holder of Cleco Common
Stock upon the exchange of such holder's Cleco Common Stock
solely for Holding Company Common Stock;
(ii) no gain or loss will be recognized by a holder of Cleco Preferred
Stock upon the exchange of such holder's Cleco Preferred Stock
solely for Holding Company Preferred Stock;
(iii) the aggregate tax basis of shares of Holding Company Common Stock
received by a former holder of shares of Cleco Common Stock in an
exchange described in clause (i) above will equal the tax basis
of such former holder's shares of Cleco Common Stock exchanged
therefor, and the holding period for such shares of Holding
Company Common Stock will include the holding period for shares
of Cleco Common Stock exchanged therefor to the extent that such
shares of Cleco Common Stock were held as a capital asset at the
effective time of the Share Exchange;
(iv) the aggregate tax basis of shares of Holding Company Preferred
Stock received by a former holder of shares of Cleco Preferred
Stock in an exchange described in clause (ii) above will equal
the tax basis of such former holder's shares of Cleco Preferred
Stock exchanged therefor, and the holding period for such shares
of Holding Company Preferred Stock will include the holding
period for shares of Cleco Preferred Stock exchanged therefor to
the extent that such shares of Cleco Preferred Stock were held as
a capital asset at the effective time of the Share Exchange;
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(v) no gain or loss will be recognized by the Holding Company or
Cleco on account of the Share Exchange or the issuance of shares
of Holding Company Common Stock to the former holders of shares
of Cleco Common Stock and the issuance of shares of Holding
Company Preferred Stock to the former holders of shares of Cleco
Preferred Stock pursuant to the Plan of Exchange; and
(vi) the consummation of the Share Exchange will not result in the
termination of the existence of the affiliated group of
corporations of which Cleco has been the common parent, and Cleco
will be included in such affiliated group of corporations of
which the Holding Company will become the new common parent.
The former holders of shares of Cleco Common Stock and Cleco Preferred
Stock will be required to attach to their income tax returns, and maintain a
permanent record of, a complete statement of all the facts relating to the
Share Exchange. The facts to be disclosed by a former holder include the
former holder's basis in the shares of Cleco Common Stock and Cleco Preferred
Stock transferred to the Holding Company and the nature and number of shares of
Holding Company Common Stock and Holding Company Preferred Stock received in
the Share Exchange.
The United States federal income tax discussion set forth above is based
upon current law and may not apply for certain taxpayers subject to special
treatment under the federal income tax laws (for example, foreign corporations
and individuals who are not citizens or residents of the United States). The
foregoing is not intended to be a comprehensive discussion of all possible
federal income tax consequences of the Share Exchange. Furthermore, this Proxy
Statement and Prospectus does not provide any information regarding the tax
consequences of the Share Exchange under the tax laws of any state or any local
or foreign jurisdiction, other than the State of Louisiana. Holders of Cleco
Common Stock and Cleco Preferred Stock are urged to consult their own tax
advisors with respect to the specific tax consequences of the Share Exchange.
MATERIAL LOUISIANA INCOME TAX CONSEQUENCES
Cleco and the Holding Company have requested a ruling letter from the
Department of Revenue regarding material Louisiana income tax consequences of
the implementation of the Holding Company Proposal. It is anticipated that the
ruling letter will be received prior to the effective date of the Holding
Company Proposal. If the ruling letter is not received timely, Phelps Dunbar
will issue an opinion regarding the material Louisiana income tax consequences.
The following is a summary of the Department of Revenue's anticipated
ruling letter and of Phelps Dunbar's opinion as to material Louisiana income
tax consequences, which are based on certain assumptions and factual
representations:
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(i) no gain or loss will be recognized by a holder of Cleco Common
Stock upon the exchange of such holder's Cleco Common Stock
solely for Holding Company Common Stock;
(ii) no gain or loss will be recognized by a holder of Cleco Preferred
Stock upon the exchange of such holder's Cleco Preferred Stock
solely for Holding Company Preferred Stock;
(iii) the aggregate tax basis of shares of Holding Company Common Stock
received by a former holder of shares of Cleco Common Stock in an
exchange described in clause (i) above will equal the tax basis
of such former holder's shares of Cleco Common Stock exchanged
therefor, and the holding period for such shares of Holding
Company Common Stock will include the holding period for shares
of Cleco Common Stock exchanged therefor to the extent that such
shares of Cleco Common Stock were held as a capital asset at the
effective time of the Share Exchange;
(iv) the aggregate tax basis of shares of Holding Company Preferred
Stock received by a former holder of shares of Cleco Preferred
Stock in an exchange described in clause (ii) above will equal
the tax basis of such former holder's shares of Cleco Preferred
Stock exchanged therefor, and the holding period for such shares
of Holding Company Preferred Stock will include the holding
period for shares of Cleco Preferred Stock exchanged therefor to
the extent that such shares of Cleco Preferred Stock were held as
a capital asset at the effective time of the Share Exchange;
(v) no gain or loss will be recognized by the Holding Company on
account of the Share Exchange or the issuance of shares of
Holding Company Common Stock to the former holders of shares of
Cleco Common Stock and the issuance of shares of Holding Company
Preferred Stock to the former holders of shares of Cleco
Preferred Stock pursuant to the Plan of Exchange; (this
conclusion is predicated on the assumption that Cleco's Louisiana
earnings and profits are greater than or equal to the fair market
value of the assets, stock interests, and limited liability
company interests distributed by Cleco to the Holding Company;
this assumption currently is being verified by
PricewaterhouseCoopers LLP and the third-party appraiser); and
(vi) no gain or loss will be recognized by Cleco on account of the
Share Exchange or the issuance of shares of Holding Company
Common Stock to the former holders of shares of Cleco Common
Stock and the issuance of shares of Holding Company Preferred
Stock to the former holders of shares of Cleco Preferred Stock
pursuant to the Plan of Exchange.
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ACCOUNTING TREATMENT
The consolidated assets and liabilities of the Holding Company and its
subsidiaries immediately after the Holding Company Proposal is implemented will
be the same as the consolidated assets and liabilities of Cleco immediately
before implementation. The Holding Company, on an unconsolidated basis, will
record its investment in Cleco and in subsidiaries transferred by Cleco and
other affiliates to the Holding Company at their net book value. The Share
Exchange will result in the Holding Company becoming the owner of the Cleco
Common Stock. This change in ownership has no accounting effect on Cleco. The
transfers of subsidiaries by Cleco and other affiliates to the Holding Company
will reduce Cleco's or such affiliates' retained earnings by an amount equal to
the net book value of the subsidiaries transferred.
DISSENTERS' RIGHTS
Each holder of Cleco Preferred Stock who objects to the Share Exchange
may be entitled to the rights and remedies of dissenting shareholders provided
in Section 131 of the LBCL (applicable excerpts attached as Appendix E to this
Proxy Statement and Prospectus). Section 131 provides that shareholders of
Louisiana corporations who vote against a share exchange have the right to
dissent if the share exchange is authorized by less than eighty percent of the
total voting power of the class of shares voting on a particular issue.
Consequently, if a series of Cleco Preferred Stock approves the exchange of such
series by less than eighty percent of the total number of outstanding shares in
the series, then the holder of a share in such series may dissent from the Share
Exchange. In addition, all holders of Cleco Preferred Stock are voting on the
Share Exchange as a single class. If such vote is by less than eighty percent
of the total number of shares of Cleco Preferred Stock issued and outstanding,
then all holders of Cleco Preferred Stock may dissent with respect to the Share
Exchange.
In order to dissent, a shareholder must file with Cleco a written
objection to the Share Exchange, which objection must be filed with Cleco prior
to or at the Annual Meeting. In addition, the shareholder must vote against
the Share Exchange at the Annual Meeting. If the Share Exchange is approved by
less than eighty percent of the total series or class outstanding, as the case
may be, Cleco must provide by registered mail notice of such vote to
shareholders who filed a written objection and voted against the Share
Exchange. A dissenting shareholder may then file with Cleco a written demand
for the fair cash value of his or her shares as of the day before the Annual
Meeting. The demand must be made within twenty days of the mailing of the
notice from Cleco and must include the fair value being requested by the
dissenting shareholder. The shareholder must also include in the demand a post
office address to which Cleco's reply may be sent and must deposit his or her
shares in escrow at a bank or trust corporation, duly endorsed and transferred
to Cleco on the sole condition that the fair value be paid. If Cleco does not
agree with the fair value requested by the dissenting shareholder, it must
provide notice to the shareholder (the "Notice") within twenty days after
receipt of the shareholder's demand and state in such Notice the value it is
willing to pay for the shares. If a disagreement continues over the
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fair value, the LBCL provides a method for determination of fair value by a
district court in Rapides Parish. If the dissenting shareholder institutes a
suit seeking an amount in excess of the amount offered by Cleco to the
dissenting shareholder in the Notice, Cleco shall deposit the amount offered
with the court. If the amount finally awarded by the court, exclusive of
interest and costs (the "Awarded Amount"), is more than the amount so offered
and deposited, then all costs of the court proceedings shall be paid by Cleco.
If the Awarded Amount is equal to or less than the amount so offered and
deposited, then all costs of the court proceedings shall be paid by the
dissenting shareholder.
The amount received by a dissenting shareholder may be more or less
than, or equal to, the par value of, or redemption price for, such shares.
Shareholders who file a demand for payment of fair value cease to have
any rights as shareholders of Cleco thereafter. Also, shareholders may
withdraw their demand at any time before Cleco gives notice of disagreement.
Withdrawal of a demand thereafter requires the written consent of Cleco in
order to be effective.
Each step must be taken in strict compliance with the applicable
provisions of the statute in order for holders of Cleco Preferred Stock to
perfect dissenters' rights. Holders of Cleco Preferred Stock will lose their
right to dissent from the Share Exchange unless they both (i) file with Cleco a
written objection to the Share Exchange prior to or at the Annual Meeting and
(ii) vote their shares (in person or by proxy) against the proposed Plan of
Exchange at the Annual Meeting.
THE FOREGOING SUMMARY OF THE PROVISIONS OF THE LBCL RELATING TO
DISSENTERS' RIGHTS IS NECESSARILY INCOMPLETE AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO EXCERPTS FROM THE LBCL ATTACHED AS APPENDIX E TO THIS PROXY
STATEMENT AND PROSPECTUS.
Holders of Cleco Preferred Stock who exercise and perfect dissenters'
rights and who receive cash for their shares will generally be subject to
federal and state income tax on all or a portion of the amount of cash
received. The receipt of cash for shares will be generally treated as a
distribution in redemption of the shareholder's stock, and depending on the
individual shareholder's circumstances, may be deemed to be a complete
termination of interest resulting in a capital gain or loss to such
shareholder. The tax opinion rendered by Phelps Dunbar attached as Appendix F
to this Proxy Statement and Prospectus states that gains or losses will be
recognized on the receipt of cash in payment of dissenters' rights.
Shareholders desiring to dissent from the Share Exchange are urged to consult
their tax advisors with regard to the tax implications to them of exercising
dissenters' rights.
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VALIDITY OF HOLDING COMPANY COMMON STOCK
The validity of the shares of Holding Company Common Stock to be issued
in the Share Exchange will be passed upon by Phelps Dunbar, counsel to Cleco
and the Holding Company, 400 Poydras Street, New Orleans, Louisiana 70130-3245.
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PROPOSAL NUMBER 2 -- ELECTION OF THREE CLASS II DIRECTORS
The Cleco Bylaws provide for the division of the Cleco Board into three
classes, Class I, Class II and Class III, with each class consisting, as nearly
as possible, of one-third of the number of directors constituting the whole
board. The Cleco Board has a total of 10 directors: 4 are in Class I, 3 are
in Class II and 3 are in Class III. The term of each directorship is three
years. The terms of the three classes are staggered in a manner so that only
one class is elected by the shareholders annually. The three Class II director
positions are proposed for election this year to serve as members of the Cleco
Board until the annual meeting of shareholders in 2002, or until their
successors are elected and qualified.
The persons named in the accompanying proxy may act with discretionary
authority (i) to cumulate the votes attributable to shares of Cleco Common
Stock represented by the proxy and (ii) to vote for other nominees upon the
unavailability of a named nominee, although management is unaware of any
circumstances likely to render any of the nominees unavailable for election.
Unless a shareholder specifies otherwise, the persons named in the accompanying
proxy intend to vote in favor of the nominees listed below. The three persons
that receive the most votes cast will be elected as directors.
All of the nominees listed below currently serve as directors of Cleco.
Directors who are members of Classes I and III, who are continuing as directors
at this time and whose terms of office expire in 2001 and 2000, respectively,
are named on pages _____ of this Proxy Statement and Prospectus. If the
Holding Company Proposal is adopted, it is anticipated that the Class I and
Class III directors, as well as the directors elected at the Annual Meeting,
will serve as directors of the Holding Company.
The Cleco Board has unanimously approved the nomination of the three
nominees for Class II Director and recommends that you vote "FOR" the election
of the three nominees for Class II Director.
The following sets forth information concerning the three nominees for
election as Class II directors at the Annual Meeting as well as the continuing
Class I and Class III directors, including the business experience of each
during the past five years.
CLASS II DIRECTORS (NOMINEES TO BE ELECTED AT THE ANNUAL MEETING; TERMS OF
OFFICE EXPIRE IN 2002)
o Robert T. Ratcliff has been chairman, president and chief
executive officer of Ratcliff Construction Company, Inc., a
company primarily engaged in the design and construction of
industrial, commercial and governmental facilities, since 1975.
Mr. Ratcliff (age 56) has been a director of Cleco since 1993 and
is a member of the audit committee of the Cleco Board (the "Audit
Committee"). He is also a director of Hibernia Corporation and
Hibernia National Bank.
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o Edward M. Simmons is chairman of the board and chief executive
officer of McIlhenny Company (makers of Tabasco brand products).
Prior to being named chairman of the board in June 1996, Mr.
Simmons had served as president and chief executive officer of
McIlhenny Company for more than five years. Mr. Simmons (age 70)
has been a director of Cleco since 1992 and he previously served
on the Cleco Board during the period 1971-1981. He is chairman
of the compensation committee of the Cleco Board (the
"Compensation Committee") and a member of the executive committee
of the Cleco Board (the "Executive Committee") and also serves as
a director of Pan American Life Insurance Company and Piccadilly
Cafeterias, Inc.
o William H. Walker, Jr. is president and a director of Howard,
Weil, Labouisse, Friedrichs Inc., an investment banking firm, and
has served in such positions for more than five years. Mr.
Walker (age 53) has been a director of Cleco since September 1996
and is a member of the Compensation Committee and the Executive
Committee. He is also a director of Howard Weil Financial
Corporation.
CLASS I DIRECTORS (TERMS OF OFFICE EXPIRE IN 2001)
o Sherian G. Cadoria has served as president of Cadoria Speaker and
Consultancy Service since January 1992. She retired in 1990 as
Brigadier General of the United States Army after a 29-year
military career. Ms. Cadoria (age 59) has been a director of
Cleco since 1993 and is a member of the Compensation Committee.
o Richard B. Crowell has been engaged in the practice of law for
more than five years as a member of the law firm of Crowell &
Owens. Mr. Crowell (age 60) has been a director of Cleco since
April 1997 and is a member of the Audit Committee. He is also a
director of Whitney Holding Corporation and Whitney National
Bank.
o David M. Eppler has served as president of Cleco since January
1999 and as chief operating officer since July 1997; he had
served as executive vice president from January 1997 until
January 1999, as vice president of power supply and energy
transmission from 1995 to 1997, and as vice president of finance
and chief financial officer from 1993 to 1995. Prior to that
time, he had served as vice president of finance and rates,
treasurer and chief financial officer. Mr. Eppler (age 48)
joined Cleco in 1981 and served as manager, investor relations
and finance until 1985, when he became vice president of
financial services.
o Gregory L. Nesbitt has served as chairman of Cleco since January
1999 and as chief executive officer since 1993; he had served as
president from 1992 until January 1999, as chief operating officer
from 1991 to 1993, and as executive
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vice president from 1988 to 1991. Mr. Nesbitt (age 61) has been
a director of Cleco since 1988 and is a member of the Executive
Committee. He joined Cleco in 1980 and served as senior vice
president of Cleco's electric power supply group until January
1988.
CLASS III DIRECTORS (TERMS OF OFFICE EXPIRE IN 2000)
o J. Patrick Garrett has been president and chief executive officer
of Windsor Food Company Ltd., a privately held company engaged in
the food processing business, since July 1995. Prior to that
time, he had been engaged in the practice of law for more than
five years as a member of the law firm of Baker & Botts, L.L.P.
Mr. Garrett (age 55) has served as a director of Cleco since 1981
and is a member of the Compensation Committee.
o F. Ben James, Jr. has been president of James Investments, Inc.,
a company primarily engaged in real estate development and
international marketing, for more than five years. Mr. James
(age 63) has been a director of Cleco since 1986 and is chairman
of the Audit Committee and a member of the Executive Committee.
o A. DeLoach Martin, Jr. has been chairman of Central Engineering &
Supply Company, a company engaged in the wholesale distribution
of refrigeration and mill supplies, for more than five years.
Mr. Martin (age 69) became a director of Cleco in 1978 and is
chairman of the Executive Committee and a member of the Audit
Committee.
ORGANIZATION AND COMPENSATION OF THE BOARD OF DIRECTORS
The Cleco Board has an Executive Committee, an Audit Committee, and a
Compensation Committee. The members of such committees are identified under
"Class II Directors", "Class I Directors" and "Class III Directors", above.
The Cleco Board has no standing nominating committee.
The Audit Committee recommends to the Cleco Board the appointment of the
independent auditors of Cleco, reviews the scope of audits, reviews and
recommends to the Cleco Board financial reporting and accounting practices,
reviews the scope and results of Cleco's procedures for internal auditing and
the adequacy of the system of internal accounting controls of Cleco, and has
responsibility with respect to audit matters generally. During 1998, the Audit
Committee held two meetings.
The Compensation Committee approves, or in some cases recommends to the
Cleco Board, remuneration arrangements and compensation plans involving Cleco's
directors, officers and employees, and administers the granting of restricted
stock and other awards to eligible
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employees under the Long-Term Incentive Plan and annual incentive compensation
program described below. The Compensation Committee held three meetings in
1998.
The Cleco Board held four regular meetings and two special meetings
during 1998. At intervals between formal meetings, members of the Cleco Board
are provided with information regarding the operations of Cleco and are
consulted informally from time to time with respect to pending business.
During 1998, all directors attended at least 75% of the total number of
meetings of the Cleco Board and of the committees of the Cleco Board on which
such directors served.
Any director who is a regularly employed officer of Cleco receives no
fees for serving as a director of Cleco. Currently, each other director who is
not the chairman of a board committee receives an annual retainer of $18,000 for
serving as a director. Each director who is the chairman of a board committee
receives an additional annual fee of $3,000. Each director receives $800 for
each day he or she attends one or more meetings of the Cleco Board or its
committees. The annual retainer, the annual fee for serving as a chairman of a
board committee, and the attendance fee are paid, at the option of the director,
in either cash, Cleco Common Stock or a combination of both. Cleco also
reimburses directors for travel and related expenses incurred in attending
meetings of the Cleco Board or such committees. Cleco has in effect a deferred
compensation plan for directors under which a director may elect to defer all or
part of his or her compensation as a director. Cleco has a retirement plan for
its non-employee directors under which directors with five years of service
receive, at age 65 or upon later retirement. The maximum annual benefit payable
under the plan is $12,000. Benefits are payable for life or a period equal to
the number of years of service as a director, whichever is shorter. Cleco also
provides its non-employee directors with $200,000 of life insurance and
permanent total disability coverage under Cleco's group accidental death and
dismemberment plan, which covers all active, full-time employees.
INTERESTS OF THE BOARD OF DIRECTORS
Mr. Ratcliff is the chairman, president and chief executive officer of
Ratcliff Construction Company, Inc. In competitive bidding, Ratcliff
Construction Company, Inc. has been awarded a site preparation contract for the
Coughlin Station Repowering Project of Cleco's wholly-owned subsidiary, Cleco
Evangeline. The contract amount, including charge orders through January 19,
1999, is $452,205.50.
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<PAGE> 48
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth the number of shares of Cleco Common
Stock and Cleco Preferred Stock beneficially owned as of February 1, 1999, by
each director and nominee, each of the executive officers named in the Summary
Compensation Table below and all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and nature
of beneficial
Amount and nature of beneficial ownership of ownership of
Common Stock(1) Preferred Stock(2)
--------------------------------------------- -------------------
Options
Exercisable Percent Percent
Within 60 of of
Direct Days Other Class Indirect Class
------ ----------- ---------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS AND NOMINEES
----------------------
Sherian G. Cadoria 1,000 *
Richard B. Crowell 22,305 51,800(3) *
David M. Eppler(4) 20,830 2,800 * 468 *
J. Patrick Garrett 2,790 *
F. Ben James, Jr. 2,400 *
A. DeLoach Martin, Jr. 18,800 *
Gregory L. Nesbitt(5) 56,922 * 249 *
Robert T. Ratcliff 1,192 *
Edward M. Simmons 2,323 *
William H. Walker, Jr. 1,828 *
NAMED OFFICERS
--------------
Darrell J. Dubroc 3,269 * 808 *
Thomas J. Howlin 3,631 * 26 *
Catherine C. Powell 6,018 * 260 *
All directors, nominees and
executive officers as a group
(18 persons, including those
listed above) 163,198 2,800 51,800 (6) *
</TABLE>
45
<PAGE> 49
(1) In accordance with SEC regulations, shares are deemed to be
"beneficially owned" by a person if such person directly or indirectly has or
shares the power to vote or to dispose of the shares, regardless of whether
such person has any economic interest in the shares. In addition, a person is
deemed to own beneficially any shares of which such person has the right to
acquire beneficial ownership within 60 days, as in the case of the stock
options which are set forth under the "Options Exercisable Within 60 Days"
column. Shares of Cleco Common Stock listed under the "Direct" column are
those as to which each named individual has sole voting or dispositive power,
including shares held under the Savings and Investment Plan (576 shares for Mr.
Dubroc and 1,412 shares for other executive officers included in the amount
shown for all directors and executive officers as a group) and shares granted
as restricted stock awards under the Long-Term Incentive Plan described below
(16,485 shares for Mr. Nesbitt, 7,393 shares for Mr. Eppler, 3,526 shares for
Mr. Howlin, 3,939 shares for Ms. Powell, 3,269 shares for Mr. Dubroc and 8,111
shares for other executive officers included in the amount shown for all
directors, nominees and executive officers as a group). Shares listed under
the "Other" column are those as to which the named individual shares voting and
dispositive power with another person.
(2) The shares of Cleco Preferred Stock beneficially owned by the
individuals indicated in the table are shares held for the respective accounts
of executive officers under the ESOP.
(3) Includes 51,800 shares owned by members of Mr. Crowell's family and
family trusts, for which beneficial ownership is disclaimed.
(4) Mr. Eppler is also the president and chief operating officer of Cleco.
(5) Mr. Nesbitt is also the chairman and chief executive officer of Cleco.
(6) The ESOP holds Cleco Preferred Stock that is convertible, at any time,
into shares of Cleco Common Stock. 161,907 shares of Cleco Preferred Stock,
convertible into 777,154 shares of Cleco Common Stock (3.5% of such common
stock), have not yet been allocated to accounts of participants in such plan.
Executive officers of Cleco serve with other Cleco employees as the
administrator of the plan and effective as of January 1, 1999, make voting
decisions with respect to such unallocated shares. Such shares have been
included only once in calculating the beneficial ownership of all officers and
directors as a group.
* Less than 1% of class.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires Cleco's
executive officers and directors, and persons who beneficially own more than
10% of a registered class of Cleco's equity securities, to file with the SEC
and the NYSE initial reports of ownership and reports of changes in ownership
of Cleco's equity securities. To Cleco's knowledge, based solely on review of
the copies of such reports furnished to Cleco and written representations that
no year-end reports on Form 5 were required, during the fiscal year ended
December 31, 1998, all Section 16(a) filing requirements applicable to its
executive officers, directors and greater-than-10% shareholders were satisfied.
46
<PAGE> 50
EXECUTIVE COMPENSATION
GENERAL
The Summary Compensation Table sets forth individual compensation
information with respect to the chief executive officer and the four other most
highly paid executive officers of Cleco for services rendered in all capacities
to Cleco during the fiscal years ended December 31, 1998, December 31, 1997 and
December 31, 1996. The table discloses the annual salary, bonuses and other
compensation awards and payouts to the named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other All
Annual Other
Compen- LTIP Compen-
Name and Principal Position Year Salary Bonus (1) sation(2) Payouts (3) sation (4)
--------------------------- ---- ------ --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gregory L. Nesbitt 1998 $334,623 $176,090 $21,645 $331,173 $6,400
Chairman and Chief 1997 296,770 126,000 16,840 206,738 6,334
Executive Officer 1996 271,081 130,600 11,954 144,187 6,000
David M. Eppler 1998 $205,389 $ 90,300 $ 8,000 $111,687 $6,924
President and Chief 1997 166,478 54,000 5,837 68,238 6,836
Operating Officer 1996 140,808 62,800 4,302 58,526 6,483
Thomas J. Howlin 1998 $167,424 $ 70,690 2,417 0 $5,217
Senior Vice President - 1997 69,454 71,500 0 0 4,085
Financial Services and
Chief Financial Officer
(Hired in 1997)
Catherine C. Powell 1998 $128,334 $ 48,380 $ 5,047 $ 73,393 $6,624
Senior Vice President - 1997 111,023 33,660 4,044 41,782 6,188
Employee and 1996 102,000 44,400 2,872 33,523 5,683
Corporate Services
Darrell J. Dubroc 1998 $147,039 53,120 $ 3,098 0 $6,474
Vice President - 1997 118,656 36,910 1,287 0 9,964
Generation Services 1996 97,565 5,737 0 0 2,592
</TABLE>
- -----------------
(1) The "Bonus" column includes cash awards that are payable or have been
paid to executive officers pursuant to (i) an annual incentive compensation
program under which participants may receive incentive compensation in addition
to base compensation determined by the performance of Cleco and the individual
participants, (ii) merit lump-sum payments received by certain named executive
officers, and (iii) payments received under Cleco's spot award incentive plan
which rewards individual performance.
(2) For 1996, 1997 and 1998, the "Other Annual Compensation" column includes
dividends paid on restricted stock awards under the Long-Term Incentive Plan.
Dividends on restricted stock are paid quarterly and at the same rate as
dividends on the Cleco Common Stock.
47
<PAGE> 51
(3) Restricted stock awards granted under the Long-Term Incentive Plan,
which are subject to performance-based vesting requirements, are reported under
the "Long-Term Incentive Plan - Awards in 1998" table below. The number and
value of the aggregate restricted stock holdings at December 31, 1998, a
portion of which is included in the "LTIP Payouts" column, for each of the
named executive officers were as follows: Gregory L. Nesbitt, 13,444 shares
with a value of $461,297; David M. Eppler, 4,969 shares with a value of
$170,499; Thomas J. Howlin, 1,501 shares with a value of $51,503; Catherine C.
Powell, 3,135 shares with a value of $107,570; and Darrell J. Dubroc, 1,924
shares with a value of $66,017. For 1996, 1997 and 1998, the "LTIP Payouts"
column includes the value of restricted stock and opportunity shares under the
Long-Term Incentive Plan that vested in 1996 relating to the performance period
January 1,1993 to December 31,1995, in 1997 relating to the performance period
January 1,1994 to December 31, 1996, and in 1998 relating to the performance
period January 1, 1995 to December 31, 1997, respectively, and related tax
gross-up amounts.
(4) For 1996, 1997 and 1998, respectively, the "All Other Compensation"
column includes: (i) amounts contributed or accrued by Cleco under the Savings
and Investment Plan on behalf of the named executive officers as follows:
Gregory L. Nesbitt, $6,000, $6,334 and $6,400; David M. Eppler, $6,000, $6,333
and $6,400; Thomas J. Howlin, $0, $0, and $4,237; Catherine C. Powell, $5,488,
$5,973 and $6,400; and Darrell J. Dubroc, $2,547, $4,881 and $6,400; (ii) term
life insurance premiums paid for the benefit of the named executive officers as
follows: Gregory L. Nesbitt, $0, $0 and $0; David M. Eppler, $483, $503 and
$524; Thomas J. Howlin, $0, $210 and $980; Catherine C. Powell, $195, $215 and
$224; and Darrell J. Dubroc, $45, $71 and $74; and (iii) unused vacation
purchased from the following named executives: Gregory L. Nesbitt, $0, $0 and
$0; David M. Eppler, $0, $0 and $0; Thomas J. Howlin, $0, $3,875 and $0;
Catherine C. Powell, $0, $0 and $0; and Darrell J. Dubroc, $0, $5,012 and $0.
STOCK OPTION PLANS
Cleco currently maintains two plans pursuant to which options to
purchase shares of Common Stock are outstanding and/or may be granted. The
first is the Stock Option Plan, covering an aggregate of 400,000 shares of
Cleco Common Stock. It expired in 1991, and no future grants can be made under
the plan. As of December 31, 1998, options covering 4,800 shares remained
exercisable pursuant to grants made under the Stock Option Plan. Cleco also
has in effect the Long-Term Incentive Plan pursuant to which certain officers
and key employees may receive restricted stock, stock options or stock
appreciation rights, among other awards. An aggregate of 800,000 shares of
Cleco Common Stock have been reserved for issuance under this plan. No stock
options or stock appreciation rights were granted under the Long-Term Incentive
Plan in 1998.
The following table sets forth, for each of the five persons listed in
the Summary Compensation Table above, the following information concerning
stock options exercised during 1998:
o the number of shares of Cleco Common Stock acquired upon the
exercise of options during 1998;
o the aggregate dollar value realized upon the exercise of such
options;
o the total number of exercisable and nonexercisable options held
on December 31, 1998; and
48
<PAGE> 52
o the aggregate dollar value of on-the-money exercisable options on
December 31, 1998.
AGGREGATE OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
December 31, 1998 December 31, 1998
----------------------------- -----------------------------
Shares
Acquired
on Value
Name Exercise Realized Exercisable(1) Unexercisable Exercisable(2) Unexercisable
- --------------------- -------- -------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gregory L. Nesbitt 0 $ 0 2,000 0 $35,065 $0
David M. Eppler 0 0 2,800 0 49,091 0
Thomas J. Howlin 0 0 0 0 0 0
Catherine C. Powell 0 0 0 0 0 0
Darrell J. Dubroc 0 0 0 0 0 0
</TABLE>
(1) These options were exercised in 1999.
(2) Based upon the closing price of the Cleco Common Stock on the NYSE
Composite Tape at December 31, 1998, minus the exercise price.
The following table sets forth, for each of the five persons listed in
the Summary Compensation Table, the information described below as to awards
granted under the Long-Term Incentive Plan during 1998:
o the number of shares of performance-based restricted stock
granted to the named executive officers in 1998;
o the time period during which the restricted stock awards are
subject to performance-based restrictions;
o the number of shares of restricted stock that will vest if
Cleco's total return to shareholders in relation to a peer group
of other utilities attains certain specified levels; and
o the maximum number of shares of restricted stock that will vest,
including related performance-based "opportunity shares."
49
<PAGE> 53
LONG-TERM INCENTIVE PLAN - AWARDS IN 1998
<TABLE>
<CAPTION>
Estimated Future Payouts
---------------------------------------------
Performance or
Other Period until Number of Number of Number of
Number Maturation or Threshold Target Maximum
Name of Shares(1) Payout Shares (2) Shares (2) Shares (3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gregory L. Nesbitt 5,521 1/1/98 - 12/31/00 1,381 5,521 8,282
David M. Eppler 2,162 1/1/98 - 12/31/00 541 2,162 3,243
Thomas J. Howlin 1,501 1/1/98 - 12/31/00 376 1,501 2,252
Catherine C. Powell 1,158 1/1/98 - 12/31/00 290 1,158 1,737
Darrell J. Dubroc 1,104 1/1/98 - 12/31/00 276 1,104 1,656
</TABLE>
(1) The amounts listed in the "Number of Shares" column represent the
performance-based restricted stock granted to the named executive officers in
1998. The recipient of a restricted stock grant is the record owner of the
number of target shares awarded, which are issued in the name of the recipient
but held in escrow by Cleco until delivery to, or forfeiture by, the recipient.
The recipient may vote the shares covered by the award and receive dividends
with respect thereto, but generally may not sell, pledge or otherwise transfer
such shares until the restriction period imposed by the Compensation Committee
comes to an end and the performance goals established by the committee have
been met. The recipient may, at the end of the restriction period, forfeit all
or a portion of the restricted shares awarded depending upon the performance
level achieved. The restricted stock awards require a three-year holding
period following vesting before any shares may be sold.
(2) The amounts listed in the "Number of Threshold Shares" and "Number of
Target Shares" columns represent performance-based restricted stock granted in
1998 that will vest under the threshold and target levels established by the
Compensation Committee. The restricted stock grants vest based upon total
return to shareholders (Cleco Common Stock price appreciation plus dividends
paid during performance cycle) in relation (by percentile) to a peer group of
other utilities ("Total Return to Shareholders"). The vesting (payout)
schedule for the restricted stock awards, based upon Cleco's Total Return to
Shareholders ranking, is as follows:
o No awards will vest if Cleco's ranking is below the 25th
percentile.
o Threshold performance provides 25% award payout at the 25th
percentile.
o Target performance provides 100% award payout from the 45th
percentile to the 55th percentile.
Performance awards above the threshold level and below the target level will be
prorated.
(3) The amounts under the "Number of Maximum Shares" column represent the
number of performance-based restricted stock grants that vest at the target
level set forth under the "Number of Target Shares" column plus the number of
performance-based "opportunity shares" granted to the named executive officers
in 1998 that will vest between the target and maximum levels established by the
Compensation Committee. "Opportunity shares" awarded in connection with a
restricted stock award will not be issued until the lapse of restrictions on
the related restricted stock and do not entitle the recipient to the rights of
a shareholder until the time of issuance of the Cleco Common Stock representing
the "opportunity shares." "Opportunity share" awards require a three-year
holding period following vesting before any of the shares may be sold. The
"opportunity shares" vest based upon Total Return to Shareholders and will be
issued when the restriction period on the related restricted stock lapses. The
vesting (payout) schedule for the "opportunity shares" included in this column,
based on Cleco's Total Return to Shareholders ranking, is as follows:
o No awards of "opportunity shares" vest if Cleco's ranking is at
or below the 55th percentile.
o Maximum performance provides 100% "opportunity share" award
payout (equal to 50% of number of target shares of restricted
stock) at the 75th percentile.
50
<PAGE> 54
Performance awards of "opportunity shares" above the target level and below the
maximum level will be prorated.
RETIREMENT PLANS
Cleco's executive officers are participants in the Savings and
Investment Plan (contributions made in 1998 for the benefit of the named
executive officers are listed in the Summary Compensation Table), Cleco's
Pension Plan (the "Pension Plan"), and Cleco's Supplemental Executive
Retirement Plan (the "SERP").
The Pension Plan generally covers employees of Cleco who have attained
age 21 and completed a year of service. The monthly benefit payable under the
Pension Plan at normal retirement age (age 65) is an amount determined with
reference to a participant's "compensation base" and years of service at
termination of employment. A participant's "compensation base" is calculated
by averaging compensation paid during the highest successive five completed
calendar years during the 10 years prior to normal retirement. Compensation is
determined taking into account the salaries and bonuses reflected in the
"Salary" and "Bonus" columns of the Summary Compensation Table. Benefits under
the Pension Plan are fully vested upon the completion of five years of service.
The maximum annual benefit payable under the Pension Plan for employees who
retire in 1998 is the lesser of $130,000 (a limitation imposed by the Internal
Revenue Code of 1986, as amended (the "Code")) or 100% of "average
compensation" (as defined in the Code).
As of December 31, 1998, Mr. Nesbitt, Mr. Eppler, Mr. Howlin, Ms.
Powell, and Mr. Dubroc had, respectively, 19, 17, 1, 7 and 13 years of service
credited under the Pension Plan.
In addition, effective July 1, 1992, Cleco established the SERP for the
benefit of certain participants designated by the Compensation Committee. As
of December 31, 1998, Cleco's chief executive officer (the "Chief Executive
Officer") and the four other most highly compensated executive officers
(collectively, the "Named Executives") participated in the SERP. The SERP
provides participants who complete 10 years of service and terminate employment
after reaching age 65 with monthly benefits for the life of the participant and
his or her surviving spouse in an amount equal to 65% of compensation, reduced
by benefits payable from the Pension Plan and other previous employer pension
plans. The Chief Executive Officer or the Compensation Committee may prescribe
a shorter period of service as a condition for the receipt of benefits. Under
the SERP, eligible compensation is based upon the sum of the highest annual
salary paid during the five years prior to termination of employment and the
average of the three highest annual incentive compensation program awards paid
to the participant during the preceding five years (these amounts are reflected
in the "Salary" and "Bonus" columns of the Summary Compensation Table). Benefits
are payable from Cleco's general assets.
The following table illustrates the combined estimated annual benefit
payable from both the Pension Plan and the SERP at age 65 to persons at
specified compensation levels. Benefits are computed on a joint and 100%
survivor annuity basis.
51
<PAGE> 55
<TABLE>
<CAPTION>
Years of Service at Retirement
------------------------------
Final Total
Compensation 15 20 25 30 35
------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $81,250 $81,250 $81,250 $81,250 $81,250
150,000 $97,500 $97,500 $97,500 $97,500 $97,500
200,000 130,000 130,000 130,000 130,000 130,000
250,000 162,500 162,500 162,500 162,500 162,500
300,000 195,000 195,000 195,000 195,000 195,000
400,000 260,000 260,000 260,000 260,000 260,000
500,000 325,000 325,000 325,000 325,000 325,000
600,000 390,000 390,000 390,000 390,000 390.000
</TABLE>
SEVERANCE AGREEMENTS
Cleco has severance agreements with Mr. Nesbitt, Mr. Eppler, Mr. Howlin,
Ms. Powell, and Mr. Dubroc and four other executive officers of Cleco. Each
agreement provides generally for the payment of a minimum annual salary,
participation in all Cleco benefit plans and programs applicable to Cleco's
executive officers, and reimbursement of employment-related expenses, all
during the term of employment. Under the severance agreements, the base
salaries for 1999 for Mr. Nesbitt, Mr. Eppler, Mr. Howlin, Ms. Powell, and Mr.
Dubroc are $350,000, $240,000, $175,000, $135,000, and $155,000, respectively.
Each agreement renews annually in July of each year, unless either Cleco or the
executive officer gives notice prior to renewal that such officer's term of
employment will not be extended.
The agreements include provisions governing the payment of severance
benefits in an amount equal to the executive's annual base salary if the
executive's employment is terminated (i) by Cleco for any reason, other than a
material breach by the executive, or (ii) by the executive following a
reduction in base salary (other than a reduction in pay uniformly applicable to
all officers) or a significant reduction in the executive's authority, duties
or responsibilities. The executive also is entitled to continued health plan
coverage for up to 18 months after such termination, and the executive is
entitled to require Cleco to (i) purchase his or her principal residence (if it
is located within 60 miles of Cleco's Pineville office) for an amount equal to
the greater of (x) the purchase price of the residence plus the cost of capital
improvements or (y) the fair market value of the residence, and (ii) pay or
reimburse the executive for relocation costs.
If a change in control (as defined in the agreement) occurs and within
three years after such change the executive's employment is terminated by Cleco
for reasons other than a material breach or the executive terminates his or her
employment for good reason (as defined in the agreement), then Cleco is
obligated to pay the executive, in lieu of any severance obligation otherwise
payable under the agreement, an amount equal to three times the executive's
average
52
<PAGE> 56
compensation paid during the five calendar years preceding the change in
control. In the event of a change in control, payments under the agreements
for the individuals named in the Summary Compensation Table, using the average
compensation for the years 1994 through 1998, will be approximately as follows:
Mr. Nesbitt, $1,176,191; Mr. Eppler, $624,284; Mr. Howlin, $520,745; Ms.
Powell, $399,818; and Mr. Dubroc, $354,413. However, the severance agreements
limit the amount payable upon a change in control to an amount that will not
result in the disallowance of a deduction to Cleco under the "golden parachute"
provisions of the Code or the imposition of an excise tax on the employee under
Section 4999 of the Code.
The severance agreements also generally require the executives not to
disclose confidential information relating to Cleco and, for a period of one
year after termination, not to hire Cleco officers, employees or agents, or
solicit or divert any customer or supplier of Cleco.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has prepared its report of 1998 executive
compensation. The Compensation Committee is composed entirely of directors who
are not current or former officers or employees of Cleco. It is responsible
for implementing or making recommendations to the Cleco Board with respect to
Cleco's officer compensation programs. The Compensation Committee has retained
the services of executive compensation consultants to provide professional
assistance, data and advice regarding pay practices at Cleco.
This report describes the basis on which such 1998 compensation
determinations or recommendations were made by the Compensation Committee with
respect to Cleco's executive officers. This report, required by rules of the
SEC, provides specific information regarding compensation of the Chief
Executive Officer and general information regarding compensation of Cleco's
executive officers as a group.
Section 162(m) of the Code limits to $1,000,000 in a taxable year the
deduction publicly held companies may claim for compensation paid to an
executive officer, unless certain requirements are met. Cleco has reviewed
this provision and has determined that Cleco is not affected by Section 162(m)
because no compensation paid to any officer currently approaches or is expected
to approach $1,000,000 in the near term. Accordingly, no change to any of the
compensation plans is contemplated at this time in relation to Section 162(m)
of the Code.
COMPENSATION PHILOSOPHY AND OVERALL OBJECTIVE OF EXECUTIVE COMPENSATION
PROGRAMS
Cleco seeks to ensure that executive compensation is directly linked to
corporate performance and shareholder value, as well as comparable pay
practices in the industry. Each year, the Compensation Committee, in making
compensation decisions and recommendations, and the Cleco Board, in approving
base salaries, review the performance of Cleco and compare
53
<PAGE> 57
such performance to specified internal and external performance standards. The
Compensation Committee has developed the following compensation guidelines as
the principles upon which compensation decisions and recommendations are made:
o provide variable compensation opportunities that are linked to
the financial performance of Cleco and that align executive
compensation with the interests of shareholders;
o provide incentives to increase corporate performance and
shareholder value relative to those of other electric utilities;
o establish executive officer base pay levels somewhat below the
competitive market, while providing incentive awards (from the
annual and long-term plans) above the market, provided that
performance objectives are achieved; and
o provide a competitive total compensation package that is
"at-risk" driven and enables Cleco to attract and retain key
executives.
COMPENSATION PROGRAM COMPONENTS
The compensation program for executive officers is currently comprised
of base salary, annual performance-related incentives and performance-based
awards of restricted stock and related "opportunity shares" granted under the
Long-Term Incentive Plan, as discussed above under "Long-Term Incentive Plan".
In addition, certain of the executive officers have stock options outstanding
that were granted under the Stock Option Plan, which expired in 1991 and under
which no future grants can be made. See "EXECUTIVE COMPENSATION - Stock Option
Plans" on page __ of this Proxy Statement and Prospectus. The compensation
programs for Cleco's executive officers are further explained below.
o Base Salary - Base pay levels recommended by the Compensation
Committee are largely determined through comparisons with those
of other electric utilities of similar size and complexity to
Cleco. These companies, as well as other electric utilities, are
included in the Edison Electric Institute Index of approximately
100 investor-owned electric utilities (the "Edison Electric
Institute Index") graphed in the performance graph shown
elsewhere. Actual salaries are based on individual performance
contributions within a salary structure that is established
through job evaluation and market comparisons. While the actual
relationship may vary from year to year, it is Cleco's policy to
have base pay levels for Cleco's executive officers, including
the Named Executives, at somewhat below the average of the
competitive market. Including 1998 base salary increases, actual
base pay levels for Cleco's executive officers, including the
Named Executives, are consistent with this policy. Increases in
base salary for 1998 to continuing executive officers were
recommended by the Compensation Committee and approved by the
Cleco
54
<PAGE> 58
Board in January 1998. In January 1998, of the continuing
officers, other than the Chief Executive Officer (see "EXECUTIVE
COMPENSATION - 1998 Compensation for the President and Chief
Executive Officer - Base Salary" on page __ of this Proxy
Statement and Prospectus), the Named Executives received pay
increases that averaged 9.2%.
o Annual Incentive Compensation - Cleco's executive officers are
eligible to participate in an annual incentive compensation
program with awards generally based on earnings per share goals
and Cleco's actual return on equity in relation to that of the
Edison Electric Institute Index, a peer group of approximately
100 electric utilities. Earnings per share and return on equity
goals are generally of equal weight. Based on actual results,
awards from 0% to 150% of target incentive levels may be made.
For awards based on 1998 performance, the earnings per share
target was $2.20. Cleco's return on equity target was the 50th
to 59th percentile of the Edison Electric Institute Index.
Cleco's actual 1998 return on equity performance was in the 60th
to 74th percentile of the Edison Electric Institute Index, and
its primary earnings per share in 1998 was $2.30. Based on the
earnings per share and return on equity financial performance,
the Compensation Committee approved actual awards for 1998 at
129% of target annual bonus levels. The objective of the annual
incentive compensation program is to deliver competitive levels
of compensation (i.e., average award levels compared to Cleco's
competitive peer group) for the attainment of short-term
financial objectives that the Compensation Committee believes are
primary determinants of shareholder value over time, and to
reinforce behavior that contributes to consistent growth of the
enterprise. The Compensation Committee bases target annual bonus
levels on average competitive bonus levels among other electric
utility companies of similar size and complexity. These
companies are included in the Edison Electric Institute Index.
Targeted awards for executive officers of Cleco under this
program range from 18% to 42% of base salary. Awards are paid in
the first quarter of the year following the year for which the
award is earned. The amounts of actual awards are further
subject to the discretion of the Compensation Committee, within
established program guidelines (i.e., the ability of the
Compensation Committee to make adjustments to reflect
extraordinary items of income or expense).
o Long-Term Incentive Plan - The Compensation Committee supports
increased stock ownership by key executives of Cleco and favors
awards to key executives of stock and/or cash, based on Cleco's
stock price appreciation and other measures of performance. The
basis for such position is the Compensation Committee's belief
that Cleco benefits by providing those persons who have
substantial responsibility for the management and growth of Cleco
with additional incentives by increasing their proprietary
interest in the success of Cleco and by rewarding those persons
for increases in Cleco's stock price or the achievement of
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<PAGE> 59
other long-term performance goals of Cleco. Thus, under the
Long-Term Incentive Plan, executive officers may be eligible to
receive performance-based grants of restricted stock, related
"opportunity shares", restricted unit grant awards, related
"opportunity units", stock options and stock appreciation rights,
giving them the right to receive or purchase shares of Cleco
Common Stock under specified circumstances or to receive cash
awards based on Cleco Common Stock price appreciation or the
achievement of pre-established long-term performance goals. The
Compensation Committee believes that such programs are also
important as a means of retaining senior management over the long
term. The number of shares of Cleco Common Stock and other
awards granted to executive officers under the Long-Term
Incentive Plan is based on competitive practices (i.e.,
compensation practices of other utilities that constitute the
Edison Electric Institute Index).
Grants and awards of restricted stock as well as awards of related
"opportunity shares" under the Long-Term Incentive Plan were made to all
executive officers in 1998. Awards to executive officers are based on a
competitive compensation analysis (i.e., compensation practices of other
utilities that constitute the Edison Electric Institute Index). Awards
actually earned are based on Cleco's performance during a three-year
performance cycle compared to the other electric utilities in the Edison
Electric Institute Index over the same period. For the sixth three-year
performance cycle which ended December 31, 1998, Cleco's total return to
shareholders placed it at the 45th percentile compared to the Edison Electric
Institute Index. As a result, the actual awards were made at target in order
to reflect Cleco's relative performance. Provisions of the long-term
restricted stock grants program require an additional three-year holding period
following vesting before any shares may be sold. No other types of awards under
the Long-Term Incentive Plan were made to executive officers or vested in during
1998.
OTHER EXECUTIVE COMPENSATION PLANS
Cleco also provides executive officers with certain executive benefits,
such as a supplemental retirement plan and severance agreements. The
Compensation Committee considers each of these programs to be reasonably
competitive and appropriate for executive officers of Cleco.
1998 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The Compensation Committee believes that the role of the Chief Executive
Officer is particularly important in reaching corporate goals and accomplishing
organizational objectives. As such, for fiscal year 1998 the Compensation
Committee made the following recommendations or determinations regarding the
compensation for Mr. Nesbitt:
o Base Salary - Mr. Nesbitt is the chairman and Chief Executive
Officer of Cleco. His base salary was increased in January,
1998, from $300,000 to $325,000, an
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<PAGE> 60
increase of approximately 8.3%. The amount of this increase was
based on the continued performance of Mr. Nesbitt as evaluated by
the Compensation Committee. Even with this adjustment, his base
pay is significantly below peers in the industry.
o Annual Incentive - Mr. Nesbitt was eligible to participate in
1998 in Cleco's annual incentive compensation program discussed
in this report above (see "EXECUTIVE COMPENSATION - Compensation
Program Components - Annual Incentive Compensation" on page __ of
this Proxy Statement and Prospectus). The Chief Executive
Officer's 1998 target award was 42% of his base salary. His
actual award for 1998 was 129% of target.
o Long-Term Incentive Plan - Awards were made to Mr. Nesbitt under
the Long-Term Incentive Plan during 1998. The number of shares
of stock and other awards granted to the Chief Executive Officer
under the Long-Term Incentive Plan are based on competitive
practices within the industry. Administration is consistent with
the provisions of the plan as described above in "Long-Term
Incentive Plan." For the three-year performance cycle ended
December 31, 1998, the Chief Executive Officer's award was 100%
of target or 3036 shares.
SUMMARY
The Compensation Committee believes that base pay levels and increases
and performance-based awards are reasonable and competitive with the
compensation programs provided to officers and other executives by electric
utilities of similar size and complexity to Cleco. The Compensation Committee
believes further that the degree of performance sensitivity in the annual
incentive program continues to be reasonable, yielding awards that are directly
linked to the annual financial and operational results of Cleco. The Long-Term
Incentive Plan continues to provide, in the view of the Compensation Committee,
financial opportunities to participants and retention features for Cleco that
are consistent with the relative returns that are generated on behalf of
Cleco's shareholders.
THE COMPENSATION COMMITTEE
Edward M. Simmons, Chairman
Sherian G. Cadoria, Brig. General (retired)
J. Patrick Garrett
William H. Walker, Jr.
PERFORMANCE GRAPH
The following performance graph compares the performance of the Cleco
Common Stock to the S&P 500 Index and to the Edison Electric Institute Index
(which includes Cleco) for
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<PAGE> 61
Cleco's last five fiscal years. The graph assumes that the value of the
investment in the Cleco Common Stock and each index was $100 at December
31,1992 and that all dividends were reinvested.
[GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Cleco $100 $ 99.85 $122.79 $133.75 $116.30 $185.04
S&P 500 Index $100 $101.32 $139.40 $171.40 $228.59 $292.63
EEI Index (1) $100 $ 88.43 $115.86 $117.25 $149.35 $170.10
</TABLE>
(1) The Edison Electric Institute Index is comprised of: Allegheny Energy
(formerly Allegheny Power System, Inc.); AMEREN; American Electric Power
Company, Inc.; Avista Corp.; Baltimore Gas & Electric Company; Bangor
Hydro-Electric Company; BEC Energy; Black Hills Corporation; Carolina Power &
Light Company; Central Hudson Gas & Electric Corporation; Cleco Corporation
(formerly Central Louisiana Electric Company, Inc.); Central Maine Power
Company; Central Vermont Public Service Corporation; Central & South West
Corporation; Cilcorp Inc.; CINergy Inc. (formerly CINergy Corp.); CMS Energy
Corp.; Commonwealth Energy System; CONECTIV; Consolidated Edison Company of New
York, Inc.; Dominion Resources, Inc.; DPL Inc.; DQE Inc.; DTE Energy Co.; Duke
Energy Corporation; Eastern Utilities Associates; Edison International; El Paso
Electric Company; Empire District Electric Company; Energy East Corp.; Entergy
Corporation; FirstEnergy Corp.; Florida Progress Corporation; FPL Group, Inc.;
GPU Inc.; Green Mountain Power Corporation; Hawaiian Electric Industries, Inc.;
Houston Industries Incorporated; IDACORP; Illinova Corp.; Interstate Energy
Corporation (formerly Interstate Power Co.); IPALCO Enterprises Inc.; Kansas
City Power & Light Company; Keyspan Corp.; LG&E Energy Corp.; Madison Gas &
Electric Co.; Maine Public Service Company; MDU Resources Group, Inc.;
MidAmerican Energy Holding Company; Minnesota Power & Light Co.; Montana Power
Co.; Nevada Power
58
<PAGE> 62
Company; New Centuries Energy, Inc. (formerly New Century Energies, Inc.); New
England Electric System; Niagara Mohawk Power Corp.; NIPSCO Industries, Inc.;
Northeast Utilities; Northern States Power Co. (MN); Northwestern Corporation
(formerly Northwestern Public Service Co.); OGE Energy; Orange & Rockland
Utilities, Inc.; Otter Tail Power Company; PG&E Corp. (formerly known as
Pacific Gas & Electric Co.); Pacificorp; Peco Energy Co.; Pinnacle West Capital
Corp.; Potomac Electric Power Corporation; PP&L Resources Inc.; Public Service
Company of New Mexico; Public Service Enterprise Group Incorporated; Puget
Sound Energy, Inc.; Rochester Gas & Electric Corporation; SCANA Corp.; Sempra
Energy; Sierra Pacific Resources; SIGCORP; Southern Company; St. Joseph Light &
Power Co.; TECO Energy, Inc.; Texas Utilities Company; TNP Enterprises, Inc.;
Unicom Corp.; Unisource; United Illuminating Company; Unitil Corp.; Utilicorp
United Inc.; Western Resources, Inc.; Wisconsin Energy Corporation; and WPS
Resources Corp. Atlantic Energy, Inc.; Boston Edison Company; Cipsco Inc.;
Delmarva Power & Light Co.; Enova Corp.; ESELCO Inc.; General Public Utilities
Corporation; Idaho Power Company; IES Industries, Inc.; KU Energy Corp.; Long
Island Lighting Company; New York State Electric & Gas Corporation; Oklahoma
Gas & Electric Company; Tucson Electric Power Company; Union Electic Co.; Upper
Peninsula Energy Corp.; Washington Water Power Co.; and WPL Holdings Inc. were
deleted from, and AMEREN; Avista Corp.; BEC Energy; CONECTIV; Energy East
Corp.; GPU Inc.; IDACORP; Keyspan Corp.; Sempra Energy; OGE Energy; and
Unisource were added to, the Edison Electric Institute Index used in Cleco's
proxy statement relating to its 1998 annual meeting of shareholders.
59
<PAGE> 63
PROPOSAL NUMBER 3 -- APPOINTMENT OF INDEPENDENT AUDITORS
The firm of PricewaterhouseCoopers LLP, or its predecessor, Coopers &
Lybrand LLP, independent certified public accountants, has served as auditors of
Cleco continuously since 1952. The Cleco Board, upon recommendation of the
Audit Committee, proposes to continue such firm's services as auditors of Cleco
and, if the Holding Company Proposal is adopted and implemented, of the Holding
Company, for the year ending December 31, 1999. PricewaterhouseCoopers LLP and
its associates do not have any relationship with Cleco except in their capacity
as auditors. The persons named in the accompanying proxy will vote in
accordance with the choice specified thereon, or, if no choice is properly
indicated, in favor of the appointment of PricewaterhouseCoopers LLP as auditors
of Cleco and, if the Holding Company Proposal is adopted and implemented, of the
Holding Company.
A representative of PricewaterhouseCoopers LLP is expected to attend
the Annual Meeting. If present, the representative will have an opportunity to
make a statement during the meeting if he or she so desires and will respond to
appropriate questions raised during the meeting.
The Cleco Board has unanimously approved the appointment of
PricewaterhouseCoopers LLP as independent auditors and recommends that you vote
"FOR" the appointment of PricewaterhouseCoopers LLP as independent auditors.
60
<PAGE> 64
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, to the knowledge of Cleco based on a
review of the information and as of the dates indicated, certain information
with respect to each person who is the beneficial owner of more than 5% of the
outstanding shares of any class of Cleco's voting securities.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Shares of $100 Preferred Stock
Beneficially Owned
- ------------------------------------------------------------------------------------------------------
Amount and Nature of Percentage of
Name and Address Beneficial Ownership Class
---------------- -------------------- -----
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
UMB Bank, N.A.,
Trustee of Cleco's 401(k) Savings and Investment Plan
1010 Grand, Kansas City, MO 64106 286,888(1) 81.0
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1998, based upon information contained in Cleco's
records and those of Cleco's transfer agent. Such 286,888 shares are held by
UMB Bank, N.A., as trustee (the "Trustee") of the ESOP. Such 286,888 shares
are convertible under certain circumstances pursuant to the Cleco Articles, and
the governing instruments of the ESOP and the Savings and Investment Plan into
1,377,062 shares of Cleco Common Stock, subject to antidilution adjustment, or
approximately 6.1% of the Cleco Common Stock outstanding as of December 31,
1998. Participants in the Savings and Investment Plan have voting rights with
respect to shares of Cleco Preferred Stock (or Cleco Common Stock into which
such stock has been converted) allocated to their accounts. The Trustee is
required to vote unallocated shares in accordance with instructions received
from the administrator of the Savings and Investment Plan. Participants in the
Savings and Investment Plan have, in the event of a tender or exchange offer,
investment discretion with respect to shares of Cleco Preferred Stock (or Cleco
Common Stock into which such stock has been converted) allocated to their
accounts. In such an event, the Trustee is required to tender unallocated
shares in accordance with instructions received from the administrator of the
Savings and Investment Plan, but has no power to tender allocated shares as to
which it has received no investment instructions. The Trustee is also the
Trustee of the 401(k) component of the Savings and Investment Plan and in such
capacity holds 537,134 shares of Cleco Common Stock. The Trustee may vote
shares allocated to a participant's 401(k) component account only in accordance
with instructions received from the participant. The combined holdings of the
Trustee under the Savings and Investment Plan (on an as-converted basis with
regard to the Cleco Preferred Stock) are 1,914,196 shares, or 8.5%, of the
outstanding shares of Cleco Common Stock as of December 31,1998.
ANNUAL REPORT
A shareholder survey card, Cleco's 1998 Year in Review, and the enclosed
1998 Annual Report to Shareholders, which contains Cleco's consolidated
financial statements for the year ended December 31, 1998, accompany the proxy
material being mailed to all shareholders. The shareholder survey card, the
1998 Year in Review, and the Annual Report to Shareholders are not a part of
the proxy solicitation material.
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<PAGE> 65
PROPOSALS BY SHAREHOLDERS
Proposals of shareholders intended to be presented at the annual
meeting in 2000 of the shareholders of the Holding Company, if the Holding
Company Proposal passes, or if not, then of Cleco, and otherwise eligible, must
be received no later than November 10, 1999 (subject to certain provisions of
the Holding Company Bylaws, if the Holding Company Proposal passes, or if not,
then of the Cleco Bylaws, which require that certain proposals be submitted 180
days before such meeting) to be included in the proxy material and form of proxy
relating to such meeting, at the following address: Cleco Corporation, P. O. Box
5000, Pineville, Louisiana 71361-5000, Attn: Secretary. If a proposal meeting
all applicable requirements is not received on or prior to January 31, 2000,
management may exercise its discretion in voting proxies for the 2000 annual
meeting of shareholders on any matter raised at such meeting without a
discussion of such matter in the proxy statement for such meeting.
OTHER MATTERS
Management does not intend to bring any other matters before the meeting
and has not been informed that any other matters are to be presented to the
meeting by others. If other matters properly come before the meeting or any
adjournments thereof, the persons named in the accompanying proxy and acting
thereunder intend to vote in accordance with their best judgment.
ALL SHARES OF CLECO COMMON STOCK OR CLECO PREFERRED STOCK THAT A
SHAREHOLDER OWNS, NO MATTER HOW FEW, SHOULD BE REPRESENTED AT THE ANNUAL
MEETING. THE ACCOMPANYING PROXY SHOULD THEREFORE BE COMPLETED, SIGNED, DATED
AND RETURNED AS SOON AS POSSIBLE.
ADDITIONAL INFORMATION
Cleco filed on Form 8-K, dated _______________, 1999, the financial
statements for the year ended December 31, 1998. The Form 8-K is incorporated
by reference into this Proxy Statement and Prospectus, as permitted by the SEC.
Incorporation by reference means that Cleco can disclose information to you,
which information you may find important, by referring you to another document.
The information in such document is deemed to be a part of this Proxy Statement
and Prospectus, except for any information superseded by information in this
Proxy Statement and Prospectus. The Form 8-K incorporated by reference herein
is for the year ended December 31, 1998, and has SEC reference number
__________ _________________.
In addition to the Form 8-K incorporated by reference, Cleco files
annual, quarterly and special reports, proxy statements and other materials
with the SEC. If the Holding Company Proposal is adopted, the Holding Company
will file such reports, but Cleco will no longer file such reports. You may
read and copy any such reports or other materials that Cleco has filed, or that
Cleco or the Holding Company will file in the future, at the SEC's public
reference rooms at 450 Fifth Street, Washington, D.C. 20549 or in New York, New
York or Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
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<PAGE> 66
Such filings and other materials are also available from the SEC's internet web
site at "http://www.sec.gov".
The Holding Company has filed a Registration Statement on Form S-4 to
register with the SEC the shares of the Holding Company Common Stock and
Holding Company Preferred Stock offered hereby. This Proxy Statement and
Prospectus is a part of that Registration Statement and constitutes a
prospectus of Holding Company as well as a proxy statement of Cleco. As
permitted by SEC rules, this Proxy Statement and Prospectus does not contain
all of the information contained in the Registration Statement or its Exhibits.
You may obtain the full Registration Statement and Exhibits, or any other
filing made by Cleco, at the SEC sites listed above, or you may also obtain
such items free of charge, by contracting Rodney J. Hamilton, P.O. Box 5000,
Pineville, Louisiana 71361-5000, telephone number 1-800-253-2652. To ensure
timely delivery, you must request this information from Cleco no later than
April 19, 1999.
By Order of the Board of Directors,
Gregory L. Nesbitt
Chairman and Chief Executive Officer
March 10, 1999
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<PAGE> 67
APPENDIX A - Present Structure
[FLOW CHART]
* Sabine Texican Pipeline Company has ownership interest in
numerous entities.
<PAGE> 68
APPENDIX B - Proposed Structure
[FLOW CHART]
* Sabine Texican Pipeline Company has ownership interests in
numerous entities.
<PAGE> 69
APPENDIX C
PLAN OF REORGANIZATION AND SHARE EXCHANGE AGREEMENT
THIS PLAN OF REORGANIZATION AND SHARE EXCHANGE AGREEMENT (the
"Agreement"), dated as of __________, 1999, is between Cleco Corporation, a
Louisiana corporation and the corporation whose shares of Common Stock and
Preferred Stock will be acquired pursuant to the "Exchange" provided for in
this Agreement (the "Subject Corporation"), and Cleco Holding Corporation, a
Louisiana corporation and the corporation which will acquire the foregoing
shares of Common Stock and Preferred 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. __________ shares of Common Stock, par value $_____ per share
("Subject Corporation Common Stock"), of which __________ were issued and
outstanding as of __________, 1998 (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 Incentive Plans
and DRIP (each as defined below) and its Employee Stock Ownership Plan
("ESOP")); and
B. __________ shares of Preferred Stock, $100 par value, of which
the following are outstanding as of the date hereof: (i) (description of
Preferred Stock to come) (each of the series set forth in (i) through and
including (___) hereinafter referred to collectively as the "Subject
Corporation Preferred Stock") (which number of issued and outstanding shares is
subject to change prior to the Effective Time of the Exchange pursuant to the
Subject Corporation's ESOP);
WHEREAS, the Acquiring Corporation is a wholly-owned subsidiary of the
Subject Corporation with authorized capital stock consisting of __________
shares of Common Stock, par value $_____ per share ("Acquiring Corporation
Common Stock"), of which ten (10) shares are issued and outstanding and owned
by the Subject Corporation;
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 and Preferred Stock issued and outstanding at the Effective Time, (b)
each share of Subject Corporation Common and Preferred Stock issued and
outstanding immediately prior to the Effective Time be automatically exchanged
for one share of Acquiring Corporation Common Stock or Acquiring Corporation
preferred stock (hereinafter referred to as
C-1
<PAGE> 70
"Acquiring Corporation Preferred Stock"), as the case may be, and (c) each
holder of shares of Subject Corporation Common or Preferred Stock issued and
outstanding immediately prior to the Effective Time becomes the holder of a
like number of shares of Acquiring Corporation Common or Preferred 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 116 of
the Louisiana Business Corporation Law ("LBCL").
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 and Preferred Stock for approval and adoption as
provided by Section 116 of the LBCL. The affirmative vote of the holders of at
least two-thirds (2/3rds) of the voting power present at a duly noticed meeting
representing the Subject Corporation Common and Preferred 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 Louisiana Secretary of State (the "Secretary of State") of a
certificate of exchange pursuant to Section 116 of the LBCL ("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;
(2) each share of Subject Corporation Preferred Stock issued and
outstanding immediately prior to the Effective Time shall be automatically
exchanged for one share of Acquiring Corporation Preferred Stock, which shares
shall be fully paid and nonassessable by the Acquiring Corporation;
C-2
<PAGE> 71
(3) the Acquiring Corporation shall acquire and become the owner and
holder of each issued and outstanding share of Subject Corporation Common Stock
and each issued and outstanding share of Subject Corporation Preferred Stock so
exchanged;
(4) each share of Subject Corporation Preferred Stock acquired by the
Acquiring Corporation shall be canceled;
(5) 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;
(6) each unexpired and unexercised option to purchase Subject
Corporation Common Stock or right to receive shares of Subject Corporation
Common Stock (herein a "Subject Corporation Grant") under the 1990 Long-Term
Incentive Plan, the 1981 Incentive Stock Option Plan, and the Deferred
Compensation Plan for Directors (collectively the "Incentive Plans"), whether
vested or unvested, will be automatically converted into an option to purchase
a number of shares of Acquiring Corporation Common Stock or the right to
acquire a number of shares of Acquiring Corporation Common Stock equal to the
number of shares of Subject Corporation Common Stock that could have been
acquired or purchased immediately prior to the Effective Time (assuming full
vesting) under such Incentive Plans, at a price per share of Acquiring
Corporation Common Stock equal to the per share option exercise price or the
per share acquisition price specified in such Subject Corporation Grant and
each such Subject Corporation Grant shall be subject to rights and benefits
that are no less or more favorable than the rights and benefits offered under
the Subject Corporation Incentive Plans;
(7) 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;
(8) each share of Subject Corporation Common Stock held under the
Automatic Dividend Reinvestment Plan (the "DRIP") immediately prior to the
Effective Time shall automatically be exchanged for a like number of shares
(including fractional and uncertified shares) of Acquiring Corporation Common
Stock, which shares shall be held under and issued pursuant to the DRIP; and
(9) 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 131 of the LBCL are applicable to such former holders.
B. Prior to the Effective Time, the Acquiring Corporation's Articles
of Incorporation shall be amended and restated substantially in the form set
forth as Attachment 1 to this Agreement.
C-3
<PAGE> 72
C. At the Effective Time, the Subject Corporation shall distribute
to the Acquiring Corporation its ownership interests in all of its
subsidiaries.
ARTICLE IV
The filing of the Certificate with the Secretary of State and the
consummation of the Exchange shall be subject to satisfaction of the following
conditions at or prior to the Effective Time:
A. the approval by the holders of Subject Corporation Common and
Preferred Stock provided for in Article I of this Agreement shall have been
received;
B. such orders, authorizations, approvals or waivers from the
Louisiana Public Service Commission, the Federal Energy Regulatory Commission,
and all other 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;
C. a registration statement is effective under the Securities Act of
1933 relating to the Acquiring Corporation Common and Preferred Stock to be
issued or reserved for issuance in connection with the Exchange;
D. 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;
E. 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
F. the Restated Articles of Incorporation of the Acquiring
Corporation shall have been filed with the Secretary of State.
ARTICLE V
Following the Effective Time, each holder of an outstanding certificate
or certificates theretofore representing shares of Subject Corporation Common
and Preferred 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
transfer, and each such holder or transferee shall be entitled to receive a
certificate or certificates representing the same number of Acquiring
Corporation Common or
C-4
<PAGE> 73
Preferred Stock as the shares of Subject Corporation Common or Preferred 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 or Preferred 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 or Preferred Stock as though such surrender or
exchange or transfer had taken place. The holders of Subject Corporation
Common or Preferred Stock at the Effective Time shall have no right at and
after the Effective Time to have their shares of Subject Corporation Common or
Preferred 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 shall 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 and Preferred Stock as provided
in Article I 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 and Preferred Stock as provided in Article I 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.
IN WITNESS WHEREOF, each of the Corporations, pursuant to authorization
and approval given by its Board of Directors, has caused this Agreement to be
executed as of the date first above written.
Cleco Corporation Cleco Holding Corporation
By: By:
------------------------------- ---------------------------------
C-5
<PAGE> 74
APPENDIX D
ARTICLES OF INCORPORATION
OF
CLECO CORPORATION
D-1
<PAGE> 75
ARTICLES OF INCORPORATION
OF
CLECO CORPORATION
ARTICLE 1.
The name of the Corporation is hereby declared to be Cleco Corporation.
ARTICLE 2.
The objects and purposes for which the Corporation is formed is to
engage in any lawful activity for which corporations may be formed under
Louisiana Business Corporation Law.
ARTICLE 3.
The duration of the Corporation shall be perpetual.
ARTICLE 4.
The location and post office address of the registered office of the
Corporation is hereby fixed, until changed by action of the board of directors
as permitted by law, at 2030 Donahue Ferry Road, City of Pineville, State of
Louisiana.
ARTICLE 5.
Until the further action of the board of directors as permitted by law,
the resident agents of the Corporation shall be , whose post office
address is 2030 Donahue Ferry Road, Pineville, Louisiana, and , whose
post office address is 2030 Donahue Ferry Road, Pineville, Louisiana
ARTICLE 6.
Section 1. The authorized capital stock of the Corporation is hereby
fixed at $324,190,000, which shall be divided into and represented by 1,491,900
shares of Preferred Stock of the par value of $100 per share ("$100 Preferred
Stock"), 3,000,000 shares of Preferred Stock of the par value of $25 per share
("$25 Preferred Stock") and 50,000,000 shares of Common Stock of the par value
of $2 per share ("Common Stock").
Section 2. Without necessity of action by the shareholders,
authorized shares of capital stock may be issued by the Corporation, from time
to time, for such consideration, either
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cash and/or property and/or good will, as may be fixed, from time to time, by
the board of directors, but shares of capital stock shall not be issued for
less than the par value thereof, and any and all such shares so issued, if the
full consideration so fixed, whether cash and/or property and/or good will, has
been paid and delivered to the Corporation therefor shall be deemed full-paid
stock and not liable to any further call or assessment and the holder or
holders of such shares and/or stock certificates shall not be liable for any
further payment thereon.
Section 3.
(a) Subject to the provisions of subsection (b) hereof, at all
meetings of the shareholders of the Corporation, each holder of shares of
Common Stock and $100 Preferred Stock of the Corporation shall be entitled to
one vote for each share of such stock standing in his name on the books of the
Corporation and each holder of shares of $25 Preferred Stock shall be entitled
to one-fourth vote for each share of such stock standing in his name on the
books of the Corporation or, if a record date has been set for the purpose of
such meeting, then as of such record date; except that in the election of
directors of the Corporation, each holder of shares of the Common Stock of the
Corporation shall have the right to multiply the number of votes to which he
may be entitled as aforesaid by the number of directors to be elected, and he
may cast all such votes for one candidate or he may distribute them among any
two or more candidates.
If at any meeting of the shareholders of the Corporation an amendment to
the articles of incorporation of the Corporation is proposed which would make
any change in the rights of the holders of shares of the Common Stock or in the
rights of the holders of shares of the Preferred Stock of any series, then the
holders of the shares so affected by the proposed amendment shall be entitled
to vote as a class thereon, and the vote of two-thirds of the votes of each
class or series so affected by the amendment shall be necessary to the adoption
thereof.
(b) During any period (hereinafter referred to as "Default Period")
that any one or more of the hereinafter described conditions shall exist, the
holders of the $100 Preferred Stock and the $25 Preferred Stock (collectively,
the "Preferred Stock"), voting separately as a class (without regard to
series), shall possess full voting powers to the extent provided in section 3
(to the exclusion of the holders of shares of all other series and classes of
capital stock of the Corporation) to elect that number of directors of the
Corporation which shall be the smallest number of directors which shall
constitute at least a majority of the total number of directors of the
Corporation authorized at the time the election concerned is to be held:
(i) if and whenever dividends payable on the Preferred Stock
shall be in arrears in an aggregate amount equal to the aggregate
dividends payable on the Preferred Stock in any period of 12 consecutive
calendar months,
(ii) in case at any time the Corporation shall fail to deposit
and apply (not later than nine months after the date the deposit
concerned shall be prescribed to be made) the maximum sum the
Corporation shall then be required (were sufficient funds then legally
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available therefor) to deposit and apply by the provisions of any
sinking fund established for the benefit of any series of Preferred
Stock on any date such deposit or application is therein provided to be
made, or
(iii) in case at the end of any calendar or fiscal year the
Corporation has failed to offer to purchase, or to purchase upon the
acceptance of such offer, that number of shares which it is required to
offer to purchase, and to purchase upon the acceptance of such offer
during such calendar or fiscal year by the provisions of any purchase
fund established for the benefit of any series of Preferred Stock,
and the said voting rights created upon the occurrence of the aforesaid
condition concerned shall continue unless and until:
(1) all accrued and unpaid dividends on the then outstanding
Preferred Stock of all series shall have been paid or declared or set
apart for payment;
(2) the Corporation shall have deposited and applied the
maximum sums the Corporation shall then or theretofore be required (were
sufficient funds at all times legally available therefor) to deposit and
apply by the provisions of any sinking fund then existing with respect
to each series of Preferred Stock then outstanding; and
(3) the Corporation shall not be in default with respect to
any obligations imposed upon it to offer to purchase or to purchase
Preferred Stock by the provisions of any purchase fund established for
the benefit of any series of Preferred Stock;
when the voting power shall revest as then prescribed by these restated
articles of incorporation or by applicable law, subject always, however, to the
foregoing provisions of this paragraph for the revesting of such voting power
in the holders of the Preferred Stock; provided further that the events whose
occurrence (as provided in the foregoing clauses (i), (ii) and (iii) of this
paragraph) create conditions entitling the holders of Preferred Stock to vote
as hereinbefore provided shall be deemed to create such voting conditions
regardless of the cause of the occurrence of the event concerned (including,
without limitation, contractual restrictions or restrictions of applicable
law).
Immediately upon accrual of any right of the holders of the Preferred
Stock to elect directors as hereinabove in this subsection (b) provided, a
special meeting of shareholders shall be called in the manner provided by the
bylaws of the Corporation if requested by the holder or holders of not less
than a number of shares of the Preferred Stock then outstanding conveying 5% of
the total votes of the Preferred Stock then outstanding. At such special
meeting, or, if no such special meeting shall have been called, then at the
next annual meeting of shareholders, the holders of the Preferred Stock, voting
as a class, shall elect the number of directors of the Corporation hereinbefore
prescribed in this subsection (b), and the holders of any series or class of
capital stock of the Corporation at the time ranking junior to the Preferred
Stock with respect to the payment of dividends or the distribution of assets
(herein sometimes called "Junior
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Stock"), subject to any conditions relative thereto contained in any provisions
with respect to any series or class of capital stock of the Corporation other
than the Preferred Stock, shall elect the remaining number of directors. At
any such special meeting or at any annual meeting held while the holders of
Preferred Stock are entitled to elect directors as hereinabove provided in this
subsection (b), the holders of a number of shares of Preferred Stock then
outstanding conveying a majority of the total votes of the Preferred Stock then
outstanding, present in person or by proxy, shall constitute a quorum for the
election of directors, notwithstanding any provision to the contrary contained
in the bylaws of the Corporation. The term of office of all persons who are
directors of the Corporation at the time of such meeting shall expire upon the
election at such meeting by the holders of Preferred Stock of the number of
directors which they are entitled to elect; and the persons so elected by the
holders of Preferred Stock, together with such persons as may be elected by the
holders of Junior Stock, shall constitute the duly elected directors of the
Corporation. In the event that the holders of Junior Stock shall fail to elect
at such meeting the full number of directors which they are entitled to elect,
the resulting vacancies in the board of directors may (subject to the
provisions of any applicable law) be filled by a majority of the directors.
Nothing herein contained shall be construed to be a bar to the reelection of
any director at any such special or annual meeting.
Upon the expiration of the Default Period, the right of the holders of
the Preferred Stock to elect directors as hereinabove provided in this
subsection (b) shall cease and the voting power with respect to the election of
directors shall be restored as otherwise provided in these restated articles of
incorporation or by applicable law. Immediately thereafter a special meeting
of shareholders shall be called in the manner provided by the bylaws of the
Corporation if requested in writing by the holder or holders of a number of
shares of any series or class of capital stock of the Corporation entitled to
vote thereat conveying 5% of the total vote entitled to vote thereat. At such
special meeting or, if no such special meeting shall have been called, then at
the next annual meeting of shareholders, an entire new board of directors shall
be elected as otherwise provided by these restated articles of incorporation or
by applicable law, and the term of office of the directors in office at the
time of such election shall expire upon the election of their successors at
such meeting; provided, however, that nothing herein contained shall be
construed to be a bar to the reelection of any director at any meeting.
The directors elected by the holders of the Preferred Stock pursuant to
this subsection (b) shall (subject to the provisions of any applicable law) be
subject to removal only by the vote of the holders of the Preferred Stock so
long as the right of the holders of the Preferred Stock to elect directors as
hereinabove provided shall continue. At any special meeting of the holders of
the Preferred Stock called for that purpose, the holders of a number of shares
of the Preferred Stock then outstanding conveying a majority of the total votes
of the Preferred Stock then outstanding, present in person or by proxy, shall
constitute a quorum for the removal of any one or more of the directors elected
by the holders of the Preferred Stock. Any vacancy in the board of directors
occurring by reason of such removal may be filled by vote of the holders of the
Preferred Stock at such meeting; and if not so filled such vacancy shall
(subject to the provisions of any applicable law) be filled by a majority of
the remaining directors, or the remaining director, elected by the holders of
the Preferred Stock.
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Subject to the right hereinabove granted to the holders of the Preferred
Stock to fill vacancies in the board of directors occurring by reason of
removal, all vacancies in the board of directors by reason of the resignation,
death, disqualification, inability to act or removal of any member thereof
elected by the holders of the Preferred Stock may (subject to the provisions of
any applicable law) be filled by a majority of the remaining directors, or the
remaining director, elected by the holders of the Preferred Stock.
Section 4. The shares of Preferred Stock may be divided into and
issued in series, from time to time, as herein provided. All shares of
Preferred Stock of all series shall be of equal rank and no class of stock
ranking prior to the Preferred Stock, or any obligation or security convertible
into stock ranking prior to the Preferred Stock, shall be created unless
authorized by the vote of the holders of a number of shares of Preferred Stock
conveying two-thirds of the total votes of the Preferred Stock then outstanding
voting as a class. All shares of any particular series of the Preferred Stock
shall be identical, except as to the date or dates from which dividends thereon
shall be cumulative as provided in section 5 hereof. Except as otherwise
specifically provided in this article 6, the shares of Preferred Stock of
different series may vary as to their terms, which, in the case of each such
series, shall be fixed or, if any of such terms and characteristics shall vary
from time to time, the method by which such terms and characteristics shall be
determined shall be established, at any time prior to the issuance thereof in
the manner provided in section 5 hereof.
Each share of the Common Stock shall be equal in all respects to every
other share of the Common Stock.
Shares of Preferred Stock, other than the shares of the 4.5% Preferred
Stock provided for in section 8 of this article 6, may not be issued unless for
12 consecutive calendar months within the 15 calendar months immediately
preceding the month within which such shares are proposed to be issued (i) the
net earnings of the Corporation available for the payment of dividends on the
Preferred Stock, as determined after provision for depreciation and all taxes
and in accordance with sound accounting practice, have been at least two and
one-half times the annual dividend requirements on all Preferred Stock to be
outstanding immediately after the issuance of such additional shares and (ii)
the net earnings of the Corporation available for the payment of interest on
the indebtedness of the Corporation for the same 12-month period, as determined
after provision for depreciation and all taxes and in accordance with sound
accounting practice, have been at least one and one-half times the aggregate of
the annual interest requirements of the Corporation's indebtedness to be
outstanding immediately after the issuance of such additional shares and the
annual dividend requirements on all shares of Preferred Stock to be outstanding
after the issuance of such additional shares. For purposes of calculating the
dividend requirements for one year applicable to any series of the Preferred
Stock proposed to be issued that will have dividends determined according to an
adjustable, floating or variable rate, the dividend rate used shall be the
higher of (A) the dividend rate applicable to such series of the Preferred
Stock on the date of such calculation, or (B) the weighted average dividend
rate applicable to all series of the Preferred Stock outstanding during the
12-month period ended on the last day of the calendar month immediately
preceding the calendar month that includes the
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date of such calculation. For purposes of calculating the dividend or interest
requirements for one year applicable to any series of the Preferred Stock or
indebtedness outstanding at the date of such proposed issue and having
dividends or interest determined according to an adjustable, floating or
variable rate, the dividend or interest rate used shall be: (A) if such series
of the Preferred Stock or indebtedness has been outstanding for at least 13
calendar months, the actual amount of dividends or interest paid on account of
such series of the Preferred Stock or indebtedness for the 12-month period
ended on the last day of the calendar month immediately preceding the calendar
month that includes the date of such calculation, or (B) if such series of the
Preferred Stock or indebtedness has been outstanding for less than 13 calendar
months, the higher of (1) the dividend or interest rate applicable to such
series of the Preferred Stock or indebtedness on the date of such calculation,
or (2) the weighted average dividend or interest rate applicable to all series
of the Preferred Stock or indebtedness outstanding during the 12-month period
ended on the last day of the calendar month immediately preceding the calendar
month that includes the date of such calculation.
Section 5. The holders of shares of each series of the Preferred
Stock at the time outstanding shall be entitled to receive, but only when and
as declared by the board of directors of the Corporation, out of funds legally
available for the payment of dividends, cumulative preferential dividends, at
the applicable dividend rate for the particular series established therefor as
herein provided, payable quarter-yearly on the first days of March, June,
September and December in each year, or at such intervals and on such dates as
otherwise are expressly set forth or provided for in the resolution of the
board of directors of the Corporation creating such series or, if such
intervals and dividend payment dates shall vary from time to time for such
series, at such intervals and on such dates derived pursuant to the method by
which such intervals and such dates shall be determined, to shareholders of
record on the respective dates, not exceeding 45 days preceding such dividend
payment dates, established for the purpose by the board of directors. Any
dividends declared or paid on the Preferred Stock in an amount less than full
cumulative dividends payable at such time upon all shares of the Preferred
Stock outstanding shall, if more than one series be outstanding, be divided
among the different series in proportion to the aggregate amounts that would be
distributable to the Preferred Stock of each series if full cumulative
dividends were simultaneously declared and paid thereon at such time without
regard to the applicable dividend payment dates. In the case of all shares of
each particular series, dividends on shares of such series shall be cumulative
from such date as may be fixed by resolution of the board of directors. Any
accumulation of dividends on the Preferred Stock shall not bear interest. The
holders of shares of the Preferred Stock of any series shall not be entitled to
receive any dividends thereon other than the dividends referred to in this
paragraph.
Whenever the full dividends on the shares of all series of Preferred
Stock at the time outstanding for all past dividend periods and for the current
dividend periods shall have been paid or declared and set apart for payment and
the Corporation shall have deposited and applied the maximum sum the
Corporation shall then be required (were sufficient funds then legally
available therefor) to deposit and apply by the provisions of any then existing
sinking fund or purchase fund established for the benefit of any series of
Preferred Stock, then such dividends (payable in cash, stock or otherwise) as
may be determined by the board of directors may be
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declared and paid on the shares of the Common Stock, but only out of funds
legally available for the payment of such dividends. For the purposes of this
paragraph, the term "Common Stock" shall be deemed to mean any capital stock of
the Corporation ranking junior to the Preferred Stock as to the payment of
dividends or the distribution of assets.
The Corporation, by action of its board of directors, may redeem the
whole or any part of any series of the Preferred Stock outstanding, at any time
or from time to time, at the redemption price of the shares of the particular
series fixed therefor as herein provided, together with a sum equal to all
accrued and unpaid dividends thereon to the date fixed for redemption. In case
of the redemption of a part only of any series of the Preferred Stock at the
time outstanding, the Corporation shall select, by lot or pro rata in such
manner as the board of directors may determine, the particular shares so to be
redeemed. The board of directors of the Corporation shall have full power and
authority, subject to the limitations and provisions herein contained, to
prescribe the manner in which and the terms and conditions upon which the
shares of the Preferred Stock shall be redeemed from time to time. Notice of
at least 30 days (or such other period, not less than 10 days, fixed by the
board of directors of the Corporation upon the creation of a series of the
Preferred Stock) of each such redemption shall be given to the holders of
record of shares of Preferred Stock so to be redeemed by mailing a notice of
such redemption to them at their respective addresses as the same shall appear
on the books of the Corporation; but no defect in such notice or in the mailing
thereof shall affect the validity of such redemption proceedings. From and
after the date fixed in any such notice as the date of redemption, if the
Corporation shall have deposited the redemption price of the shares called for
redemption in trust in a special account for that purpose in a bank or trust
company doing business in the United States of America, and having capital,
surplus and undivided profits aggregating at least $25,000,000, the said shares
shall no longer be deemed to be outstanding, shall cease to be entitled to
dividends, and all rights of the holders thereof as shareholders of the
Corporation by reason of their ownership of such shares (except their right to
receive the redemption price from such bank or trust company out of the funds
so deposited) shall cease and determine. In case the holder of any shares so
called for redemption shall not claim the redemption price for his shares
within six years after such deposit in trust by the Corporation, the said bank
or trust company shall, upon demand, pay over to the Corporation such amount so
deposited and the said bank or trust company shall thereupon be relieved from
all responsibility to the holder of such shares.
If and whenever any dividend payable on the Preferred Stock shall be in
arrears or in case at any time the Corporation shall have failed to deposit and
apply the maximum sum the Corporation shall then be required (were sufficient
funds then legally available therefor) to deposit and apply by the provisions
of any sinking fund or purchase fund established for the benefit of any series
of Preferred Stock on any date such deposit or application is therein provided
to be made, the Corporation shall not redeem, purchase or otherwise acquire for
value any shares of the Preferred Stock unless all of the shares of the
Preferred Stock outstanding are so redeemed, purchased or acquired, unless
concurrently with such redemption or purchase such arrearage in the payment of
dividends or failure to meet sinking fund or purchase fund requirements shall
be cured and satisfied. Except as hereinabove otherwise expressly provided,
nothing herein contained shall limit any legal right of the Corporation to
purchase or otherwise
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acquire any shares of the Preferred Stock at not exceeding the price at which
the same may be redeemed. Subject to the provisions of sections 9, 10 and 11
of this article 6 with respect to limitations upon the issuance of the 1955
Series Preferred, the 1964 Series Preferred and the 1965 Series Preferred,
respectively, all or any shares of the Preferred Stock at any time redeemed,
purchased or acquired by the Corporation shall be canceled and restored to the
status of authorized but unissued shares of the Preferred Stock, and such
shares may thereafter, in the discretion of the board of directors of the
Corporation, be reissued or otherwise disposed of at any time, or from time to
time, to the extent and in the manner now or hereafter permitted by law.
Before any amount shall be paid to, or any assets distributed among, the
holders of shares of the Common Stock upon any liquidation, dissolution or
winding up of the Corporation, and after paying or providing for the payment of
all creditors of the Corporation, the holders of all shares of each series of
the Preferred Stock at the time outstanding shall be entitled to be paid in
cash the amount for the shares of the particular series fixed therefor as
herein provided, together with all accrued and unpaid dividends thereon to the
date such payment is made available in full to the various holders of the
particular series concerned (in the manner provided for redemption payments in
the third paragraph of this section 5); but no payments on account of such
distributive amounts shall be made to the holders of any shares of any series
of the Preferred Stock unless there shall likewise be paid at the same time to
the holders of shares of each other series of the Preferred Stock at the time
outstanding like proportionate distributive amounts, ratably, in proportion to
the full distributive amounts to which they are respectively entitled as herein
provided. The holders of shares of the Preferred Stock of any series shall not
be entitled to receive any amount with respect thereto upon any liquidation,
dissolution or winding up of the Corporation other than the amounts referred to
in this paragraph. Neither the consolidation or merger of the Corporation with
or into any other corporation, nor the sale or transfer by the Corporation of
all or any part of its assets, shall be deemed to be a liquidation, dissolution
or winding up of the Corporation for the purposes of this paragraph.
In the event of any liquidation, dissolution or winding up of the
Corporation, all assets and funds of the Corporation remaining after paying or
providing for the payment of all creditors of the Corporation and after paying
or providing for the payment to the holders of shares of all series of the
Preferred Stock of the full distributive amounts to which they are respectively
entitled, as herein provided, shall be divided among and paid to the holders of
shares of the Common Stock according to their respective shares.
Subject to the applicable laws of the State of Louisiana and to the
provisions of these restated articles of incorporation, the board of directors
of the Corporation may, at any time, or from time to time, within the then
total authorized number of shares of the Preferred Stock, amend these restated
articles of incorporation, or take such other action as may be permitted by the
applicable laws of the State of Louisiana, to (i) increase the authorized
number of shares of any series of the Preferred Stock or of any Preferred Stock
which is not a part of a then existing series, (ii) establish or reestablish
any unissued shares of the Preferred Stock as shares of the Preferred Stock of
any series, or, as to Preferred Stock which is not part of a then existing
series, create one or more additional series of the Preferred Stock, (iii) fix
the authorized number of
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shares of any series (which number of shares shall be subject to change from
time to time by like action), (iv) establish the designations and the terms of
any series of the Preferred Stock (including, if the terms of any series shall
vary from time to time, the method by which such terms shall be determined) in
the respect to which the shares of any series may vary from the shares of other
series of Preferred Stock as provided in section 4 of this article 6, and (v)
delete from these restated articles of incorporation all provisions pertaining
to any series of Preferred Stock no shares of which are outstanding and no
shares of which are proposed by the board of directors to be reissued and to
make such conforming changes to these restated articles of incorporation as may
be necessary or appropriate in connection with any such deletion.
Section 6. No holder of shares of Common Stock or of any series of
Preferred Stock shall be entitled as such as a matter of right to subscribe for
or purchase any part of any new or additional issue of shares, or securities
convertible into shares, of any class, series or kind whatsoever, whether now
or hereafter authorized and whether issued for cash, property, services, by way
of dividends, or otherwise.
Section 7.
(a) So long as any shares of Preferred Stock are outstanding,
dividends on the Common Stock shall be restricted (i) to not more than 50% of
the net income available for dividends on such Common Stock for a period of 12
consecutive calendar months within the 15 calendar months immediately preceding
the date on which such payment of dividends is to be made, when the ratio of
Common Stock equity to total capitalization, at the end of such 12-month
period, is less than 20%; and (ii) to not more than 75% of such net income when
such ratio is 20% or more but less than 25%. At any time when such ratio is
25% or more, payment of dividends on the Common Stock shall not be restricted
except that the Corporation may not pay (other than as permitted by (i) and
(ii) above) any dividends on the Common Stock which would reduce such ratio
below 25%. For the foregoing purposes (i) "Common Stock equity" shall mean the
aggregate of the par value of, or stated capital represented by, the
outstanding Common Stock, including premiums on the Common Stock, and the
earned surplus, capital surplus, paid-in surplus and any other surplus of the
Corporation, whether or not available for the payment of dividends on the
Common Stock; (ii) "total capitalization" shall mean the aggregate of the par
value of, or stated capital represented by, the outstanding shares of capital
stock of all classes of the Corporation, including premiums thereon, the earned
surplus, capital surplus, paid-in surplus and any other surplus of the
Corporation, whether or not available for the payment of dividends on the
Common Stock, and the principal amount of all outstanding indebtedness of the
Corporation maturing more than 12 months after the date of the determination of
total capitalization; and (iii) "dividends on Common Stock" shall embrace
dividends on Common Stock (other than dividends payable only in shares of
Common Stock), distributions on, and purchases or other acquisitions for value
of, any Common Stock of the Corporation.
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For the purposes of this subsection (a), the term "Common Stock" shall
be deemed to mean any capital stock of the Corporation ranking junior to the
Preferred Stock as to the payment of dividends or the distribution of assets.
(b) So long as any shares of Preferred Stock are outstanding, without
the consent of the holders of a number of shares of Preferred Stock conveying
two-thirds of the total votes of the Preferred Stock then outstanding as of a
record date fixed by the board of directors (given either by their affirmative
vote at a special meeting called for that purpose, or in writing without a
meeting, and in addition to any other approvals or consents required by law)
the Corporation will not voluntarily liquidate, dissolve or wind up its
business or sell, transfer or otherwise dispose of all or substantially all of
its assets to, or consolidate with, or merge into, any other person, or permit
any other person to merge into the Corporation, unless concurrently with the
consummation of such transaction all the outstanding shares of Preferred Stock
shall be redeemed in accordance with the applicable provisions of these
articles.
Section 8. Of the authorized shares of Preferred Stock of the par
value of $100 per share of the Corporation, 21,480 shares are hereby
established and classified as a series of such Preferred Stock which shall be
designated as "4.5% Preferred Stock." The remaining authorized shares of
Preferred Stock of the Corporation may be established and classified by the
board of directors from time to time in one or more series as provided in
sections 4 and 5 of this article 6, and may thereafter be issued as provided in
section 2 of this article 6.
The terms of the 4.5% Preferred Stock, in the respects in which the
shares of such series may vary from the shares of Preferred Stock of different
series, as provided in section 4 of article 6 of the restated articles of
incorporation of the Corporation, shall be as follows:
(a) the annual dividend rate of the shares of 4.5% Preferred Stock
shall be $4.50 per share and the date from which dividends on the shares of
such series shall be cumulative shall be the date as of which the said shares
shall be issued;
(b) the redemption price of the shares of such series shall be $103
per share as to any shares redeemed on or prior to February 28, 1954, $102 per
share as to any shares redeemed subsequent to February 28, 1954, and on or
prior to February 28, 1957, and thereafter at $101 per share as to any shares
redeemed subsequent to February 28, 1957; in each case together with all
accrued and unpaid dividends thereon to the date fixed for redemption;
(c) the amount per share for such series payable to the holders
thereof upon any voluntary liquidation, dissolution or winding up of the
Corporation shall be the redemption price with respect to such shares which
shall be applicable thereto at the time when such voluntary liquidation,
dissolution or winding up shall occur;
(d) the amount per share for such series payable to the holders
thereof upon any involuntary liquidation, dissolution or winding up of the
Corporation shall be the sum of $100
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per share together with all accrued and unpaid dividends thereon to the date
fixed for the payment.
Section 9. Of the authorized shares of Preferred Stock of the
Corporation of the par value of $100 per share, 20,000 shares thereof are
hereby established and classified as a series of such Preferred Stock which
shall be designated as "4.5% Preferred Stock, Series of 1955" (herein referred
to as "1955 Series Preferred"). The remaining authorized shares of Preferred
Stock of the Corporation may be established and classified by the board of
directors from time to time in one or more series as provided in sections 4 and
5 of this article 6, and may thereafter be issued as provided in section 2 of
this article 6; provided, nevertheless, notwithstanding any other provisions of
this article 6 and so long as there shall be outstanding any of the 1955 Series
Preferred, the Corporation will not, without the consent of the holders of at
least 66-2/3% of the shares of the 1955 Series Preferred at the time
outstanding as of a record date fixed by the board of directors (given either
by their affirmative vote at a special meeting called for that purpose or in
writing without a meeting, in addition to any other approvals or consents
required by law), issue any shares of the 1955 Series Preferred (or any
securities convertible into any such shares) except for the 20,000 shares
thereof initially to be issued.
The following is a description (supplemental to the general description
of the Preferred Stock of all series contained in these restated articles of
incorporation) of the 1955 Series Preferred, with the privileges, rights,
restrictions, limitations and qualifications thereof (the headings hereinafter
set forth being solely for convenience of reference):
9.1 Dividends. The dividend rate for the 1955 Series Preferred is
$4.50 per share per annum and no more, and the date from which dividends on the
shares of such series shall be cumulative (whether or not earned or declared)
shall be the date as of which the said shares shall be issued.
9.2 Redemption. The 1955 Series Preferred shall be redeemable in
whole or in part at any time or from time to time. The sums payable upon the
redemption thereof (in addition to accrued and unpaid dividends) shall be:
$104.50 if redeemed on or before June 1, 1958; $104 if redeemed
thereafter and on or before June 1, 1961; $103.50 if redeemed thereafter
and on or before June 1, 1964; $103 if redeemed thereafter and on or
before June 1, 1967; $102.50 if redeemed thereafter and on or before
June 1, 1970; and $102 if redeemed thereafter.
The above redemption prices shall apply only to voluntary redemptions
and shall not apply to redemptions pursuant to the sinking fund for 1955 Series
Preferred hereinafter provided.
All such redemptions shall be made in the manner provided in section 5
of this article 6, except that if less than all of the shares of the 1955
Series Preferred are to be redeemed when any of the then outstanding shares of
the 1955 Series Preferred are registered in the name of any holder (hereinafter
in this subsection 9.2 called "Pro Rata Holder"), either in whose name the
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shares concerned were first registered or in whose name not less than 500
shares of the 1955 Series Preferred are then registered, the aggregate number
of shares of the 1955 Series Preferred to be redeemed shall be apportioned pro
rata, as nearly as practicable (so as only to redeem whole shares), between
each Pro Rata Holder and, collectively, all of the other then holders of shares
of the 1955 Series Preferred then outstanding in the proportion that the
aggregate number of such shares held by the Pro Rata Holder concerned bears to
the aggregate number of all other such shares then outstanding, provided that
the amount so apportioned for redemption of such shares not registered in the
name of any Pro Rata Holder shall be applied to such of said shares as are
selected in the manner provided in said section 5 of this article 6.
9.3 1955 Series Preferred Sinking Fund. On the respective dates
hereinafter set forth the Corporation shall (so long as any shares of the 1955
Series Preferred shall be outstanding and subject to the other provisions of
this article 6) set apart out of its funds lawfully available for the purpose
(or to the extent the same are lawfully available therefor) and shall deposit
in a special fund (herein called "1955 Series Sinking Fund") to be established
and maintained by the Corporation (with a bank or trust company doing business
in the State of Louisiana and having a capital, surplus and undivided profits
aggregating not less than $2,000,000), for the retirement of its 1955 Series
Preferred, that sum in cash which shall be sufficient to redeem (at a price per
share equal to $100 plus an amount equal to all accrued and unpaid dividends
thereon) on June 1 of each year, commencing June 1, 1956, the largest integral
number of shares of the 1955 Series Preferred contained in 2% of the maximum
number of shares of the 1955 Series Preferred at any time issued on or prior to
the June 1 concerned.
The aforesaid obligations of the Corporation to set apart such sum or
sums shall be cumulative so that, if the full amount required to be set apart
as aforesaid on each such date for the 1955 Series Sinking Fund shall not be so
set apart, the deficiency shall be made good thereafter as soon as funds
lawfully available therefor shall become available.
Each amount so set apart for the 1955 Series Sinking Fund shall be
applied by the Corporation, on the date the deposit concerned is made and in
the manner provided in section 5 and subsection 9.2 of this article 6, to the
redemption of the maximum number of shares of the 1955 Series Preferred
redeemable from such deposited moneys at the sinking fund redemption price
hereinbefore in this subsection provided.
9.4 Liquidation Rights. The amount per share for such 1955 Series
Preferred payable to the holders thereof upon any voluntary liquidation,
dissolution or winding up of the Corporation shall be the redemption price with
respect to such shares which shall be applicable thereto at the time when such
voluntary liquidation, dissolution or winding up shall occur, including all
accrued and unpaid dividends thereon to the date such payment is made available
in full to the various holders of the 1955 Series Preferred (in the manner
provided for redemption payments in the third paragraph of section 5 of this
article 6).
The amount per share for such 1955 Series Preferred payable to the
holders thereof upon any involuntary liquidation, dissolution or winding up of
the Corporation shall be the sum of
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$100 per share together with all accrued and unpaid dividends thereon to the
date such payment is made available in full to the various holders of the 1955
Series Preferred (in the manner provided for redemption payments in the third
paragraph of section 5 of this article 6).
9.5 Restrictive Agreement. So long as any shares of the 1955 Series
Preferred shall be outstanding, the Corporation will not, without the consent
of the holders of at least 66-2/3% of the shares of the 1955 Series Preferred
at the time outstanding as of a record date fixed by the board of directors
(given either by their affirmative vote at a special meeting called for that
purpose, or in writing without a meeting, and in addition to any other
approvals or consents required by law), issue, assume or guarantee, or
otherwise obligate itself for the payment of, any funded debt (as hereinafter
defined) other than Bonds (as hereinafter defined) if immediately thereafter
the aggregate principal amount of all funded debt to be outstanding shall
exceed 66-2/3% of the capitalization of the Corporation (as hereinafter
defined).
For the purposes of this subsection, the term "outstanding" when used
with reference to funded debt or other indebtedness shall be deemed to include
any funded debt or indebtedness being concurrently issued, assumed or
guaranteed by the Corporation, or for which it shall concurrently become
obligated, but shall be deemed to exclude any funded debt or indebtedness being
concurrently retired or provision for retirement of which is concurrently being
made and any funded debt held in the treasury of the Corporation.
The term "funded debt" as used in this subsection shall be deemed to
mean all bonds (including Bonds as hereinafter defined), notes, debentures or
other evidences of indebtedness, whether secured or unsecured (including,
without limitation, indebtedness secured by mortgages or other liens existing
on property hereafter acquired by the Corporation at the time of acquisition
thereof, whether or not assumed in connection with such acquisition, and
purchase money obligations created in connection with such acquisition), other
than evidences of indebtedness maturing on demand or within one year from the
date of the creation thereof and not renewable or extendable by the terms
thereof, at the option of the Corporation, beyond such year; provided, however,
that no obligation or evidence of indebtedness itself maturing by its terms not
more than one year after the date of its creation or issuance, issued or
created to renew, pay or refund an obligation which matured by its terms within
one year, shall be deemed to be funded debt nor shall the original obligation
be thereby transformed into funded debt of the Corporation; nor shall
customers' deposits and advances by customers for construction be deemed to be
funded debt of the Corporation.
In the case of any funded debt of the Corporation which is secured by
the pledge of Bonds, the aggregate principal amount of such funded debt shall
be deemed to be either the aggregate principal amount of such funded debt or
the aggregate principal amount of such pledged Bonds, whichever shall be
greater.
The term "capitalization of the Corporation" shall mean, at any date as
of which the amount thereof is to be determined, the aggregate of:
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(a) The par value of, or stated capital represented by, the
outstanding shares of capital stock of all classes of the Corporation,
including premiums paid to the Corporation thereon, the earned surplus (or
deficit), capital surplus, paid-in surplus and any other surplus of the
Corporation, whether or not available for the payment of dividends on the
Common Stock, and
(b) The aggregate principal amount of all funded debt of the
Corporation outstanding on such date.
The term "Bonds" as used herein shall mean any bonds duly issued under
the Indenture of Mortgage, dated as of July 1, 1950, between the Corporation
and The National Bank of Commerce in New Orleans, as trustee, as supplemented
or amended, or any indenture of the Corporation executed and delivered in lieu
of and in substitution for such Indenture of Mortgage, dated as of July 1,
1950, as supplemented or amended, which (i) creates a lien on the property of
the Corporation and (ii) contains provisions with respect to the percentage of
bondable value of property additions which may serve as the basis for the
issuance of bonds substantially equivalent to the corresponding provisions
contained in said Indenture of Mortgage, dated as of July 1, 1950, as
supplemented and amended.
Section 10. Of the authorized shares of Preferred Stock of the
Corporation of the par value of $100 per share, 70,000 shares thereof are
hereby established and classified as a series of such Preferred Stock which
shall be designated as "4.65% Preferred Stock, Series of 1964" (herein referred
to as "1964 Series Preferred"). The remaining authorized shares of Preferred
Stock of the Corporation may be established and classified by the board of
directors from time to time in one or more series as provided in sections 4 and
5 of this article 6, and may thereafter be issued as provided in section 2 of
this article 6; provided, nevertheless, notwithstanding any other provisions of
this article 6 and so long as there shall be outstanding any of the 1964 Series
Preferred, the Corporation will not, without the consent of the holders of at
least 66-2/3% of the shares of the 1964 Series Preferred at the time
outstanding as of a record date fixed by the board of directors (given either
by their affirmative vote at a special meeting called for that purpose or in
writing without a meeting, in addition to any other approvals or consents
required by law), issue any shares of the 1964 Series Preferred (or any
securities convertible into any such shares) except for the 70,000 shares
thereof initially to be issued.
The following is a description (supplemental to the general description
of the Preferred Stock of all series contained in these restated articles of
incorporation) of the 1964 Series Preferred, with the privileges, rights,
restrictions, limitations and qualifications thereof (the headings hereinafter
set forth being solely for convenience of reference):
10.1 Dividends. The dividend rate for the 1964 Series Preferred is
$4.65 per share per annum and no more, and the date from which dividends on the
shares of such series shall be cumulative (whether or not earned or declared)
shall be the date as of which the said shares shall be issued.
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10.2 Redemption. The 1964 Series Preferred shall be redeemable in
whole or in part at any time or from time to time; provided, however, that
prior to November 30, 1969, no redemption shall be effected which, directly or
indirectly, is a part of, or is effected in anticipation of, any refunding
operation involving, directly or indirectly, any borrowing, the issuance of any
security or the incurring of any indebtedness at an interest rate or a dividend
rate or an effective annual cost (computed in accordance with generally
accepted financial practice) of less than 4.65% per annum. Subject to the
foregoing, the sums payable per share upon the redemption thereof (in addition
to accrued and unpaid dividends) shall be:
$104.65 if redeemed on or before November 30, 1969; $104 if
redeemed thereafter and on or before November 30, 1972; $103.50 if
redeemed thereafter and on or before November 30, 1975; $103 if redeemed
thereafter and on or before November 30, 1978; $102.50 if redeemed
thereafter and on or before November 30, 1981; and $102 if redeemed
thereafter.
The above redemption prices shall apply only to voluntary redemptions
and shall not apply to redemptions pursuant to the purchase fund for 1964
Series Preferred hereinafter provided.
All such redemptions shall be made in the manner provided in section 5
of this article 6, except that if less than all of the shares of the 1964
Series Preferred are to be redeemed when any of the then outstanding shares of
the 1964 Series Preferred are registered in the name of any holder (hereinafter
in this subsection 10.2 called "Pro Rata Holder"), either in whose name the
shares concerned were first registered or in whose name not less than 500
shares of the 1964 Series Preferred are then registered, the aggregate number
of shares of the 1964 Series Preferred to be redeemed shall be apportioned pro
rata, as nearly as practicable (so as only to redeem whole shares), between
each Pro Rata Holder and, collectively, all of the other then holders of shares
of the 1964 Series Preferred then outstanding in the proportion that the
aggregate number of such shares held by the Pro Rata Holder concerned bears to
the aggregate number of all other such shares then outstanding, provided that
the amount so apportioned for redemption of such shares not registered in the
name of any Pro Rata Holder shall be applied to such of said shares as are
selected in the manner provided in said section 5 of this article 6.
10.3. 1964 Series Preferred Purchase Fund. The Corporation agrees that
for the benefit of holders of the 1964 Series Preferred, it shall comply with
the following:
(a) Prior to November 10 in each calendar year commencing with the
calendar year 1968, so long as any shares of the 1964 Series Preferred are
outstanding, the Corporation shall, insofar as practicable, endeavor to
purchase shares of the 1964 Series Preferred in the open market or at private
sale, in each case as the Corporation may in its discretion deem advisable, and
in each case at such price or prices as the Corporation may in its discretion
deem advisable, but not to exceed, as to any shares so purchased, $100 per
share plus an amount equal to accrued and unpaid dividends, whether or not such
dividends shall have been earned or declared
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(exclusive of any brokerage commissions or other similar expenses payable by
the purchaser with respect to each such purchase).
(b) If the Corporation between January 1 and November 9, inclusive,
of each such calendar year purchases as aforesaid 2% of the greatest number of
shares of the 1964 Series Preferred at any one time outstanding prior to
January 1 of such calendar year, then the Corporation shall have no further
obligations under the provisions of this subsection 10.3 with respect to such
calendar year.
(c) If the Corporation in any such calendar year has not
complied with the provisions of (b) above between January 1 and November 9,
inclusive, of such calendar year, then the Corporation shall comply with the
following:
(i) On November 10 of such calendar year the Corporation shall
set aside in cash as and for a Purchase Fund for the purchase of shares
of the 1964 Series Preferred an amount sufficient to purchase, at $100
per share, a number of shares of 1964 Series Preferred equal to 2% of
the greatest number of shares of such stock at any one time outstanding
prior to January 1 of such calendar year less the number of shares of
such stock purchased as aforesaid by the Corporation between January 1
and November 9, inclusive, of such calendar year.
(ii) Not later than November 15 of such calendar year the
Corporation shall, in writing addressed to all holders of record of the
1964 Series Preferred at the close of business on the preceding November
1, invite tenders of 1964 Series Preferred, at $100 per share, plus an
amount equal to accrued and unpaid dividends to the next succeeding
December 15, whether or not such dividends shall have been earned or
declared, in an aggregate amount (exclusive of said accrued and unpaid
dividends) sufficient to exhaust the moneys so set aside in the Purchase
Fund. The invitations for tenders shall specify how many shares are to
be purchased, how tenders shall be made and how notification of
acceptance thereof will be given. Tenders may be made on or before
December 5 in each year.
(iii) If the number of shares of the 1964 Series Preferred
tendered in response to any such invitation multiplied by $100
aggregates more than the amount available in the Purchase Fund, each
tendering holder shall be entitled to have purchased by the Corporation
on each such invitation not less than the lesser of
(A) that number of shares which such holder elects to
tender, or
(B) that number of shares (to the nearest integral
share) of the 1964 Series Preferred which bears the same ratio to
the total number of shares of the 1964 Series Preferred to be
purchased pursuant to the invitation as the number of shares held
of record in the name of such holder at the close of business on
the preceding November 1 bears to the total number of shares of
1964 Series
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Preferred held at the time aforesaid by all of the holders
tendering one or more shares in response to such invitation for
tenders.
The amount (if any) remaining in the Purchase Fund after application of
the foregoing formula shall be applied to the purchase of shares tendered so
that each holder of shares tendered and not accepted for purchase under the
foregoing formula shall be entitled to have purchased that number of shares (to
the nearest integral share) of the 1964 Series Preferred which bears the same
ratio to the total remaining number of shares which can be purchased by the
amount remaining in the Purchase Fund after application of the foregoing
formula as the number of shares tendered by such holder and not accepted for
purchase under the foregoing formula bears to the total number of shares
tendered by all holders and not accepted for purchase under the foregoing
formula. Payment for the 1964 Series Preferred for which tenders have been
accepted shall be made on December 15 of each year beginning in the year 1968
and payment therefor shall be equal to $100 per share plus an amount equal to
accrued and unpaid cumulative dividends (whether or not earned or declared) to
the date of such payment for shares so tendered and accepted.
(iv) To the extent that tenders in any year are not made in an
amount sufficient to exhaust all of the moneys so held in the Purchase
Fund, any excess moneys in the Purchase Fund for that year shall be
released from the Purchase Fund and become general corporate funds of
the Corporation provided that the Corporation is not then in default in
the performance of its obligations hereunder with regard to the 1964
Series Preferred Purchase Fund.
(v) The obligation to set aside amounts in the Purchase Fund
as aforesaid shall be cumulative so that if, on November 10 of any year,
cash in the required amount shall not have been set aside in full, the
amount of the deficiency shall be added to the amount to be set aside in
the Purchase Fund in the next succeeding year until the total aggregate
amount which shall then or theretofore have been set aside in said
Purchase Fund and either used or released to the Corporation shall equal
the total amount required to be set aside and used or released for the
calendar year 1968 and thereafter. So long as such deficiency shall
exist in the amount required to be set aside in the Purchase Fund, the
Company shall be deemed to be in default with respect to its obligations
under the Purchase Fund.
(vi) Accrued and unpaid cumulative dividends on the 1964 Series
Preferred purchased through the Purchase Fund shall not be charged to
the Purchase Fund, but shall be paid by the Corporation out of its other
funds.
(d) Notwithstanding anything hereinabove in this subsection 10.3
contained to the contrary, the Corporation shall not at any time be permitted
to make any purchase of the 1964 Series Preferred shares under the provisions
of this subsection 10.3 if any Preferred Stock dividends are in arrears.
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(e) No shares of the 1964 Series Preferred purchased under the
provisions of this subsection 10.3 shall be reissued or otherwise disposed of
and no shares of the 1964 Series Preferred shall be issued in lieu thereof, and
the Corporation shall, from time to time, cause all such shares to be retired.
If no shares of the 1964 Series Preferred shall remain outstanding, any balance
remaining in the Purchase Fund shall become part of the general funds of the
Corporation.
10.4. Liquidation Rights. The amount per share for such 1964 Series
Preferred payable to the holders thereof upon any voluntary liquidation,
dissolution or winding up of the Corporation shall be the redemption price with
respect to such shares which shall be applicable thereto at the time when such
voluntary liquidation, dissolution or winding up shall occur, including all
accrued and unpaid dividends thereon to the date such payment is made available
in full to the various holders of the 1964 Series Preferred (in the manner
provided for redemption payments in the third paragraph of section 5 of this
article 6).
The amount per share for such 1964 Series Preferred payable to the
holders thereof upon any involuntary liquidation, dissolution or winding up of
the Corporation shall be the sum of $100 per share together with all accrued
and unpaid dividends thereon to the date such payment is made available in full
to the various holders of the 1964 Series Preferred (in the manner provided for
redemption payments in the third paragraph of section 5 of this article 6).
10.5 Restrictive Agreement. So long as any shares of the 1964 Series
Preferred shall be outstanding, the Corporation will not, without the consent
of the holders of at least 66-2/3% of the shares of the 1964 Series Preferred
at the time outstanding as of a record date fixed by the board of directors
(given either by their affirmative vote at a special meeting called for that
purpose, or in writing without a meeting, and in addition to any other
approvals or consents required by law), issue, assume or guarantee, or
otherwise obligate itself for the payment of, any funded debt (as hereinafter
defined) other than Bonds (as hereinafter defined) if immediately thereafter
the aggregate principal amount of all funded debt to be outstanding shall
exceed 66-2/3% of the capitalization of the Corporation (as hereinafter
defined).
For the purposes of this subsection, the term "outstanding" when used
with reference to funded debt or other indebtedness shall be deemed to include
any funded debt or indebtedness being concurrently issued, assumed or
guaranteed by the Corporation, or for which it shall concurrently become
obligated but shall be deemed to exclude any funded debt or indebtedness being
concurrently retired or provision for retirement of which is concurrently being
made and any funded debt held in the treasury of the Corporation.
The term "funded debt" as used in this subsection shall be deemed to
mean all bonds (including Bonds as hereinafter defined), notes, debentures or
other evidences of indebtedness, whether secured or unsecured (including,
without limitation, indebtedness secured by mortgages or other liens existing
on property hereafter acquired by the Corporation at the time of acquisition
thereof, whether or not assumed in connection with such acquisition, and
purchase money obligations created in connection with such acquisition), other
than evidences of indebtedness
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maturing on demand or within one year from the date of the creation thereof and
not renewable or extendable by the terms thereof, at the option of the
Corporation, beyond such year; provided, however, that no obligation or
evidence of indebtedness itself maturing by its terms not more than one year
after the date of its creation or issuance, issued or created to renew, pay or
refund an obligation which matured by its terms within one year, shall be
deemed to be funded debt nor shall the original obligation be thereby
transformed into funded debt of the Corporation; nor shall customers' deposits
and advances by customers for construction be deemed to be funded debt of the
Corporation.
In the case of any funded debt of the Corporation which is secured by
the pledge of Bonds, the aggregate principal amount of such funded debt shall
be deemed to be either the aggregate principal amount of such funded debt or
the aggregate principal amount of such pledged Bonds, whichever shall be
greater.
The term "capitalization of the Corporation" shall mean, at any date as
of which the amount thereof is to be determined, the aggregate of:
(a) The par value of, or stated capital represented by, the
outstanding shares of capital stock of all classes of the Corporation,
including premiums paid to the Corporation thereon, the earned surplus (or
deficit), capital surplus, paid-in surplus and any other surplus of the
Corporation, whether or not available for the payment of dividends on the
Common Stock, and
(b) The aggregate principal amount of all funded debt of the
Corporation outstanding on such date.
The term "Bonds" as used herein shall mean any bonds duly issued under
the Indenture of Mortgage, dated as of July 1, 1950, between the Corporation
and The National Bank of Commerce in New Orleans, as trustee, as supplemented
or amended, or any indenture of the Corporation executed and delivered in lieu
of and in substitution for such Indenture of Mortgage, dated as of July 1,
1950, as supplemented or amended, which (i) creates a lien on the property of
the Corporation and (ii) contains provisions with respect to the percentage of
bondable value of property additions which may serve as the basis for the
issuance of bonds substantially equivalent to the corresponding provisions
contained in said Indenture of Mortgage, dated as of July 1, 1950, as
supplemented and amended.
Section 11. Of the authorized shares of Preferred Stock of the
Corporation of the par value of $100 per share, 65,000 shares thereof are
hereby established and classified as a series of such Preferred Stock which
shall be designated as "4.75% Preferred Stock, Series of 1965" (herein referred
to as "1965 Series Preferred"). The remaining authorized shares of Preferred
Stock of the Corporation may be established and classified by the board of
directors from time to time in one or more series as provided in sections 4 and
5 of this article 6, and may thereafter be issued as provided in section 2 of
this article 6; provided, nevertheless, notwithstanding any other provisions of
this article 6 and so long as there shall be outstanding any of the 1965 Series
Preferred, the Corporation will not, without the consent of the holders of at
least 66-2/3% of the
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shares of the 1965 Series Preferred at the time outstanding as of a record date
fixed by the board of directors (given either by their affirmative vote at a
special meeting called for that purpose or in writing without a meeting, in
addition to any other approvals or consents required by law), issue any shares
of the 1965 Series Preferred (or any securities convertible into any such
shares) except for the 65,000 shares thereof initially to be issued.
The following is a description (supplemental to the general description
of the Preferred Stock of all series contained in these restated articles of
incorporation) of the 1965 Series Preferred, with the privileges, rights,
restrictions, limitations and qualifications thereof (the headings hereinafter
set forth being solely for convenience of reference):
11.1. Dividends. The dividend rate for the 1965 Series Preferred is
$4.75 per share per annum and no more, and the date from which dividends on the
shares of such series shall be cumulative (whether or not earned or declared)
shall be the date as of which the said shares shall be issued.
11.2. Redemption. The 1965 Series Preferred shall be redeemable in
whole or in part at any time or from time to time; provided, however, that
prior to October 1, 1970, no redemption shall be effected which, directly or
indirectly, is a part of, or is effected in anticipation of, any refunding
operation involving, directly or indirectly, any borrowing, the issuance of any
security or the incurring of any indebtedness at an interest rate or a dividend
rate or an effective annual cost (computed in accordance with generally
accepted financial practice) of less than 4.75% per annum. Subject to the
foregoing, the sums payable per share upon the redemption thereof (in addition
to accrued and unpaid dividends) shall be:
$104.75 if redeemed on or before October 1, 1970; $104 if
redeemed thereafter and on or before October 1, 1975; $103 if redeemed
thereafter and on or before October 1, 1980; $102 if redeemed thereafter
and on or before October 1, 1985; $101 if redeemed thereafter and on or
before October 1, 1990; and $100 if redeemed thereafter.
The above redemption prices shall apply only to voluntary redemptions
and shall not apply to redemptions pursuant to the purchase fund for 1965
Series Preferred hereinafter provided.
All such redemptions shall be made in the manner provided in section 5
of this article 6, except that if less than all of the shares of the 1965
Series Preferred are to be redeemed when any of the then outstanding shares of
the 1965 Series Preferred are registered in the name of any holder (hereinafter
in this subsection 11.2 called "Pro Rata Holder"), either in whose name the
shares concerned were first registered or in whose name not less than 500
shares of the 1965 Series Preferred are then registered, the aggregate number
of shares of the 1965 Series Preferred to be redeemed shall be apportioned pro
rata, as nearly as practicable (so as only to redeem whole shares), between
each Pro Rata Holder and, collectively, all of the other then holders of shares
of the 1965 Series Preferred then outstanding in the proportion that the
aggregate number of such shares held by the Pro Rata Holder concerned bears to
the aggregate number of all other such
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shares then outstanding, provided that the amount so apportioned for redemption
of such shares not registered in the name of any Pro Rata Holder shall be
applied to such of said shares as are selected in the manner provided in said
section 5 of this article 6.
11.3 1965 Series Preferred Purchase Fund. The Corporation agrees
that, for the benefit of holders of the 1965 Series Preferred, it shall comply
with the following:
(a) Prior to November 10 in each calendar year commencing with the
calendar year 1969, so long as any shares of the 1965 Series Preferred are
outstanding, the Corporation shall, insofar as practicable, endeavor to
purchase shares of the 1965 Series Preferred in the open market or at private
sale, in each case as the Corporation may in its discretion deem advisable, and
in each case at such price or prices as the Corporation may in its discretion
deem advisable, but not to exceed, as to any shares so purchased, $100 per
share plus an amount equal to accrued and unpaid dividends, whether or not such
dividends shall have been earned or declared (exclusive of any brokerage
commissions or other similar expenses payable by the purchaser with respect to
each such purchase).
(b) If the Corporation between January 1 and November 9, inclusive,
of each such calendar year purchases as aforesaid 2% of the greatest number of
shares of the 1965 Series Preferred at any one time outstanding prior to
January 1 of such calendar year, then the Corporation shall have no further
obligations under the provisions of this subsection 11.3 with respect to such
calendar year.
(c) If the Corporation in any such calendar year has not complied
with the provisions of (b) above between January 1 and November 9, inclusive,
of such calendar year, then the Corporation shall comply with the following:
(i) On November 10 of such calendar year the Corporation shall
set aside in cash as and for a Purchase Fund for the purchase of shares
of the 1965 Series Preferred an amount sufficient to purchase, at $100
per share, a number of shares of 1965 Series Preferred equal to 2% of
the greatest number of shares of such stock at any one time outstanding
prior to January 1 of such calendar year less the number of shares of
such stock purchased as aforesaid by the Corporation between January 1
and November 9, inclusive, of such calendar year.
(ii) Not later than November 15 of such calendar year the
Corporation shall, in writing addressed to all holders of record of the
1965 Series Preferred at the close of business on the preceding November
1, invite tenders of 1965 Series Preferred, at $100 per share, plus an
amount equal to accrued and unpaid dividends to the next succeeding
December 15, whether or not such dividends shall have been earned or
declared, in an aggregate amount (exclusive of said accrued and unpaid
dividends) sufficient to exhaust the moneys so set aside in the Purchase
Fund. The invitations for tenders shall specify how many shares are to
be purchased, how tenders shall be made and how notification of
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acceptance thereof will be given. Tenders may be made on or before
December 5 in each year.
(iii) If the number of shares of the 1965 Series Preferred
tendered in response to any such invitation multiplied by $100
aggregates more than the amount available in the Purchase Fund, each
tendering holder shall be entitled to have purchased by the Corporation
on each such invitation not less than the lesser of
(A) that number of shares which such holder elects to
tender, or
(B) that number of shares (to the nearest integral
share) of the 1965 Series Preferred which bears the same ratio to
the total number of shares of the 1965 Series Preferred to be
purchased pursuant to the invitation as the number of shares held
of record in the name of such holder at the close of business on
the preceding November 1 bears to the total number of shares of
1965 Series Preferred held at the time aforesaid by all of the
holders tendering one or more shares in response to such
invitation for tenders.
The amount (if any) remaining in the Purchase Fund after application of the
foregoing formula shall be applied to the purchase of shares tendered so that
each holder of shares tendered and not accepted for purchase under the
foregoing formula shall be entitled to have purchased that number of shares (to
the nearest integral share) of the 1965 Series Preferred which bears the same
ratio to the total remaining number of shares which can be purchased by the
amount remaining in the Purchase Fund after application of the foregoing
formula as the number of shares tendered by such holder and not accepted for
purchase under the foregoing formula bears to the total number of shares
tendered by all holders and not accepted for purchase under the foregoing
formula. Payment for the 1965 Series Preferred for which tenders have been
accepted shall be made on December 15 of each year beginning in the year 1969
and payment therefor shall be equal to $100 per share plus an amount equal to
accrued and unpaid cumulative dividends (whether or not earned or declared) to
the date of such payment for shares so tendered and accepted.
(iv) To the extent that tenders in any year are not made in an
amount sufficient to exhaust all of the moneys so held in the Purchase
Fund, any excess moneys in the Purchase Fund for that year shall be
released from the Purchase Fund and become general corporate funds of
the Corporation provided that the Corporation is not then in default in
the performance of its obligations hereunder with regard to the 1965
Series Preferred Purchase Fund.
(v) The obligation to set aside amounts in the Purchase Fund
as aforesaid shall be cumulative so that if, on November 10 of any year,
cash in the required amount shall not have been set aside in full, the
amount of the deficiency shall be added to the amount to be set aside in
the Purchase Fund in the next succeeding year until the total aggregate
amount which shall then or theretofore have been set aside in said
Purchase Fund and either used or released to the Corporation shall equal
the total amount required to be set
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aside and used or released for the calendar year 1969 and thereafter.
So long as any such deficiency shall exist in the amount required to be
set aside in the Purchase Fund, the Company shall be deemed to be in
default with respect to its obligations under the Purchase Fund.
(vi) Accrued and unpaid cumulative dividends on the 1965 Series
Preferred purchased through the Purchase Fund shall not be charged to
the Purchase Fund, but shall be paid by the Corporation out of its other
funds.
(d) Notwithstanding anything hereinabove in this subsection 11.3
contained to the contrary, the Corporation shall not at any time be permitted
to make any purchase of the 1965 Series Preferred shares under the provisions
of this subsection 11.3 if any Preferred Stock dividends are in arrears.
(e) No shares of the 1965 Series Preferred purchased under the
provisions of this subsection 11.3 shall be reissued or otherwise disposed of
and no shares of the 1965 Series Preferred shall be issued in lieu thereof, and
the Corporation shall, from time to time, cause all such shares to be retired.
If no shares of the 1965 Series Preferred shall remain outstanding, any balance
remaining in the Purchase Fund shall become part of the general funds of the
Corporation.
11.4 Liquidation Rights. The amount per share for such 1965 Series
Preferred payable to the holders thereof upon any voluntary liquidation,
dissolution or winding up of the Corporation shall be the redemption price with
respect to such shares which shall be applicable thereto at the time when such
voluntary liquidation, dissolution or winding up shall occur, including all
accrued and unpaid dividends thereon to the date such payment is made available
in full to the various holders of the 1965 Series Preferred (in the manner
provided for redemption payments in the third paragraph of section 5 of this
article 6).
The amount per share for such 1965 Series preferred payable to the
holders thereof upon any involuntary liquidation, dissolution or winding up of
the Corporation shall be the sum of $100 per share together with all accrued
and unpaid dividends thereon to the date such payment is made available in full
to the various holders of the 1965 Series Preferred (in the manner provided for
redemption payments in the third paragraph of section 5 of this article 6).
11.5 Restrictive Agreement. So long as any shares of the 1965 Series
Preferred shall be outstanding, the Corporation will not, without the consent
of the holders of at least 66-2/3% of the shares of the 1965 Series Preferred
at the time outstanding as of a record date fixed by the board of directors
(given either by their affirmative vote at a special meeting called for that
purpose, or in writing without a meeting, and in addition to any other
approvals or consents required by law), issue, assume or guarantee, or
otherwise obligate itself for the payment of, any funded debt (as hereinafter
defined) other than Bonds (as hereinafter defined) if immediately thereafter
the aggregate principal amount of all funded debt to be outstanding shall
exceed 66-2/3% of the capitalization of the Corporation (as hereinafter
defined).
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For the purposes of this subsection, the term "outstanding" when used
with reference to funded debt or other indebtedness, and the terms "funded
debt," "capitalization of the Corporation" and "Bonds" as used in this
subsection, shall include the definitions and have the meanings, respectively,
set out in subsection 10.5 of this article 6.
Section 12. Ninety thousand shares of the authorized and unissued
Preferred Stock of the Corporation of the par value of $100 per share are
hereby established and classified as a series of such Preferred Stock which
shall be designated as "7.50% Preferred Stock, Series of 1973" (herein referred
to as "1973 Series Preferred"). The remaining authorized shares of Preferred
Stock of the Corporation may be established and classified by the board of
directors from time to time in one or more series as provided in sections 4 and
5 of this article 6, and may thereafter be issued as provided in section 2 of
this article 6; provided, nevertheless, notwithstanding any other provisions of
this article 6 and so long as there shall be outstanding any of the 1973 Series
Preferred, the Corporation will not, without the consent of the holders of at
least 66-2/3% of the shares of the 1973 Series Preferred at the time
outstanding as of a record date fixed by the board of directors (given either
by their affirmative vote at a special meeting called for that purpose or in
writing without a meeting, in addition to any other approvals or consents
required by law), issue any shares of the 1973 Series Preferred (or any
securities convertible into any such shares) except for the 90,000 shares
thereof initially to be issued.
The following is a description (supplemental to the general description
of the Preferred Stock of all series contained in these restated articles of
incorporation) of the 1973 Series Preferred with the privileges, rights,
restrictions, limitations and qualifications thereof (the headings hereinafter
set forth being solely for convenience of reference):
12.1 Dividends. The dividend rate for the 1973 Series Preferred is
$7.50 in cash per share per annum and no more, and the date from which
dividends on the shares of such series shall be cumulative (whether or not
earned or declared) shall be the date as of which the said shares shall be
issued.
12.2 Redemption. The 1973 Series Preferred shall be redeemable in
whole or in part at any time or from time to time; provided, however, that,
notwithstanding any other provision of this article 6 to the contrary, prior to
July 1, 1983, no redemption pursuant to this subsection 12.2 shall be effected
which, directly or indirectly, is a part of, or is effected in anticipation of,
any refunding operation involving, directly or indirectly, any borrowing, the
issuance of any security or the incurring of any indebtedness at an interest
rate or a dividend rate or an effective annual cost (computed in accordance
with generally accepted financial practice) of less than 7.50% per annum.
Subject to the foregoing, the sums payable per share upon the redemption
thereof (in addition to accrued and unpaid dividends) shall be:
$107.50 if redeemed on or before July 1, 1983; $104 if redeemed
thereafter and on or before July 1, 1986; $102 if redeemed thereafter
and on or before July 1, 1993; $101 if redeemed thereafter and on or
before July 1, 1998; and $100 if redeemed thereafter.
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The above redemption prices shall apply only to voluntary redemptions
and shall not apply to redemptions pursuant to the sinking fund for 1973 Series
Preferred hereinafter provided.
All such redemptions, and all redemptions pursuant to the sinking fund
for 1973 Series Preferred hereinafter provided, shall be made in the manner
provided in section 5 of this article 6, except that if less than all of the
shares of the 1973 Series Preferred are to be redeemed when any of the then
outstanding shares of the 1973 Series Preferred are registered in the name of
any holder (hereinafter in this subsection 12.2 called "Pro Rata Holder"),
either in whose name the shares concerned were first registered or in whose
name not less than 500 shares of the 1973 Series Preferred are then registered,
the aggregate number of shares of the 1973 Series Preferred to be redeemed
shall be apportioned pro rata, as nearly as practicable (so as only to redeem
whole shares), between each Pro Rata Holder and, collectively, all of the other
then holders of shares of the 1973 Series Preferred then outstanding in the
proportion that the aggregate number of such shares held by the Pro Rata Holder
concerned bears to the aggregate number of all other such shares then
outstanding, provided that the amount so apportioned for redemption of such
shares not registered in the name of any Pro Rata Holder shall be applied to
such of said shares as are selected in the manner provided in said section 5 of
this article 6.
12.3 1973 Series Preferred Sinking Fund. On the respective dates
hereinafter set forth the Corporation shall (so long as any shares of the 1973
Series Preferred shall be outstanding and subject to the other provisions of
this article 6) set apart out of its funds lawfully available for the purpose
(or to the extent the same are lawfully available therefor) and shall deposit
in a special fund (herein called "1973 Series Sinking Fund") to be established
and maintained by the Corporation (with a bank or trust company doing business
in the United States of America and having a capital, surplus and undivided
profits aggregating not less than $2,000,000), for the retirement of its 1973
Series Preferred, that sum in cash which shall be sufficient to redeem (at a
price per share equal to $100 plus an amount equal to all accrued and unpaid
dividends thereon) on July 1 of each year, commencing July 1, 1979, the largest
integral number of shares of the 1973 Series Preferred contained in 3% of the
maximum number of shares of the 1973 Series Preferred ever at any time
outstanding.
The aforesaid obligations of the Corporation to set apart such sum or
sums shall be cumulative so that, if the full amount required to be set apart
as aforesaid on each such date for the 1973 Series Sinking Fund shall not be so
set apart, the deficiency shall be made good thereafter as soon as funds
lawfully available therefor shall become available, it being understood that
this provision does not restrict in any way the right of the holders of the
Preferred Stock granted under subsection (b) of section 3 of this article 6
upon the incurrence of the condition described in clause (ii) of the first
paragraph of such subsection (b).
Each amount so set apart for the 1973 Series Sinking Fund shall be
applied by the Corporation, on the date the deposit concerned is made and in
the manner provided in section 5 and subsection 12.2 of this article 6, to the
redemption of the maximum number of shares of the 1973 Series Preferred
redeemable from such deposited moneys at the sinking fund redemption price
hereinbefore in this subsection provided.
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No shares of the 1973 Series Preferred redeemed under the provisions of
subsection 12.1 of this article 6 or this subsection 12.3 shall be reissued or
otherwise disposed of and no shares of the 1973 Series Preferred shall be
issued in lieu thereof, and the Corporation shall, from time to time, cause all
such shares so redeemed to be retired. Subject to the provisions of this
section 12 with respect to limitations upon the issuance of the 1973 Series
Preferred, all or any shares of the Preferred Stock at any time purchased or
acquired by the Corporation (except shares of the 1973 Series Preferred
redeemed under the provisions of subsection 12.2 of this article 6 or this
subsection 12.3) may thereafter, in the discretion of the board of directors of
the Corporation, be reissued or otherwise disposed of at any time, or from time
to time, to the extent now or hereafter permitted by law and these restated
articles of incorporation. If no shares of the 1973 Series Preferred shall
remain outstanding, any balance remaining in the 1973 Series Sinking Fund shall
become part of the general funds of the Corporation.
12.4 Liquidation Rights. The amount per share for such 1973 Series
Preferred payable to the holders thereof upon any voluntary liquidation,
dissolution or winding up of the Corporation shall be the redemption price
specified in subsection 12.2 of this article 6 with respect to such shares
which shall be applicable thereto at the time when such voluntary liquidation,
dissolution or winding up shall occur, including all accrued and unpaid
dividends thereon to the date such payment is made available in full to the
various holders of the 1973 Series Preferred (in the manner provided for
redemption payments in the third paragraph of section 5 of this article 6).
The amount per share for such 1973 Series Preferred payable to the
holders thereof upon any involuntary liquidation, dissolution or winding up of
the Corporation shall be the sum of $100 per share together with all accrued
and unpaid dividends thereon to the date such payment is made available in full
to the various holders of the 1973 Series Preferred (in the manner provided for
redemption payments in the third paragraph of section 5 of this article 6).
12.5 Restrictive Agreement. So long as any shares of the 1973 Series
Preferred shall be outstanding, the Corporation will not, without the consent
of the holders of at least 66-2/3% of the shares of the 1973 Series Preferred
at the time outstanding as of a record date fixed by the board of directors
(given either by their affirmative vote at a special meeting called for that
purpose, or in writing without a meeting, and in addition to any other
approvals or consents required by law), issue, assume or guarantee, or
otherwise obligate itself for the payment of, any funded debt (as hereinafter
defined) other than Bonds (as hereinafter defined) if immediately thereafter
the aggregate principal amount of all funded debt to be outstanding shall
exceed 66-2/3% of the capitalization of the Corporation (as hereinafter
defined).
For the purposes of this subsection, the term "outstanding" when used
with reference to funded debt or other indebtedness, and the terms "funded
debt," "capitalization of the Corporation" and "Bonds" as used in this
subsection shall include the definitions and have the meanings, respectively,
set out in subsection 10.5 of this article 6, except that the term "funded
debt," solely for the purposes of this subsection, shall include the aggregate
amount, discounted to present value on the date on which funded debt is to be
determined, of all amounts (whether or not designated as rentals or charter
hire) payable by a lessee or charterer (excluding the amounts
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payable on account of maintenance, ordinary repairs, insurance, taxes,
assessments, water rates and other similar charges) under any lease of real or
personal property (including any charter of a vessel but excluding (a) any
lease having a rental rate of less than $20,000 per annum, (b) any lease of
nuclear materials having an initial term of five years or less, and (c) the
lease between the Corporation and Louisiana Rural Electric Corporation as in
effect on July 1, 1973), having a term (including all renewal terms whether or
not exercised, except that no unexercised renewal term shall be taken into
account for purposes of determining the amount of funded debt represented by
any lease) extending more than five years from the date on which funded debt is
to be determined, with respect to which the Corporation is directly or
contingently obligated, such discounting to be at a rate equivalent to the
effective interest cost at which such real or personal property is financed by
such lease or charter, if such an equivalent rate is ascertainable, or, if such
an equivalent rate is not ascertainable, at a rate of 7-1/2% per annum. If and
to the extent the amounts so payable during any future period are not
definitely determinable under the lease or charter in question, such amounts
shall be estimated in such reasonable manner as the board of directors of the
Corporation may in good faith determine.
Section 13. Two hundred and fifty thousand shares of the authorized
and unissued $100 Preferred Stock of the Corporation are hereby established and
classified as a series of $100 Preferred Stock which shall be designated as
"Adjustable Rate Cumulative Preferred Stock, Series of 1984" (herein referred
to as "1984 Series Preferred"). The remaining authorized shares of $100
Preferred Stock of the Corporation may be established and classified by the
board of directors from time to time in one or more series as provided in
sections 4 and 5 of this article 6, and may thereafter be issued as provided in
section 2 of this article 6.
The following is a description (supplemental to the general description
of the Preferred Stock of all series contained in these restated articles of
incorporation) of the 1984 Series Preferred, and the privileges, rights,
restrictions, limitations and qualifications thereof (the headings hereinafter
set forth being solely for convenience of reference):
13.1 Dividends.
(a) Dividends on the 1984 Series Preferred shall be at a rate per
share of 11.05% per annum from the date of original issuance to November 30,
1984. Thereafter, dividends on the Series 1984 Preferred Stock will be at the
Applicable Rate, as defined below, from time to time in effect, for each
subsequent three-month period ending on the last day of the month immediately
preceding the month in which a dividend is paid (a "Dividend Period").
(b) Except as provided below in this paragraph, the "Applicable Rate"
for any Dividend Period will be 1.50 percentage points per annum below the
highest of (i) the Treasury Bill Rate, (ii) the Ten Year Constant Maturity Rate
and (iii) the Twenty Year Constant Maturity Rate (each as hereinafter defined)
for such Dividend Period. In the event that the Corporation determines in good
faith that for any reason one or more of such rates cannot be determined for
any Dividend Period, then the Applicable Rate for such Dividend Period shall be
1.50 percentage points per annum less than the higher of whichever of such
rates can be determined. In the event
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that the Corporation determines in good faith that none of such rates can be
determined for a Dividend Period, then the Applicable Rate for such Dividend
Period shall be the Applicable Rate in effect for the preceding Dividend
Period. Anything herein to the contrary notwithstanding, the Applicable Rate
for any Dividend Period will never be less than 7% per annum nor greater than
15% per annum.
(c) Except as provided below in this paragraph, the "Treasury Bill
Rate" for each Dividend Period will be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period, as defined below) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board during the Calendar
Period ending on the day prior to the last 10 calendar days of the month
preceding the first month of the Dividend Period for which the dividend rate is
being determined. In the event that the Federal Reserve Board does not publish
a weekly per annum market discount rate during any such Calendar Period, then
the Treasury Bill Rate for the related Dividend Period will be the arithmetic
average of the two most recent weekly per annum market discount rates (or the
one weekly per annum market discount rate, if only one such rate shall be
published during the relevant Calendar Period) for three-month U.S. Treasury
bills, as published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum market discount rate for
three-month U.S. Treasury bills shall not be published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, then the Treasury Bill Rate for the related
Dividend Period will be the arithmetic average of the two most recent weekly
per annum market discount rates (or the one weekly per annum market discount
rate, if only one such rate shall be published during the relevant Calendar
Period) for all of the U.S. Treasury bills then having maturities of not less
than 80 or more than 100 days, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board shall not publish such
rates, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason no such U.S. Treasury bill rates
are published as provided above during such Calendar Period, then the Treasury
Bill Rate for the related Dividend Period will be the arithmetic average of the
per annum market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable non-interest bearing U.S.
Treasury securities with a maturity of not less than 80 or more than 100 days
from the date of each such quotation, as quoted daily for each business day in
New York City (or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized U.S. Government
securities dealers selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation cannot
determine the Treasury Bill Rate for a Dividend Period as provided above in
this paragraph, the Treasury Bill Rate for such Dividend Period shall be the
arithmetic average of the per annum market discount rates based upon the
closing bids during the related Calendar Period for each of the issues of
marketable interest-bearing U.S. Treasury securities with a maturity of not
less than 80 or more than 100 days from the date of each such quotation, as
quoted daily for each business day in New York City (or less frequently if
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daily quotations shall not be generally available) to the Corporation by at
least three recognized U.S. Government securities dealers selected by the
Corporation.
(d) Except as provided below in this paragraph, the "Ten Year
Constant Maturity Rate" for each Dividend Period will be the arithmetic average
of the two most recent weekly per annum Ten Year Average Yields, as defined
below (or the one weekly per annum Ten Year Average Yield, if only one such
yield shall be published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period ending on the
day prior to the last 10 calendar days of the month preceding the first month
of the Dividend Period for which the dividend rate is being determined. In the
event that the Federal Reserve Board does not publish such a weekly per annum
Ten Year Average Yield during such Calendar Period, then the Ten Year Constant
Maturity Rate for such Dividend Period will be the arithmetic average of the
two most recent weekly per annum Ten Year Average Yields (or the one weekly per
annum Ten Year Average Yield, if only one such yield shall be published during
such Calendar Period), as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency selected by
the Corporation. In the event that a per annum Ten Year Average Yield shall
not be published by the Federal Reserve Board or by any Federal Reserve Bank or
by any U.S. Government department or agency during such Calendar Period, then
the Ten Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum average yields to
maturity (or the one weekly average yield to maturity, if only one such yield
shall be published during such Calendar Period) for all of the actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities, as defined below) then having maturities of not less than eight or
more than 12 years, as published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish such yields,
by any Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that the Corporation determines in
good faith that for any reason the Corporation cannot determine the Ten Year
Constant Maturity Rate for any Dividend Period as provided above in this
paragraph, then the Ten Year Constant Maturity Rate for such Dividend Period
will be the arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each of the issues
of actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) with a final maturity date not less than eight
or more than 12 years from the date of each such quotation, as quoted daily for
each business day in New York City (or less frequently if daily quotations
shall not be generally available) to the Corporation by at least three
recognized U.S. Government securities dealers selected by the Corporation.
(e) Except as provided below in this paragraph, the "Twenty Year
Constant Maturity Rate" for each Dividend Period will be the arithmetic average
of the two most recent weekly per annum Twenty Year Average Yields, as defined
below (or the one weekly per annum Twenty Year Average Yield, if only one such
yield shall be published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period ending on the
day prior to the last 10 calendar days of the month preceding the first month
of the Dividend Period for which the Applicable Rate is being determined. In
the event that the Federal Reserve
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Board does not publish such a weekly per annum Twenty Year Average Yield during
such Calendar Period, then the Twenty Year Constant Maturity Rate for such
Dividend Period will be the arithmetic average of the two most recent weekly
per annum Twenty Year Average Yields (or the one weekly per annum Twenty Year
Average Yield, if only one such yield shall be published during such Calendar
Period), as published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum Twenty Year Average Yield shall not
be published by the Federal Reserve Board or by any Federal Reserve Bank or by
any U.S. Government department or agency during such Calendar Period, then the
Twenty Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum average yields to
maturity (or the one weekly average yield to maturity, if only one such yield
shall be published during such Calendar Period) for all of the actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities) then having maturities of not less than 18 or more than 22 years,
as published during such Calendar Period by the Federal Reserve Board or, if
the Federal Reserve Board shall not publish such yields, by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that the Corporation determines in good faith that
for any reason the Corporation cannot determine the Twenty Year Constant
Maturity Rate for any Dividend Period as provided above in this paragraph, then
the Twenty Year Constant Maturity Rate for such dividend period will be the
arithmetic average of the per annum average yields to maturity based upon the
closing bids during such Calendar Period for each of the issues of actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than 18 or more than 22
years from the date of each such quotation, as quoted daily for each business
day in New York City (or less frequently if daily quotations shall not be
generally available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
(f) The Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Twenty Year Constant Maturity Rate shall each be rounded to the nearest
five one-hundredths of a percentage point.
(g) The amount of dividends per share payable for each Dividend
Period shall be computed by dividing the dividend rate for such Dividend Period
by four and applying such rate against the par value per share of the 1984
Series Preferred. The amount of dividends payable for any period shorter or
longer than a full quarterly Dividend Period shall be prorated on the basis of
a 360-day year of 30-day months.
(h) The Applicable Rate for each Dividend Period will be calculated
as promptly as practicable by the Corporation according to the appropriate
method described herein. The mathematical accuracy of each such calculation
will be confirmed in writing by independent accountants of recognized standing.
The Corporation will cause notice of each dividend rate to be enclosed with the
dividend payment checks next mailed to the holders of the 1984 Series
Preferred.
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(i) As used herein, the term "Calendar Period" means a period of 14
calendar days; the term "Special Securities" means securities which can, at the
option of the holder, be surrendered at face value in payment of any federal
estate tax or which provide tax benefits to the holder and are priced to
reflect such tax benefits or which were originally issued at a deep or
substantial discount; the term "Ten Year Average Yield" means the average yield
to maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of 10 years); and the term "Twenty
Year Average Yield" means the average yield to maturity for actively traded
marketable U.S. Treasury fixed interest rate securities (adjusted to constant
maturities of 20 years).
13.2 Redemption. The 1984 Series Preferred shall not be redeemable at
the option of the Corporation prior to October 1, 1989. On and after that
date, the Corporation may redeem the whole or any part of the 1984 Series
Preferred at a redemption price of $103 per share if redeemed prior to October
1, 1994, and at a redemption price of $100 per share if redeemed on or after
October 1, 1994, together, in each case, with dividends accrued thereon to the
date of redemption.
All such redemptions shall be made in the manner provided in section 5
of this article 6.
13.3 Liquidation Rights. The amount per share for such 1984 Series
Preferred payable to the holders thereof upon any voluntary liquidation,
dissolution or winding up of the Corporation shall be the redemption price
specified in subsection 13.2 of this article 6 with respect to such shares
which shall be applicable thereto at the time such voluntary liquidation,
dissolution or winding up shall occur, including all accrued and unpaid
dividends thereon to the date such payment is made available in full to the
various holders of the 1984 Series Preferred (in the manner provided for
redemption payments in the third paragraph of section 5 of this article 6).
The amount per share for such 1984 Series Preferred payable to the
holders thereof upon any involuntary liquidation, dissolution or winding up of
the Corporation shall be the sum of $100 per share together with all accrued
and unpaid dividends thereon to the date such payment is made available in full
to the various holders of the 1984 Series Preferred (in the manner provided
for redemption payments in the third paragraph of section 5 of this article 6).
Section 14. ESOP Preferred.
14.1 ESOP Preferred. The following is a description (supplemental to
the general description of the Preferred Stock of all series contained in these
restated articles of incorporation) of a series of Preferred Stock, $100 par
value, with the privileges, conversion and other rights, restrictions,
limitations and qualifications thereof (the headings set forth herein being
solely for convenience of reference):
(a) Three hundred thousand shares of the authorized and unissued
Preferred Stock of the Corporation of the par value of $100 per share are
hereby established and classified as a
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series of such Preferred Stock which shall be designated as "Convertible
Preferred Stock Series of 1991" (herein referred to as the "ESOP Preferred").
The remaining authorized and unissued shares of Preferred Stock of the
Corporation may be established and classified by the board of directors from
time to time and issued as provided in this article 6; provided, nevertheless,
notwithstanding any other provisions of this article 6 and so long as there
shall be outstanding any of the ESOP Preferred, the Corporation shall not,
without the consent of the holders of a number of shares of ESOP Preferred
conveying at least two-thirds of the total votes of the ESOP Preferred then
outstanding as of a record date fixed by the board of directors, issue any
shares of the ESOP Preferred (or any securities convertible into or exercisable
or exchangeable for any such shares) except for the three hundred thousand
shares thereof initially to be issued.
(b) Shares of ESOP Preferred shall be issued only to a trustee acting
on behalf of any employee stock ownership plan or trust or other similar
employee benefit plan or trust maintained by the Corporation or by any of its
affiliates (the "ESOP"). In the event of any transfer of shares of ESOP
Preferred to any person other than any such plan trustee, the shares of ESOP
Preferred so transferred, upon such transfer and without any further action by
the Corporation or the holder, shall be automatically converted into shares of
Common Stock pursuant to subsection 14.5 hereof and no such transferee shall
have any of the voting powers, preferences and relative, participating,
optional or special rights ascribed to shares of ESOP Preferred hereunder but,
rather, only the powers and rights pertaining to the Common Stock into which
such shares of ESOP Preferred shall be so converted. Notwithstanding the
foregoing, the pledge of shares of the ESOP Preferred pursuant to or the
foreclosure on any such pledge under a credit agreement (or a related security
agreement) for the financing or the refinancing of the initial purchase of the
ESOP Preferred by the ESOP or other employee benefit plan of the Corporation
shall not constitute such a transfer.
14.2 Dividends. The dividend rate for the ESOP Preferred is $8.125
per share per annum and no more, and the date from which dividends on the
shares of such series shall be cumulative and accrue (whether or not earned or
declared) shall be the date as of which the shares are issued; provided,
however, that if as of a given Dividend Payment Date (as defined below)
$2.03125 is less than an amount (the "Common Stock Equivalent Dividend") equal
to (i) the aggregate amount of all cash dividends (excluding an amount equal to
that portion of any dividend which constitutes a part of an Extraordinary
Distribution, as defined in subsection 14.6) paid per share of Common Stock
since the immediately preceding Dividend Payment Date multiplied by (ii) the
number of shares of Common Stock into which such share of ESOP Preferred was
convertible on the date or dates dividends were paid on the Common Stock, then
the dividend payable for such period on each share of the ESOP Preferred shall
be equal to the Common Stock Equivalent Dividend. Dividends on the ESOP
Preferred shall be payable on the 28th day of March, June, September and
December in each year (each such date being a "Dividend Payment Date");
provided, that at the election of the Corporation the dividend payable on
December 28 in any year may instead be paid on the fourth business day of the
next succeeding calendar year. Dividends on the ESOP Preferred shall accrue
and accumulate on the basis of a 360-day year of 12 months of 30 days each. No
interest shall accrue on accumulated but unpaid dividends.
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14.3 Redemption.
(a) Subject to the limitation in paragraphs (c) and (d) of this
subsection 14.3, the ESOP Preferred shall be redeemable, in whole or in part,
at the option of the Corporation at any time after April 1, 1996 or earlier if
permitted by other provisions of this subsection 14.3 at the following
redemption prices per share:
<TABLE>
<CAPTION>
During the Twelve-
Month Period Price Per
Beginning April 1. Share
-------------------- ----------
<S> <C>
1991 $108.1250
1992 $107.3125
1993 $106.5000
1994 $105.6875
1995 $104.8750
1996 $104.0625
1997 $103.2500
1998 $102.4375
1999 $101.6250
2000 $100.8125
</TABLE>
and thereafter at $100 per share, plus, in the case of any redemption of the
ESOP Preferred, an amount equal to all accrued, accumulated and unpaid
dividends accrued thereon to the date fixed for redemption, subject to the
rights of holders of record on a record date prior to the date fixed for
redemption to receive dividends on the relevant Dividend Payment Date. Payment
of the redemption price shall be made as permitted by paragraph (f) of this
subsection 14.3. From and after the date fixed for redemption, dividends on
shares of ESOP Preferred called for redemption, and not previously converted,
shall cease to accrue, shares of ESOP Preferred shall no longer be outstanding
and all rights with respect to such shares shall cease, except the right to
receive the redemption price.
(b) Unless otherwise required by law, notice of any redemption shall
be sent to the holders of ESOP Preferred at the address shown on the books of
the Corporation or any transfer agent for the ESOP Preferred by first-class
mail, postage prepaid, mailed not less than thirty (30) days nor more than
sixty (60) days prior to the redemption date. The notice shall state: (i) the
redemption date; (ii) the number of shares of the ESOP Preferred to be redeemed
and, if fewer than all the shares held by a holder are to be redeemed, the
number of shares to be redeemed from the holder; (iii) the redemption price;
(iv) the place or places where certificates for the shares are to be
surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed shall cease to accrue on the redemption date; and (vi)
the conversion rights of the shares to be redeemed, the period within which
conversion rights may be exercised, and the Conversion Price and number of
shares of Common Stock issuable upon conversion of a share of ESOP Preferred.
The notice provisions may be amended if necessary to comply with the optional
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redemption provisions for preferred stock as "qualifying employer securities"
or "employer securities" within the meaning of sections 4975(e)(8) and 409(1)
under the Internal Revenue Code of 1986, as amended (the "Code"), or under any
successor provision thereof or as "qualifying employer securities" under
section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as
amended, or under any successor provision thereof. Payment for the shares to
be redeemed by the Corporation shall be made on the later of (i) the date
following surrender of certificates for shares (properly endorsed or assigned
for transfer, if the board of directors of the Corporation shall so require and
the notice shall so state) to be redeemed, (ii) the date fixed for redemption
with respect to that portion of the purchase price payable in cash, or (iii)
five business days following the date specified in (i) and (ii) in the case of
that portion of the redemption price payable in shares of Common Stock.
(c) Should,
(i) there be a change in the federal tax laws of the United
States of America (or any regulations promulgated thereunder), or any
change in the application, enforcement or interpretation in respect of
such laws, regulations or rulings, including any of the foregoing taken
by a court of competent jurisdiction, which has the effect of precluding
the Corporation from claiming any of the tax deductions, in whole or in
part, for dividends paid on the ESOP Preferred when such dividends are
used as provided under section 404(k)(2) of the Code in effect on the
date shares of ESOP Preferred are initially issued, or
(ii) the ESOP, as amended, or any successor plan be determined
by the Internal Revenue Service not to be qualified under sections
401(a) and 4975(e)(7) of the Code, or
(iii) there be a change in the federal tax laws of the United
States of America which permits the Corporation to claim a tax deduction
or a tax credit or to effect a tax treatment which reduces federal
income taxes, in whole or in part, for any dividends paid on any of the
Corporation's equity securities (for federal tax purposes) other than in
relation to the ESOP or a similar plan, or
(iv) the board of directors have authorized the Corporation to
enter into an agreement to or have adopted a resolution recommending to
the shareholders of the Corporation that they approve action to
voluntarily liquidate, dissolve or wind up its business or sell,
transfer or otherwise dispose of all or substantially all of its assets
to, or consolidate with, or merge into, any other person, or permit any
other person to merge with the Corporation or be a party to any similar
transaction, including a share exchange, requiring the vote of holders
of the ESOP Preferred (any of the foregoing being hereafter referred to
as an "Extraordinary Transaction") and if such Extraordinary Transaction
shall not have been abandoned or consummated, or
(v) the Corporation elect to terminate the ESOP,
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the Corporation may, at any time thereafter (but in the event of a redemption
under clause (i) or (iii) of this paragraph (c), not later than one year after
the holder has given notice to the Corporation of the occurrence of an event
giving rise to the right of redemption) and in its sole discretion and
notwithstanding anything to the contrary in paragraph (a) of this subsection
14.3, but subject to paragraph (d) of this subsection 14.3, elect to redeem the
ESOP Preferred, in whole or in part, for $100 per share, except in case of a
redemption pursuant to clauses (iii), (iv) or (v) of this paragraph (c), in
which case the redemption shall be at the redemption price per share set forth
in paragraph (a), plus in any case an amount equal to all accrued, accumulated
and unpaid dividends thereon to the date fixed for redemption, subject to the
rights of holders of record on a record date prior to the date fixed for
redemption to receive dividends on the relevant Dividend Payment Date.
(d) Notwithstanding paragraphs (a) or (c) of this subsection 14.3,
the Corporation shall not have the right to redeem the ESOP Preferred after a
"Change of Control" if the board of directors includes fewer than three
"Continuing Directors" or there are at least three Continuing Directors and the
redemption is not approved by at least 80% of the Continuing Directors.
"Change of Control" shall mean occurrence of one or more of the
following events:
(i) an event involving the Corporation occurs of a nature that
the Corporation would be required to report in response to item 6(e) of
schedule 14A of regulation 14A promulgated by the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of
1934, as amended (the "1934 Act");
(ii) any "person" (as such term is used in sections 13(d) and
14(d) of the 1934 Act), other than the Corporation or any "person" who
on January 1, 1991, is a director or officer of the Corporation, is or
becomes the "beneficial owner" (as determined in rule 13d-3 under the
1934 Act), directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities; or
(iii) at any time after January 1, 1991, Continuing Directors
cease for any reason to constitute at least a majority of the board of
directors.
"Continuing Directors" shall mean members of the board of directors on
January 1, 1991, and persons who thereafter became directors, the nomination of
whom was approved by at least 80% of the directors than in office who were
either directors on January 1, 1991, or Continuing Directors at the time of
their election.
(e) At the option of the holder, at any time and from time to time
upon notice to the Corporation given not less than five (5) business days prior
to the date fixed by the holder in such notice for such redemption, shares of
ESOP Preferred shall be redeemed by the Corporation, to the extent permitted by
applicable statutes and regulations, at the applicable redemption price
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specified in this paragraph (e) plus in each case an amount equal to all
accrued, accumulated and unpaid dividends thereon to the date fixed for
redemption, subject to the rights of holders of record on a record date prior
to the date fixed for redemption to receive dividends on the relevant Dividend
Payment Date, (i) at a redemption price of $100 per share when and to the
extent necessary, for such holder to provide for distributions required to be
made under, or to satisfy an investment election provided to participants in
accordance with, the ESOP, as the same may be amended, or any successor plan,
(ii) at the redemption price specified in paragraph (a) of this subsection 14.3
applicable at the time, (A) when and to the extent necessary, for such holder
to make payment of principal, interest or premium due and payable on any
indebtedness incurred by the holder for the benefit of the ESOP, or (B) if the
ESOP is determined by the Internal Revenue Service no longer to be qualified
within the meaning of sections 401(a) and 4975(e)(7) of the Code, but in such
event the holder shall have such option only at such time as the Corporation is
not in good faith taking steps to reinstate the qualification of the ESOP,
(iii) at the redemption price specified in paragraph (a) of this subsection
14.3 applicable at the time in case an Extraordinary Transaction has been
approved by all necessary action of the holders of capital stock of the
Corporation and the holders of the ESOP Preferred were neither entitled to vote
to approve the Extraordinary Transaction as a separate class, nor constituted
the holders of Preferred Stock conveying 40% or more of the votes entitled to
vote pursuant to subsection (b) of section 7 of this article 6 and the
Preferred Stock was entitled to vote on the Extraordinary Transaction under
that subsection and (iv) at the redemption price specified in paragraph (a) of
this subsection 14.3, applicable at the time, if at any time after March 30,
1994, pursuant to the terms of the Term Loan Agreement between Central
Louisiana Electric Company, Inc. 401(k) Savings and Investment Plan ESOP Trust
(the "Trust"), the Corporation, each of the banks identified on the signature
pages thereof and The Bank of New York, as agent, entered into by the trustee
of the trust to fund the acquisition of the ESOP Preferred, any interest rate
computed thereunder shall actually be computed at the Base Rate (as defined
therein) and 2.00%.
(f) The Corporation, at its option, may make payment of the
redemption price upon redemption of shares of ESOP Preferred in cash or in
shares of Common Stock, or in a combination of such shares and cash, any such
shares to be valued for such purpose at their Fair Market Value (as defined in
paragraph (g) of subsection 14.6 hereof) on the date fixed for redemption;
provided, however, that in the event that any shares of ESOP Preferred that
have been pledged to a lender as collateral (as contemplated by the last
sentence of Section 14.1(b)) have been transferred to such lender in
satisfaction of such pledge, the redemption price for such shares shall be
payable by the corporation in cash only. Notwithstanding anything herein to
the contrary, in the event that the Corporation elects, by a resolution of its
board of directors, to make payment of all future redemption prices solely in
cash or solely in shares of Common Stock and notifies the holders of ESOP
Preferred of such election, all redemption payments thereafter shall be made in
compliance with such election which shall be irrevocable.
14.4 Liquidation Rights. The amount per share for the ESOP Preferred
payable to the holders thereof upon any voluntary liquidation, dissolution or
winding up of the Corporation shall be the redemption price set forth in
paragraph (a) of subsection 14.3 applicable at the time of such voluntary
liquidation, dissolution or winding up, plus an amount equal to all accrued,
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accumulated and unpaid dividends thereon to the date such payment is made
subject to the rights of holders of record on a record date prior to the date
fixed for redemption to receive dividends on the relevant Dividend Payment
Date.
The amount per share for the ESOP Preferred payable to the holders
thereof upon any involuntary liquidation, dissolution or winding up of the
Corporation shall be the sum of $100 per share plus an amount equal to all
accrued, accumulated and unpaid dividends thereon to the date such payment is
made available in full.
14.5 Conversion Rights.
(a) At the option of the holder thereof, the ESOP Preferred shall be
convertible at any time into one share of fully paid and nonassessable Common
Stock in exchange for each $41.66667 par value of shares of ESOP Preferred,
such conversion price (hereinafter sometimes called the "Conversion Price")
being subject to adjustment as hereinafter provided. To exercise the conversion
right, a holder of the ESOP Preferred shall surrender to the Corporation, at
the office of one of the transfer agents of the ESOP Preferred or, if there is
no transfer agent, than at the office of the Corporation, certificates for the
ESOP Preferred duly endorsed in blank or accompanied by proper instruments of
transfer and with the form of written notice endorsed thereon of the holder's
election to convert, duly filled out and executed. The conversion right shall
be effectively exercised at the date on which the certificates for the shares
to be converted, with such notice of election duly filled out and executed, are
deposited, and from such date the person entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder of the Common Stock and shall cease to have any rights with respect to
the ESOP Preferred converted; provided, however, the conversion right in
respect of any certificate deposited after the close of business on any day
shall not be effectively exercised until the next succeeding Business Day.
From and after the date of effective exercise of the right of conversion,
dividends on the ESOP Preferred converted shall cease to accrue. In the event
that notice of redemption of all or a part of the outstanding shares of ESOP
Preferred shall be given, the right of the holders of the ESOP Preferred so
called for redemption to convert the same into shares of Common Stock shall
terminate as of the close of business on the Business Day next preceding the
date fixed as the date of redemption. However, if the redemption price of such
shares is not deposited by the Corporation on or before the redemption date in
such manner as to render such shares no longer outstanding, the conversion
rights shall again be in full force and effect. As soon as practicable after
the conversion of any ESOP Preferred into Common Stock, and in any event within
10 days thereafter, the Corporation shall deliver to the person entitled
thereto, certificates representing shares of Common Stock, the cash, if any, to
which such person shall be entitled as payment, as hereinafter provided, for
any fraction of a share of Common Stock resulting from such conversion plus an
amount equal to all accumulated and unpaid dividends on the ESOP Preferred to
the date the conversion is effective, subject to the rights of holders of
record on a record date prior to the date the conversion is effective to
receive dividends on the relevant Dividend Payment Date. The Corporation, as a
condition to the exercise of any right of conversion, may require the payment
of a sum equal to any transfer tax or other governmental charge (but not
including any tax payable upon the issuance of stock
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<PAGE> 112
deliverable upon such conversion) that may be imposed or required by law upon
any transfer incidental or prior thereto, or the submission of proper proof
that the same has been paid.
(b) The Corporation shall at all times reserve and keep available out
of its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of ESOP Preferred, free from any preemptive rights, such
number of shares of Common Stock as shall from time to time be issuable upon
the conversion of all the shares of ESOP Preferred then outstanding. The
Corporation shall obtain and shall use its best efforts to keep in force such
governmental or regulatory permits or other authorizations as may be required
by law, and shall comply with all requirements as to registration or
qualification of the Common Stock, in order to enable the Corporation lawfully
to issue and deliver to each holder of record of ESOP Preferred such number of
shares of its Common Stock as shall from time to time be sufficient to effect
the conversion of all shares of ESOP Preferred then outstanding.
14.6 Anti-Dilution Adjustments.
(a) In the event the Corporation shall, at any time or from time to
time while any of the shares of the ESOP Preferred are outstanding, (i) pay a
dividend or make a distribution in respect of the Common Stock in shares of
Common Stock, (ii) subdivide into a greater number of shares the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, in each case whether by reclassification of
shares, recapitalization of the corporation or otherwise, the Conversion Price
in effect immediately prior to such action, subject to paragraphs (e) and (f)
of this subsection 14.6, shall be adjusted by multiplying such Conversion Price
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately before such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event. An
adjustment made pursuant to clause (i) of this paragraph (a) shall be given
effect, upon payment of such a dividend or distribution, as of the record date
for the determination of shareholders entitled to receive such dividend or
distribution and in the case of a subdivision or combination shall become
effective immediately as of the effective date thereof.
(b) In the event that the Corporation shall, at any time or from time
to time while any of the shares of ESOP Preferred are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including by
way of a reclassification of shares or a recapitalization of the Corporation,
any right or warrant to purchase shares of Common Stock (but not including, as
such a right or warrant, any security convertible into or exchangeable for
shares of Common Stock) at a purchase price per share less than the Fair Market
Value (as hereinafter defined) of a share of Common Stock on the date of
issuance of such right or warrant, then, subject to the provisions of
paragraphs (e) and (f) of this subsection 14.6, the Conversion Price shall be
adjusted by multiplying such Conversion Price by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding immediately
before such issuance of rights or warrants plus the number of shares of Common
Stock which could be purchased at the Fair Market Value of a share of Common
Stock at the time of such issuance for the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants and the
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denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the maximum number
of shares of Common Stock that could be acquired upon exercise in full of all
such rights and warrants.
(c) In the event the Corporation shall, at any time or from time to
time while any of the shares of ESOP Preferred are outstanding, issue, sell or
exchange shares of Common Stock other than pursuant to any (x) right or warrant
to purchase or acquire shares of Common Stock (including as such a right or
warrant any security convertible into or exchangeable for shares of Common
Stock, but excluding any right or warrant which is deliverable upon conversion
of the ESOP Preferred), (y) employee or director incentive or benefit plan or
arrangement, including any employment agreement, of the Corporation or any
subsidiary of the Corporation heretofore or hereafter adopted or (z) any
dividend reinvestment plan, for a consideration per share less than the Fair
Market Value per share of such shares on the date the Corporation is
contractually bound, subject to reasonable conditions, to effect such issuance,
sale or exchange ("Contract Date"), then, subject to the provisions of
paragraphs (e) and (f) of this subsection 14.6, the Conversion Price shall be
adjusted by multiplying such Conversion Price by a fraction, the numerator of
which shall be the sum of (i) the Fair Market Value of all the shares of Common
Stock outstanding on the Contract Date (immediately preceding the issuance,
sale or exchange if it is on such date) plus (ii) the Fair Market Value of the
consideration received or to be received by the company in respect of such
issuance, sale or exchange and the denominator of which shall be the product of
(i) the Fair Market Value of a share of Common Stock on the Contract Date
(immediately preceding such issuance, sale or exchange if it is on such date)
multiplied by (ii) the sum of the number of shares of Common Stock outstanding
on such date plus the number of shares of Common Stock issued, sold or
exchanged or to be issued, sold or exchanged by the Corporation. In the event
the Corporation shall, at any time or from time to time while any shares of
ESOP Preferred are outstanding, issue, sell or exchange any right or warrant to
purchase or acquire shares of Common Stock (including as such a right or
warrant any security convertible into or exchangeable for shares of Common
Stock), other than (x) any such issuance to holders of shares of Common Stock
as a dividend or distribution (including by way of a reclassification of shares
or a recapitalization of the Corporation) or (y) pursuant to any employee or
director incentive or benefit plan or arrangement (including any employment
agreement) of the Corporation or any subsidiary of the Corporation heretofore
or hereafter adopted, for a consideration having a Fair Market Value on the
date the Corporation is contractually bound, subject to reasonable conditions,
to effect such issuance, sale or exchange ("Warrant Contract Date") less than
the Non-Dilutive Amount (as hereinafter defined), then, subject to the
provisions of paragraphs (e) and (f) of this subsection 14.6, the Conversion
Price shall be adjusted by multiplying such Conversion Price by a fraction the
numerator of which shall be the sum of (i) the Fair Market Value of all the
shares of Common Stock outstanding on the Warrant Contract Date plus (ii) the
Fair Market Value of the consideration received or to be received by the
Corporation in respect of such issuance, sale or exchange of such right or
warrant plus (iii) the Fair Market Value on the Warrant Contract Date of the
consideration which the Corporation would receive upon exercise in full of all
such rights or warrants, and the denominator of which shall be the product of
(i) the Fair Market Value of a share of Common Stock on the Warrant Contract
Date multiplied by (ii) the sum of the number of shares of Common Stock
outstanding
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on the Warrant Contract Date plus the maximum number of shares of Common Stock
which could be acquired pursuant to such right or warrant at the time of the
issuance, sale or exchange of such right or warrant (assuming shares of Common
Stock could be acquired pursuant to such right or warrant at such time).
(d) In the event the Corporation shall, at any time or from time to
time while any of the shares of ESOP Preferred are outstanding, make an
Extraordinary Distribution (as hereinafter defined) in respect of the Common
Stock, whether by dividend, distribution, reclassification of shares or
recapitalization of the Corporation or effect a Pro Rata Repurchase (as
hereinafter defined) of Common Stock, the Conversion Price in effect
immediately prior to such Extraordinary Distribution or Pro Rata Repurchase
shall, subject to paragraphs (e) and (f) of this subsection 14.6, be adjusted
by multiplying such Conversion Price by a fraction, the numerator of which is
(i) the product of (x) the number of shares of Common Stock outstanding
immediately before such Extraordinary Distribution or Pro Rata Repurchase
multiplied by (y) the Fair Market Value of a share of Common Stock on the day
prior to the ex-dividend date with respect to an Extraordinary Distribution, or
on the applicable expiration date (including all extensions thereof) of any
tender offer which is a Pro Rata Repurchase, or on the date of purchase with
respect to any Pro Rata Repurchase which is not a tender offer, as the case may
be, minus (ii) the Fair Market Value of the Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as the case may be, and
the denominator of which shall be the product of (A) the number of shares of
Common Stock outstanding immediately before such Extraordinary Distribution or
Pro Rata Repurchase minus, in the case of a Pro Rata Repurchase, the number of
shares of Common Stock repurchased by the Corporation multiplied by (B) the
Fair Market Value of a share of Common Stock on the day prior to the
ex-dividend date with respect to an Extraordinary Distribution or on the
applicable expiration date (including all extensions thereof) of any tender
offer which is a Pro Rata Repurchase or on the date of purchase with respect to
any Pro Rata Repurchase which is not a tender offer, as the case may be. The
Corporation shall send each holder of ESOP Preferred (i) notice of its intent
to make any dividend or distribution and (ii) notice of any offer of the
Corporation to make a Pro Rata Repurchase, in each case at the same time as, or
as soon as practicable after, such offer is first communicated (including by
announcement of a record date in accordance with the rules of any stock
exchange on which the Common Stock is listed or admitted to trading) to holders
of Common Stock. Such notice shall indicate the intended record date and the
amount and nature of such dividend or distribution, or the number of shares
subject to such offer for a Pro Rata Repurchase and the purchase price payable
by the Corporation pursuant to such offer, as well as the Conversion Price and
the number of shares of Common Stock into which a share of ESOP Preferred may
be converted at such time.
(e) Notwithstanding any other provisions of this subsection 14.6, the
Corporation shall not be required to make any adjustment of the Conversion
Price unless such adjustment would require an increase or decrease of at least
(1%) in the Conversion Price. Any lesser adjustment shall be carried forward
and shall be made no later than the time of, and together with, the next
subsequent adjustment (which shall be computed as if all adjustments carried
forward had been made) which, together with any adjustment or adjustments so
carried forward,
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shall amount to an increase or decrease of at least (1%) in the Conversion
Price. In addition, notwithstanding any other provisions of this subsection
14.6, the Corporation shall not be required to make any adjustment of the
Conversion Price that would result in the Corporation's receiving less than the
par value of the Common Stock upon conversion of the ESOP Preferred into Common
Stock.
(f) If the Corporation shall make any dividend or distribution on the
Common Stock or issue any Common Stock, other capital stock or other security
of the Corporation or any rights or warrants to purchase or acquire any such
security, which transaction does not result in an adjustment to the Conversion
Price pursuant to the foregoing provisions of this subsection 14.6, the board
of directors of the Corporation shall have the authority to consider whether
such action is of such a nature that an adjustment to the Conversion Price
should equitably be made in respect of such transaction. If in such case the
board of directors of the Corporation determines that an adjustment to the
Conversion Price should be made as a result of such an action, an adjustment
shall be made effective as of such date, as specified by the board of directors
of the corporation. The determination of the board of directors of the
Corporation as to whether an adjustment to the Conversion Price should be made
pursuant to the foregoing provisions of this paragraph (f), and, if so, as to
what adjustment should be made and when, shall be final and binding on the
Corporation and all shareholders of the Corporation. The Corporation shall be
entitled to make such additional adjustments in the Conversion Price, in
addition to those provided by this subsection 14.6, as shall be necessary in
order that any dividend or distribution in shares of capital stock of the
Corporation, subdivision, reclassification or combination of shares of stock of
the Corporation or any recapitalization of the Corporation shall not be taxable
to holders of the Common Stock.
(g) For purposes of the ESOP Preferred, the following definitions
shall apply:
(i) "Adjustment Period" shall mean the period of five (5)
consecutive trading days preceding, and including, the date on which
Fair Market Value of a security is to be determined.
(ii) "Business Day" shall mean a day of the year on which banks
are not required or authorized to close in Boston, Massachusetts.
(iii) "Current Market Price" of publicly traded shares of Common
Stock or any other class of capital stock or other security of the
Corporation or any other issuer for an applicable date shall mean the
last reported sales price, regular way, or, in case no sale takes place
on such day, the average of the reported closing bid and asked prices,
regular way, in either case as reported on the New York Stock Exchange
Composite Tape or, if such security is not listed or admitted to trading
on the New York Stock Exchange, on the principal national securities
exchange on which such security is listed or admitted to trading or, if
not listed or admitted to trading on any national securities exchange,
on the NASDAQ National Market System or, if such security is not quoted
on such National Market System, the average of the closing bid and asked
prices on such day in the
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over-the-counter market as reported by NASDAQ, or if bid and asked
prices for such security on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices for such day as
furnished by any New York Stock Exchange member firm regularly making a
market in such security selected from time to time for such purpose by
the board of directors of the corporation.
(iv) "Extraordinary Distribution" shall mean any dividend or
other distribution to holders of Common Stock (effected while any of the
shares of the Preferred Stock are outstanding) of (a) cash (other than
that portion of a regularly scheduled quarterly dividend not exceeding
125% of the average regularly scheduled quarterly dividend for the most
recent period of 12 months in which the Corporation paid four quarterly
dividends) or (b) any shares of capital stock of the Corporation (other
than shares of Common Stock), other securities of the Corporation (other
than securities of the type referred to in paragraph (b) of this
subsection 14.6), evidences of indebtedness of the Corporation or any
other person or any other property (including shares of any subsidiary
of the Corporation), or any combination thereof.
(v) "Fair Market Value" shall mean
(a) as to shares of Common Stock or any other class of
capital stock or securities of the Corporation or any other
issuer which are publicly traded, the average of the Current
Market Price of such shares or securities for each day of the
Adjustment Period;
(b) as to any security which is not publicly traded or
any other property, the fair value thereof as of the applicable
date as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or
property selected in good faith by the board of directors of the
Corporation or a committee thereof, or, if no such investment
banking or appraisal firm is in the good faith judgment of the
board of directors or such committee available to make such
determination, as determined in good faith by the board of
directors of the Corporation or such committee.
(vi) "Non-Dilutive Amount" in respect of an issuance, sale or
exchange by the Corporation of any right or warrant to purchase or
acquire shares of Common Stock (including any security convertible into
or exchangeable for shares of Common Stock) shall mean the remainder of
(a) the product or the Fair Market Value of a share of Common Stock on
the Warrant Contract Date multiplied by the maximum number of shares of
Common Stock which may be acquired upon the exercise in full of such
rights and warrants (including upon the conversion or exchange of all
such convertible or exchangeable securities), whether or not exercisable
(or convertible or exchangeable) at such date, minus (b) the aggregate
amount payable pursuant to such right or warrant to purchase or acquire
such maximum number of shares of common stock plus the fair
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market value of the consideration received or to be received by the
corporation in respect of the issuance, sale or exchange of such right
or warrant; provided, however, that in no event shall the Non-Dilutive
Amount be less than zero. For purposes of the foregoing sentence, in
the case of a security convertible into or exchangeable for shares of
Common Stock, the amount payable pursuant to a right or warrant to
purchase or acquire shares of Common Stock shall be the Fair Market
Value of such security on the date of the issuance, sale or exchange of
such security by the Corporation.
(vii) "Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or any subsidiary thereof, whether for
cash, shares of capital stock of the Corporation, other securities of
the Corporation, evidences of indebtedness of the Corporation or any
other person or any other property (including shares of a subsidiary of
the Corporation), or any combination thereof, effected while any of the
shares of ESOP Preferred are outstanding, pursuant to any tender offer
or exchange offer subject to section 13(e) of the 1934 Act, or any
successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no
purchase of shares by the Corporation or any subsidiary thereof made in
open market transactions shall be deemed a Pro Rata Repurchase. For
purposes of this paragraph (g), shares shall be deemed to have been
purchased by the Corporation or any subsidiary thereof "in open market
transactions" if they have been purchased substantially in accordance
with requirements of Rule l0b-18 as in effect under the Exchange Act, on
the date shares of ESOP Preferred are initially issued by the
Corporation or on such other terms and conditions as the board of
directors of the Corporation or a committee thereof shall have
determined are reasonably designed to prevent such purchases from having
a material effect on the trading market for the Common Stock.
(h) Whenever an adjustment to the Conversion Price is required, the
Corporation shall forthwith place on file with the transfer agent for the
Common Stock and the ESOP Preferred if there be one, and with the Secretary of
the Corporation, a statement signed by two officers of the Corporation stating
the adjusted Conversion Price determined as provided herein. Such statement
shall set forth in reasonable detail such facts as shall be necessary to show
the reason and the manner of computing such adjustment, including any
determination of Fair Market Value involved in such computation. Promptly
after each adjustment to the Conversion Price of the ESOP Preferred, the
Corporation shall mail a notice thereof and of the then prevailing conversion
price to each holder of shares of the ESOP Preferred.
14.7 Retirement of Converted Shares. Any shares of the ESOP Preferred
redeemed, repurchased, converted into Common Stock or otherwise acquired by the
Corporation shall be permanently retired, shall no longer be outstanding and
shall not, under any circumstances, be reissued as shares of the ESOP
Preferred, and the Corporation may from time to time take such appropriate
corporate action, if any, as may be necessary to reduce the authorized ESOP
Preferred accordingly.
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14.8 Miscellaneous.
(a) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of
receipt thereof or three (3) Business Days after the mailing thereof if sent by
registered mail (unless first-class mail shall be specifically permitted for
such notice) with postage prepaid, address: (i) if to the Corporation, to its
office at
Cleco Corporation
2030 Donahue Ferry Road
Pineville, Louisiana 71360-5226
(Attention: Secretary) or (ii) if to any holder of the ESOP Preferred or Common
Stock, as the case may be, to such holder at the address of such holder as
listed in the stock record books of the Corporation (which may include the
records of any transfer agent for the ESOP Preferred, as the case may be) or
(iii) to such other address as the Corporation or any such holder, as the case
may be, shall have designated by notice similarly given.
(b) The term "Common Stock" as used in this article means the
Corporation's Common Stock, par value $4.00 per share as defined in section 1
of this article 6 as the same existed at January 1, 1991, or any other class of
stock resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time as a
result of any adjustment made pursuant to subsection 14.6 the holder of any
share of the ESOP Preferred upon thereafter surrendering such share for
conversion shall become entitled to receive any shares or other securities of
the Corporation other than shares of Common Stock, the Conversion Price in
respect of such other shares or securities so receivable upon conversion of
shares of ESOP Preferred shall thereafter be adjusted, and shall be subject to
further adjustment from time to time, in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in subsection 14.6 hereof.
ARTICLE 7.
Section 1. All of the corporate powers of the Corporation shall be
vested in and exercised by, and the business and affairs of the Corporation
shall be managed by, a board of directors which shall consist of not less than
three or more than 13 directors.
Section 2. The board of directors shall have authority to make and
alter bylaws not inconsistent with law or these restated articles, subject to
the power of the shareholders to change or repeal the bylaws so made, including
the right to make and alter bylaws fixing their number within said limits
prescribed in section 1 of this article and fixing or increasing their
compensation. The board of directors, without necessity of action by the
shareholders except as provided in the second sentence of section 4 of article
6 hereof, shall have authority in connection with the issuance and sale of any
stock or securities of the Corporation to grant to the holders thereof the
right to convert, upon such terms and conditions as the board of directors may
deem expedient, the principal thereof into shares of any class issued or to be
issued by the Corporation. The board of directors shall also have and exercise
all other powers, not
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inconsistent with these articles, now or hereafter by law conferred upon or
permitted by law to be conferred upon boards of directors of similar
corporations and the members of the board of directors shall have and exercise
all rights, power and duties (not inconsistent with these restated articles)
and shall be entitled to all immunities now or hereafter granted or permitted
by law.
Section 3. No director shall be required to own any stock in the
Corporation.
Section 4. Except as specially provided and required to the contrary
by law, no notice of the holding of any meeting of either shareholders or
directors need state the objects or purposes thereof or the nature of the
business to be transacted thereat and, except as otherwise specially provided
by law or these articles, any and all matters and things may be submitted to
and acted upon and any business transacted at any meeting.
Section 5. The annual meeting of the shareholders for the election of
directors and the transaction of such other business as may be submitted for
consideration by the shareholders shall, until otherwise fixed by the bylaws,
be held in Pineville, Louisiana, on the second Thursday after the first Monday
in April of each year. Notice of the annual meeting of the Corporation, unless
waived in writing, shall be given personally to the shareholders entitled to
vote thereat by depositing in the United States Post Office at least 15 days
before such meeting a notice of the holding thereof, enclosed in a postpaid
wrapper addressed to each such shareholder at the last address furnished to the
Corporation by said shareholder and, in the event that no address be furnished,
then addressed "General Delivery" at the place where such meeting is to be
held. Special meetings of the shareholders may be held on giving at least five
days' notice of the holding of such meeting to the shareholders entitled to
vote thereat, said notice to be given in the same manner as for the holding of
the annual meeting. At all meetings of the shareholders the majority of votes
cast, in person or by written proxy, shall, except as otherwise provided by
law, these articles or the bylaws, decide all questions. The failure to hold
an annual meeting to elect directors shall not dissolve the Corporation, but
the directors and officers then in office shall remain as such until their
successors shall be elected and qualified.
Except as otherwise provided in subsection (b) of section 3 of article 6
hereof, and except as provided in section 4 of article II of the Corporation's
bylaws with respect to the rights of holders of Preferred Stock, a special
meeting of the shareholders of the Corporation proposed to be called by a
shareholder or shareholders of the Corporation may be called at any time in the
manner provided by the bylaws of the Corporation upon the written request of
the holder or holders of not less than a number of shares entitled to vote
thereat conveying fifty-one percent (51%) of the vote entitled to vote thereat,
Section 6. A quorum of the board of directors for the transaction of
any and all business, except where specially provided by law to the contrary,
shall consist of a majority of the whole board present in person, and except as
specially provided by law to the contrary, a majority of votes cast in person
shall control.
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Section 7. The board of directors shall not have power or authority
to declare vacant the office of a director because of his absence from the
State of Louisiana continuously for a period of six months or more without
leave granted by the board.
Section 8. A director or officer of the Corporation shall not be
personally liable to the Corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director or officer of the Corporation,
except that this section shall not eliminate or limit the liability of a
director or officer of the Corporation for:
(a) any breach of the director's or officers' duty of loyalty to the
Corporation or its shareholders;
(b) acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
(c) liability under section 12:92(D) of the Louisiana Revised
Statutes; or
(d) any transaction from which the director or officer derived an
improper personal benefit.
The foregoing shall not eliminate or limit the liability of a director
or officer of the Corporation for any act or omission occurring prior to the
date when the foregoing becomes effective as a part of the restated articles of
incorporation of the Corporation. If the Louisiana Business Corporation Law is
amended after approval by the shareholders of the Corporation of the foregoing
paragraph to authorize action further eliminating or limiting the personal
liability of directors or officers of the Corporation, then the liability of a
director or officer of the Corporation shall be eliminated or limited to the
fullest extent permitted by such law, as so amended. Any repeal or
modification of the foregoing paragraph shall not impair any right or
protection of a director or officer of the Corporation existing at the time of
such repeal or modification.
ARTICLE 8.
The board of directors shall, except as otherwise provided in these
restated articles, elect a president, a secretary and a treasurer. The bylaws
may provide for a chairman of the board of directors who shall have such powers
and authority as may be determined by the board of directors. The board of
directors shall also have the power to elect one or more vice presidents and
one or more assistant secretaries and one or more assistant treasurers, and
such other officers and agents with such titles, powers and authority as it
may, from time to time, deem proper and advisable. The board of directors may
combine in one person any two offices except president and vice president.
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ARTICLE 9.
The Corporation claims and shall have the benefit of the provisions of
section 161 of title 12 of the Louisiana Revised Statutes.
ARTICLE 10.
If, at any time, the Corporation should own wasting assets intended for
sale in the ordinary course of business, or shall own property having a limited
life, it may pay cash dividends from the net profits arising from such assets
without deduction for depreciation or depletion of assets thereby sustained.
The Corporation may also pay cash dividends out of paid-in surplus.
ARTICLE 11.
From time to time or at any time or times, if and when authorized by
resolution adopted by the board of directors of the Corporation by the
affirmative vote of at least two-thirds of the entire membership of the board
of directors cast in person or by written proxy at any meeting thereof and for
such consideration and on such terms and conditions as may be fixed by said
board, in its discretion, in said resolution, the Corporation may, from time to
time, sell, lease, exchange or otherwise dispose of all or any part or parts of
the assets of the Corporation, including its good will, franchise and/or other
rights. Such sale or sales, lease or leases, exchange or exchanges or other
dispositions need not be either previously authorized or subsequently approved
by the shareholders. Provided, however, that in the event such sale or sales,
lease or leases, exchange or exchanges or other dispositions of all or any part
or parts of the assets of the Corporation, including its good will, franchise
and/or other rights, be proposed to be made either in whole or in part in
exchange for or in consideration of shares and/or securities of another
corporation, domestic or foreign, exclusive of vendor's lien notes or bonds
secured by the property involved, then such sale, lease, exchange and/or other
disposition must be previously authorized not only by the affirmative vote of
at least two-thirds of the entire membership of the board of directors, as
above set forth, but also by the affirmative vote of the holders of a majority
of the capital stock of the Corporation then outstanding, said vote by said
shareholders to be cast at a meeting of the shareholders to be called in the
manner and with the delay as set forth hereinabove for the calling of the
annual meeting of the shareholders. Anything in these restated articles to the
contrary notwithstanding, the notice to be given to the shareholders of the
holding of said meeting shall contain a brief statement of the purpose for
which the meeting is called and at said meeting said shareholders, by said
vote, shall have the right and power not only to approve the terms and
conditions of and consideration for said proposed sale, lease, exchange or
other disposition, or disapprove same, but also either to fix the consideration
for and the terms and conditions of the same or to delegate such power to the
board of directors with full power in said board of directors to act thereafter
without the calling of a subsequent meeting of the shareholders.
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ARTICLE 12.
Except as specially provided to the contrary by law or by these
articles, and except as these articles provide for their amendment by the board
of directors of the Corporation, these articles of incorporation may be
amended, including increasing and/or decreasing the capital stock of the
Corporation, by an affirmative vote of the holders of a majority of the capital
stock of the Corporation then outstanding, said vote by said shareholders to be
cast at a meeting of the shareholders to be called in the manner and with the
delay as set forth hereinabove for the calling of the annual meeting of
shareholders. Anything in these restated articles to the contrary
notwithstanding, the notice to be given to the shareholders of the holding of
said meeting shall contain a brief statement of the purpose for which the
meeting is called.
THUS DONE AND PASSED, in multiple originals, on the day, month and year
herein first above written, in the presence of ____________ and ____________,
competent witnesses of lawful age and domiciled in the state and parish
aforesaid, who hereunto sign their names with the said appearers and me,
notary, after due reading of the whole.
WITNESSES:
- --------------------------- ---------------------------
- --------------------------- ---------------------------
--------------------------------------
NOTARY PUBLIC
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APPENDIX E
DESCRIPTION OF DISSENTERS' RIGHTS
Applicable Excerpts From Section 131 of the
Louisiana Business Corporation Law
(Applicable to a share exchange pursuant to
Section 116(K) of the Louisiana Business Corporation Law)
C. (1)(a) Except as provided in Paragraph (4) of this Subsection, any
shareholder electing to exercise such right of dissent shall file
with the corporation, prior to or at the meeting of shareholders
at which such proposed corporate action is submitted to a vote, a
written objection to such proposed corporate action, and shall
vote his shares against such action. If such proposed corporate
action be taken by the required vote, but by less than eighty
percent of the total voting power, and the merger, consolidation
or sale, lease or exchange of assets authorized thereby be
effected, the corporation shall promptly thereafter give written
notice thereof to each shareholder who filed such written
objection to, and voted his shares against, such action, at such
shareholder's last address on the corporation's records.
(b) An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the
facts stated therein.
(2) Each such shareholder may, within twenty days after the mailing
of such notice to him, but not thereafter, file with the
corporation a demand in writing for the fair cash value of his
shares as of the day before such vote was taken; provided that he
state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at
the same time deposit in escrow in a chartered bank or trust
company located in the parish of the registered office of the
corporation, the certificates representing his shares, duly
endorsed and transferred to the corporation upon the sole
condition that said certificates shall be delivered to the
corporation upon payment of the value of the shares determined in
accordance with the provisions of this Section. With his demand
the shareholder shall deliver to the corporation, the written
acknowledgment of such bank or trust company that it so holds his
certificates of stock.
(3) Unless the objection, demand, and acknowledgment are made and
delivered by the shareholder within the period limited in
Paragraphs (1) and (2), he shall conclusively be presumed to have
acquiesced in the corporate action proposed or taken.
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D. If the corporation does not agree to the value so stated and demanded,
or does not agree that a payment is due, it shall, within twenty days
after receipt of such demand and acknowledgment, notify in writing the
shareholder, at the designated post office address, of its disagreement,
and shall state in such notice the value it will agree to pay if any
payment should be held to be due; otherwise it shall be liable for, and
shall pay to the dissatisfied shareholder, the value demanded by him for
his shares.
E. In case of disagreement as to such fair cash value, or as to whether any
payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder,
within sixty days after receipt of notice in writing of the
corporation's disagreement, but not thereafter, may file suit against
the corporation, or the merged or consolidated corporation, as the case
may be, in the district court of the parish in which the corporation or
the merged or consolidated corporation, as the case may be, has its
registered office, praying the court to fix and decree the fair cash
value of the dissatisfied shareholder's shares as of the day before such
corporate action complained of was taken, and the court shall, on such
evidence as may be adduced in relation thereto, determine summarily
whether any payment is due, and, if so, such cash value, and render
judgment accordingly. Any shareholder entitled to file such suit may,
within such sixty-day period but not thereafter, intervene as a
plaintiff in such suit filed by another shareholder, and recover therein
judgment against the corporation for the fair cash value of his shares.
No order or decree shall be made by the court staying the proposed
corporate action, and any such corporate action may be carried to
completion notwithstanding any such suit. Failure of the shareholder to
bring suit, or to intervene in such a suit, within sixty days after
receipt of notice of disagreement by the corporation shall conclusively
bind the shareholder (1) by the corporation's statement that no payment
is due, or (2) if the corporation does not contend that no payment is
due, to accept the value of his shares as fixed by the corporation in
its notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become
liable for the value demanded by the shareholder because of failure to
give notice of disagreement and of the value it will pay, or when the
shareholder has become bound to accept the value the corporation agrees
is due because of his failure to bring suit within sixty days after
receipt of notice of the corporation's disagreement, the action of the
shareholder to recover such value must be brought within five years from
the date the value was agreed upon, or the liability of the corporation
became fixed.
G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay
to the dissatisfied shareholder on demand an amount in cash deemed by it
to be the fair cash value of his shares, and if, on the institution of a
suit by the dissatisfied shareholder claiming an amount in excess of the
amount so offered, the corporation, or the merged or consolidated
corporation, as the case may be, shall deposit in the registry of the
court, there to remain until the final
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determination of the cause, the amount so offered, then, if the amount
finally awarded such shareholder, exclusive of interest and costs, be
more than the amount offered and deposited as aforesaid, the costs of
the proceeding shall be taxed against the corporation, or the merged or
consolidated corporation, as the case may be; otherwise the costs of the
proceeding shall be taxed against such shareholder.
H. Upon filing a demand for the value of his shares, the shareholder shall
cease to have any of the rights of a shareholder except the rights
accorded by this section. Such a demand may be withdrawn by the
shareholder at any time before the corporation gives notice of
disagreement, as provided in subsection D of this section. After such
notice of disagreement is given, withdrawal of a notice of election
shall require the written consent of the corporation. If a notice of
election is withdrawn, or the proposed corporate action is abandoned or
rescinded, or a court shall determine that the shareholder is not
entitled to receive payment for his shares, or the shareholder shall
otherwise lose his dissenters' rights, he shall not have the right to
receive payment for his shares, his share certificates shall be returned
to him (and, on his request, new certificates shall be issued to him in
exchange for the old ones endorsed to the corporation), and he shall be
reinstated to all his rights as a shareholder as of the filing of his
demand for value, including any intervening preemptive rights, and the
right to payment of any intervening dividend or other distribution, or,
if any such rights have expired or any such dividend or distribution
other than in cash has been completed, in lieu thereof, at the election
of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been
taken in the interim.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Certain statutes, articles of incorporation, and bylaws authorize the
purchase of insurance and/or the provision of indemnification for directors
and/or officers of Cleco. 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 foregoing provisions, or
otherwise, Cleco has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Cleco 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, Cleco 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 Securities Act of 1933 and will be
governed by the final adjudication of such issue.
Item 21. Exhibits and Financial Statement Schedules.
The Exhibits designated by an asterisk are filed herewith. The Exhibits
not so designated have been previously filed with the SEC and are incorporated
herein by reference.
EXHIBIT DESCRIPTION
2.1 Plan of Reorganization and Plan of Exchange
3(a) Restated Articles of Incorporation of Cleco dated as of July 24,
1989, as amended through April 24, 1992 (incorporated by
reference from Cleco's Form 10-Q for the quarter ended March 31,
1992 (Commission File No. 1-5663)
3(b) Amended and Restated Bylaws of Cleco, as amended to April 25,
1997 (incorporated by reference from Cleco's Form 10-Q for the
quarter ended March 31, 1997 (Commission File No. 1-5663)
3(c) Articles of Incorporation of Cleco Holding Corporation (attached
as Appendix D to this Proxy Statement and Prospectus)
*3(d) Bylaws of Cleco Holding Corporation
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4(a)(1) Indenture of Mortgage dated as of July 1, 1950, between Cleco and
First National Bank of New Orleans, as Trustee
4(a)(2) First Supplemental Indenture dated as of October 1, 1951, to
Exhibit 4(a)(1)
4(a)(3) Second Supplemental Indenture dated as of June 1, 1952, to
Exhibit 4(a)(1)
4(a)(4) Third Supplemental Indenture dated as of January 1, 1954, to
Exhibit 4(a)(1)
4(a)(5) Fourth Supplemental Indenture dated as of November 1, 1954, to
Exhibit 4(a)(1)
4(a)(6) Tenth Supplemental Indenture dated as of September 1, 1965, to
Exhibit 4(a)(1) (incorporated by reference from Cleco's Form 10-K
for the fiscal year ended December 31, 1986) (Commission File No.
1-5663)
4(a)(7) Eleventh Supplemental Indenture dated as of April 1, 1969, to
Exhibit 4(a)(1) (incorporated by reference from Cleco's Form S-9
dated April 7, 1969) (Commission File No. 2-32069)
4(a)(8) Eighteenth Supplemental Indenture dated as of December 1, 1982,
to Exhibit 4(a)(1) (incorporated by reference from Cleco's Form
10-K for the fiscal year ended December 31, 1993) (Commission
File No. 1-5663)
4(a)(9) Nineteenth Supplemental Indenture dated as of January 1, 1983, to
Exhibit 4(a)(1) (incorporated by reference from Cleco's Form 10-K
for the fiscal year ended December 31, 1993) (Commission File No.
1-5663)
4(a)(10) Twenty-Sixth Supplemental Indenture dated as of March 15, 1990 to
Exhibit 4(a)(1) (incorporated by reference from Cleco's Form 8-K
dated March 15, 1990) (Commission File No. 1-5663)
4(b) Indenture between Cleco and Bankers Trust Company, as Trustee,
dated as of October 1, 1988 (incorporated by reference from
Cleco's Form S-3 dated October 11, 1988) (Commission File No. 33-
24896)
4(b)(1) Agreement Appointing Successor Trustee dated as of April 1, 1996
by and among Cleco, Bankers Trust Company and The Bank of New
York (incorporated by reference from Cleco's Form S-3 dated April
26, 1996) (Commission File No. 333-02895)
4(c) Trust Indenture (The Industrial Development Board of the Parish
of Rapides, Inc. (Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991) dated as of May 1, 1991,
between The Industrial Development Board
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of the Parish of Rapides, Inc. and First National Bank of
Commerce (incorporated by reference from Cleco's Form 10-K for
the fiscal year ended December 31, 1991) (Commission File No. 1-
5663)
4(c)(1) First Supplemental Trust Indenture (The Industrial Development
Board of the Parish of Rapides, Inc. (Louisiana) Adjustable
Tender Pollution Control Revenue Refunding Bonds, Series 1991)
dated as of May 1, 1993, between The Industrial Development Board
of the Parish of Rapides, Inc. and First National Bank of
Commerce, relating to Exhibit 4(c) (incorporated by reference
from Cleco's Form 10-K for the fiscal year ended December 31,
1994) (Commission File No. 1-5663)
4(d) Refunding Agreement (The Industrial Development Board of the
Parish of Rapides, Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991) dated as of May 1,
1991, between The Industrial Development Board of the Parish of
Rapides, Inc. and First National Bank of Commerce (incorporated
by reference from Cleco's Form 10-Q for the quarter ended June
30, 1991) (Commission File No. 1-5663)
4(e) Trust Indenture (Parish of DeSoto, State of Louisiana Adjustable
Tender Pollution Control Revenue Refunding Bonds, Series 1991A)
dated as of May 1, 1991, between Parish of DeSoto, State of
Louisiana and First National Bank of Commerce (incorporated by
reference from Cleco's Form 10-K for the fiscal year ended
December 31, 1991) (Commission File No. 1-5663)
4(e)(1) First Supplemental Trust Indenture (Parish of DeSoto, State of
Louisiana Adjustable Tender Pollution Control Revenue Refunding
Bonds, Series 1991A) dated as of May 1, 1993, between the Parish
of DeSoto, State of Louisiana and First National Bank of
Commerce, relating to Exhibit 4(e) (incorporated by reference
from Cleco's Form 10-K for the fiscal year ended December 31,
1994) (Commission File No. 1-5663)
4(f) Refunding Agreement Parish of DeSoto, State of Louisiana
Adjustable Tender Pollution Control Revenue Refunding Bonds,
Series 1991A) dated as of May 1, 1991, between the Parish of
DeSoto, State of Louisiana and Cleco (incorporated by reference
from Cleco's Form 10-Q for the quarter ended June 30, 1991)
(Commission File No. 1-5663)
4(g) Trust Indenture (Parish of DeSoto, State of Louisiana Adjustable
Tender Pollution Control Revenue Refunding Bonds, Series 1991B)
dated as of May 1, 1991, between the Parish of DeSoto, State of
Louisiana and First National Bank of Commerce (incorporated by
reference from Cleco's Form 10-K for the fiscal year ended
December 31, 1991) (Commission File No. 1-5663)
II-3
<PAGE> 129
4(g)(1) First Supplemental Trust Indenture (Parish of DeSoto, State of
Louisiana Adjustable Tender Pollution Control Revenue Refunding
Bonds, Series 1991B) dated as of May 1, 1993, between the Parish
of DeSoto, State of Louisiana and First National Bank of
Commerce, relating to Exhibit 4(g) (incorporated by reference
from Cleco's Form 10-K for the fiscal year ended December 31,
1994) (Commission File No. 1-5663)
4(h) Refunding Agreement (Parish of DeSoto, State of Louisiana
Adjustable Tender Pollution Control Revenue Refunding Bonds,
Series 1991B) dated as of May 1, 1991, between the Parish of
DeSoto, State of Louisiana and Cleco (incorporated by reference
from Cleco's Form 10-Q for the quarter ended June 30, 1991)
(Commission File No. 1-5663)
4(i) $100,000,000 Credit Agreement dated as of June 15, 1995, among
Cleco, certain Banks parties thereto, and The Bank of New York,
as Agent (incorporated by reference from Cleco's Form 10-Q for
the quarter ended June 30, 1995) (Commission File No. 1-5663)
4(j) $25,000,000 Loan Agreement dated as of March 20, 1997, between
Whitney National Bank and Cleco (incorporated by reference from
Cleco's Form 10-Q for the quarter ended March 31, 1997)
(Commission File No. 1-5663)
5 Opinion of Phelps Dunbar, L.L.P. as to the legality of the shares
being registered (to be filed by amendment)
8 Opinion of Phelps Dunbar, L.L.P. regarding certain tax matters
(to be filed by amendment)
10(a) 1990 Long-Term Incentive Compensation Plan (incorporated by
reference from Cleco's 1990 Proxy Statement as filed with the
Commission on April ___, 1990) (Commission File No. 1-5663)
10(b) 1981 Incentive Stock Option Plan (incorporated by reference from
Cleco's Form 10-K for the fiscal year ended December 31, 1992)
(Commission File No. 1-5663)
10(c) Participation Agreement, Annual Incentive Compensation Plan
10(d) Deferred Compensation Plan for Directors (incorporated by
reference from Cleco's Form 10-K for the fiscal year ended
December 31, 1992) (Commission File No. 1-5663)
II-4
<PAGE> 130
10(e)(1) Supplemental Executive Retirement Plan (incorporated by reference
from Cleco's Form 10-K for the fiscal year ended December 31,
1992) (Commission File No. 1-5663)
10(e)(2) Form of Supplemental Executive Retirement Plan Participation
Agreement between Cleco and the following officers: Gregory L.
Nesbitt, David M. Eppler, Thomas J. Howlin, Catherine C. Powell
and Darrell J. Dubroc (incorporated by reference from Cleco's
Form 10-K for the fiscal year ended December 31, 1992)
(Commission File No. 1-5663)
10(f) Form of Executive Severance Agreement between Cleco and the
following officers: Gregory L. Nesbitt, David M. Eppler, Thomas
J. Howlin, Catherine C. Powell and Darrell J. Dubroc
(incorporated by reference from Cleco's Form 10-K for the fiscal
year ended December 31, 1995) (Commission File No. 1-5663)
10(h)(1) Term Loan Agreement dated as of April 2, 1991, among the 401(k)
Savings and Investment Plan ESOP Trust, Cleco, as Guarantor, the
Banks listed therein and The Bank of New York, as Agent
(incorporated by reference from Cleco's Form 10-Q for the quarter
ended March 31, 1991) (Commission File No. 1-5663)
10(h)(2) Assignment and Assumption Agreement, effective as of May 6, 1991,
between The Bank of New York and the Canadian Imperial Bank of
Commerce, relating to Exhibit 10(h)(1) (incorporated by reference
from Cleco's Form 10-Q for the quarter ended March 31, 1991)
(Commission File No. 1-5663)
10(h)(3) Assignment and Assumption Agreement, dated as of July 3, 1991,
between The Bank of New York and Rapides Bank and Trust Company
in Alexandria, relating to Exhibit 10(h)(1) (incorporated by
reference from Cleco's Form 10-K for the fiscal year ended
December 31, 1991) (Commission File No. 1-5663)
10(h)(4) Assignment and Assumption Agreement dated as of July 6, 1992,
among The Bank of New York, CIBC, Inc. and Rapides Bank and Trust
Company in Alexandria, as Assignors, the 401(k) Savings and
Investment Plan ESOP Trust, as Borrower, and Cleco, as Guarantor,
relating to Exhibit 10(h)(1) (incorporated by reference from
Cleco's Form 10-K for the fiscal year ended December 31, 1992)
(Commission File No. 1-5663)
10(i) Reimbursement Agreement (The Industrial Development Board of the
Parish of Rapides, Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991) dated as of October
15, 1997, among Cleco, various financial institutions, and
Westdeutsche Landesbank Gironzentrale, New York Branch, as Agent
II-5
<PAGE> 131
10(i)(1) Remarketing Agreement (The Industrial Development Board of the
Parish of Rapides, Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991) dated as of July
19, 1994, between Cleco and PaineWebber Incorporated
(incorporated by reference from Cleco's Form 10-Q for the quarter
ended September 30, 1994) (Commission File No. 1-5663)
10(i)(2) Tender Agreement (The Industrial Development Board of the Parish
of Rapides, Inc. (Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991) dated as of May 1, 1991,
among First National Bank of Commerce, as Trustee, Cleco, The
First National Bank of Chicago, as Tender Agent and Registrar,
Smith Barney, Harris Upham & Co. Incorporated, as Remarketing
Agent, and Swiss Bank Corporation, as Bank (incorporated by
reference from Cleco's Form 10-K for the fiscal year ended
December 31, 1991) (Commission File No. 1-5663)
10(i)(3) Amendment No. 1 to Reimbursement Agreements (The Industrial
Development Board of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue Refunding Bonds,
Series 1991, 1991A and 1991B) dated as of December 9, 1994, among
Cleco, various financial institutions, Swiss Bank Corporation,
New York Branch, as Issuer of the Letters of Credit, and Swiss
Bank Corporation, New York Branch, as Agent, relating to Exhibits
10(i), 10(j) and 10(k) (incorporated by reference from Cleco's
Form 10-K for the fiscal year ended December 31, 1994)
(Commission File No. 1-5663)
10(j) Reimbursement Agreement (Parish of DeSoto, State of Louisiana
Adjustable Tender Pollution Control Revenue Refunding Bonds,
Series 1991) dated as of October 15, 1997, among Cleco, various
financial institutions, and Westdeutsche Landesbank
Gironzentrale, New York Branch, as Agent
10(j)(1) Remarketing Agreement (Parish of DeSoto, State of Louisiana
Adjustable Tender Pollution Control Revenue Refunding Bonds,
Series 1991A) dated as of July 19, 1994, between Cleco and
PaineWebber Incorporated (incorporated by reference from Cleco's
Form 10-Q for the quarter ended September 30, 1994) (Commission
File No. 1-5663)
10(j)(2) Tender Agreement (Parish of DeSoto, State of Louisiana Adjustable
Tender Pollution Control Revenue Refunding Bonds, Series 1991A)
dated as of May 1, 1991, among First National Bank of Commerce,
as Trustee, Cleco, The First National Bank of Chicago, as Tender
Agent and Registrar, Smith Barney, Harris Upham & Co.
Incorporated, as Remarketing Agent, and Swiss Bank Corporation,
as Bank (incorporated by reference from Cleco's Form 10-K for the
fiscal year ended December 31, 1991) (Commission File No. 1-5663)
II-6
<PAGE> 132
10(k) Reimbursement Agreement (Parish of DeSoto, State of Louisiana
Adjustable Tender Pollution Control Revenue Refunding Bonds,
Series 1991B) dated as of October 15, 1997, among Cleco, various
financial institutions, and Westdeutsche Landesbank
Gironzentrale, New York Branch, as Agent
10(k)(1) Remarketing Agreement (Parish of DeSoto, State of Louisiana
Adjustable Tender Pollution Control Revenue Refunding Bonds,
Series 1991B) dated as of July 19, 1994, between Cleco and
PaineWebber Incorporated (incorporated by reference from Cleco's
Form 10-Q for the quarter ended September 30, 1994) (Commission
File No. 1-5663)
10(k)(2) Tender Agreement (Parish of DeSoto, State of Louisiana Adjustable
Tender Pollution Control Revenue Refunding Bonds, Series 1991B)
dated as of May 1, 1991, among First National Bank of Commerce,
as Trustee, Cleco, The First National Bank of Chicago, as Tender
Agent and Registrar, Smith Barney, Harris Upham & Co.
Incorporated, as Remarketing Agent, and Swiss Bank Corporation,
as Bank (incorporated by reference from Cleco's Form 10-K for the
fiscal year ended December 31, 1991) (Commission File No. 1-5663)
10(l) Selling Agency Agreement between Cleco and Salomon Brothers Inc.
Merrill Lynch & Co., Smith Barney Inc. and First Chicago Capital
Markets, Inc. dated as of December 12, 1996 (incorporated by
reference from Cleco's Form S-3 dated December 10, 1996)
(Commission File No. 333-02895)
10(m) 401(k) Savings and Investment Plan ESOP Trust Agreement dated as
of August 1, 1997, between UMB Bank, N.A. and Cleco
10(m)(1) First Amendment to 401(k) Savings and Investment Plan ESOP Trust
Agreement dated as of August 1, 1997, between UMB Bank, N.A. and
Cleco
23 Consent of Independent Accountants (to be filed by amendment)
24* Power of Attorney from each Director and Officer of Cleco whose
signature is affixed to this Form S-4 (included on Page S-1
hereto)
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(i) to file, during any period in which offers or sales are being
made pursuant to this Registration Statement, a post-effective amendment to
this Registration Statement:
II-7
<PAGE> 133
(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(b) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement; and
(c) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
(ii) that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be deemed to be
a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time will be deemed to be the initial
bona fide offering thereof;
(iii) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering;
(iv) 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 Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement will be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering thereof;
(v) that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed underwriters, in
addition to information called for by the other Items of the applicable form;
(vi) that every prospectus (a) that is filed pursuant to the preceding
paragraph, or (b) that purports to meet the requirements of section 10(a)(3) of
the Exchange Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is effective
and that, for purposes of determining any liability under the Securities Act of
1933, each such post-effective amendment will be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof;
II-8
<PAGE> 134
(vii) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4
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; and
(viii) to supply by means of a post-effective amendment all information
concerning a transaction, and Cleco being acquired involved therein, that was
not the subject of and included in the Registration Statement when it became
effective.
II-9
<PAGE> 135
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
Orleans, State of Louisiana, on January 22, 1999.
CLECO CORPORATION
By: /s/ GREGORY L. NESBITT
---------------------------------------
Gregory L. Nesbitt
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Gregory L. Nesbitt, David M. Eppler and Thomas J. Howlin, and each of them,
with full power to act without the other, such person's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this Registration Statement, and any and all amendments
thereto (including pre- and post-effective amendments) or any registration
statement for the same offering that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and to file the same,
with exhibits and schedules thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing necessary or desirable to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on January 22, 1999.
SIGNATURE TITLE
- --------- -----
/s/ GREGORY L. NESBITT Chairman, Chief Executive Officer and
- ------------------------------------ Director
Gregory L. Nesbitt
/s/ THOMAS J. HOWLIN Senior Vice President - Financial
- ------------------------------------ Services and Chief Financial Officer
Thomas J. Howlin
S-1
<PAGE> 136
/s/ SHERIAN G. CADORIA
- ------------------------------------ Director
Sherian G. Cadoria
/s/ RICHARD B. CROWELL
- ------------------------------------ Director
Richard B. Crowell
/s/ DAVID M. EPPLER President, Chief Operating Officer
- ------------------------------------ and Director
David M. Eppler
/s/ J. PATRICK GARRETT
- ------------------------------------ Director
J. Patrick Garrett
/s/ F. BEN JAMES, JR.
- ------------------------------------ Director
F. Ben James, Jr.
/s/ A. DeLOACH MARTIN, JR.
- ------------------------------------ Director
A. DeLoach Martin, Jr.
/s/ ROBERT T. RATCLIFF
- ------------------------------------ Director
Robert T. Ratcliff
/s/ EDWARD M. SIMMONS
- ------------------------------------ Director
Edward M. Simmons
/s/ WILLIAM H. WALKER, JR.
- ------------------------------------ Director
William H. Walker, Jr.
S-2
<PAGE> 137
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------
*3(d) Bylaws of Cleco Holding Corporation
Exhibit Index - 1
<PAGE> 1
EXHIBIT 3(d)
BYLAWS
OF
CLECO CORPORATION
<PAGE> 2
<TABLE>
<S> <C>
ARTICLE I - REGISTERED OFFICE; REGISTERED AGENTS . . . . . . . . . . . . . -1-
Section 1 Registered Office; Registered Agents . . . . . . . . -1-
ARTICLE II - SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . -1-
Section 1. Place of Holding Meetings . . . . . . . . . . . . . . -1-
Section 2. Quorum; Adjournment of Meetings . . . . . . . . . . . -1-
(a) General Rule . . . . . . . . . . . . . . . . . . . . -1-
(b) Special Rule . . . . . . . . . . . . . . . . . . . . -1-
(c) Adjournments . . . . . . . . . . . . . . . . . . . . -2-
Section 3. Annual Meeting . . . . . . . . . . . . . . . . . . . -2-
Section 4. Special Meeting . . . . . . . . . . . . . . . . . . . -2-
Section 5. Conduct of Meetings . . . . . . . . . . . . . . . . . -3-
Section 6. Voting . . . . . . . . . . . . . . . . . . . . . . . -4-
Section 7. Notice . . . . . . . . . . . . . . . . . . . . . . . -5-
Section 8. Amendment of Articles of Incorporation . . . . . . . -6-
(a) Shareholder Proposals . . . . . . . . . . . . . . . . -6-
(b) Effectiveness . . . . . . . . . . . . . . . . . . . . -7-
Section 9. Effectiveness of Other Amendments to Articles of
Incorporation . . . . . . . . . . . . . . . . . . . . . . . -8-
ARTICLE III - DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
Section 1. Certain General Provisions . . . . . . . . . . . . . -9-
(a) Number . . . . . . . . . . . . . . . . . . . . . . . -9-
(b) Classification . . . . . . . . . . . . . . . . . . . -9-
(c) Nominations . . . . . . . . . . . . . . . . . . . . . -9-
(d) Qualifications; Declaration of Vacancy . . . . . . . -10-
(e) Removal . . . . . . . . . . . . . . . . . . . . . . . -11-
(f) Powers . . . . . . . . . . . . . . . . . . . . . . . -12-
(g) Change in Number of Directors . . . . . . . . . . . . -13-
(h) Rights of Preferred Shareholders, etc . . . . . . . . -13-
Section 2. Filling of Vacancies . . . . . . . . . . . . . . . . -13-
Section 3. Annual and Regular Meetings . . . . . . . . . . . . . -14-
Section 4. Special Meetings . . . . . . . . . . . . . . . . . . -14-
Section 5. Place of Meetings; Telephone Meetings . . . . . . . . -14-
Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . . . -14-
Section 7. Compensation . . . . . . . . . . . . . . . . . . . . -14-
Section 8. Committees . . . . . . . . . . . . . . . . . . . . . -15-
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 1. Right to Indemnification - General . . . . . . . . . -15-
Section 2. Certain Provisions Respecting Indemnification for and
Advancement of Expenses . . . . . . . . . . . . . . . -15-
Section 3. Procedure for Determination of Entitlement to
Indemnification . . . . . . . . . . . . . . . . . . . -16-
Section 4. Presumptions and Effect of Certain Proceedings . . . -17-
Section 5. Right of Claimant to Bring Suit . . . . . . . . . . . -18-
Section 6. Non-Exclusivity and Survival of Rights . . . . . . . -18-
Section 7. Definitions . . . . . . . . . . . . . . . . . . . . . -19-
ARTICLE V - EXECUTIVE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . -20-
Section 1. Election and Tenure . . . . . . . . . . . . . . . . . -20-
Section 2. Powers . . . . . . . . . . . . . . . . . . . . . . . -21-
Section 3. Meetings . . . . . . . . . . . . . . . . . . . . . . -21-
Section 4. Compensation . . . . . . . . . . . . . . . . . . . . -21-
ARTICLE VI - AUDIT COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . -21-
Section 1. Election and Tenure . . . . . . . . . . . . . . . . . -21-
Section 2. Audit Committee . . . . . . . . . . . . . . . . . . . -21-
Section 3. Meetings. . . . . . . . . . . . . . . . . . . . . . -22-
Section 4. Compensation. . . . . . . . . . . . . . . . . . . . . -22-
ARTICLE VII - COMPENSATION COMMITTEE . . . . . . . . . . . . . . . . . . . -22-
Section 1. Election and Tenure . . . . . . . . . . . . . . . . . -22-
Section 2. Compensation Committee . . . . . . . . . . . . . . . -22-
Section 3. Meetings . . . . . . . . . . . . . . . . . . . . . . -22-
Section 4. Compensation . . . . . . . . . . . . . . . . . . . . -22-
ARTICLE VIII - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
Section l. Election, Tenure, and Compensation . . . . . . . . . -23-
Section 2. Powers and Duties of Chairman of Board of Directors . -23-
Section 3. Powers and Duties of President . . . . . . . . . . . -23-
Section 4. Powers and Duties of Vice President . . . . . . . . . -23-
Section 5. Powers and Duties of Secretary . . . . . . . . . . . -24-
Section 6. Powers and Duties of Treasurer . . . . . . . . . . . -24-
Section 7. Delegation of Duties . . . . . . . . . . . . . . . . -24-
ARTICLE IX - CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . -24-
Section l. Stock Certificates . . . . . . . . . . . . . . . . . -24-
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
Section 2. Lost or Destroyed Certificates . . . . . . . . . . . -25-
Section 3. Transfer of Shares. . . . . . . . . . . . . . . . . -25-
Section 4. Dividends . . . . . . . . . . . . . . . . . . . . . . -25-
Section 5. Closing Transfer Books; Fixing Record Date . . . . . -25-
ARTICLE X - FAIR-PRICE PROVISIONS . . . . . . . . . . . . . . . . . . . . . -26-
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . -26-
Section 2. Vote Required in Business Combinations . . . . . . . -29-
Section 3. When Voting Requirements Not Applicable . . . . . . . -29-
(a) Definitions . . . . . . . . . . . . . . . . . -29-
(b) Conditions . . . . . . . . . . . . . . . . . . -30-
(c) Other Provisions . . . . . . . . . . . . . . . -33-
ARTICLE XI - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
Section 1. Manner of Giving Notice . . . . . . . . . . . . . . . -33-
Section 2. Waiver of Notice . . . . . . . . . . . . . . . . . . -33-
ARTICLE XII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . -34-
Section 1. Fiscal Year . . . . . . . . . . . . . . . . . . . . . -34-
Section 2. Checks and Drafts . . . . . . . . . . . . . . . . . . -34-
Section 3. Books and Records . . . . . . . . . . . . . . . . . . -34-
Section 4. Separability . . . . . . . . . . . . . . . . . . . . -34-
ARTICLE XIII - AMENDMENT OF BYLAWS . . . . . . . . . . . . . . . . . . . . -34-
Section 1. Voting. . . . . . . . . . . . . . . . . . . . . . . . -34-
Section 2. Shareholder Proposals . . . . . . . . . . . . . . . . -34-
Section 3. Effective Date. . . . . . . . . . . . . . . . . . . . -35-
ARTICLE XIV - OTHER AMENDMENTS TO BYLAWS . . . . . . . . . . . . . . . . . -35-
Section 1. Effective Date . . . . . . . . . . . . . . . . . . . -35-
ARTICLE XV - CONTROL SHARE ACQUISITION STATUTE . . . . . . . . . . . . . . -36-
Section 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
</TABLE>
4
<PAGE> 5
BYLAWS
OF
CLECO CORPORATION
ARTICLE I
Registered Office; Registered Agents
The registered office of the Corporation is 2030 Donahue Ferry Road,
Pineville, Louisiana 71360-5226, and its registered agents are Gregory L.
Nesbitt, post office address 2030 Donahue Ferry Road, Pineville, Louisiana
71360-5226, and David M. Eppler, post office address 2030 Donahue Ferry Road,
Pineville, Louisiana 71360-5226. The Corporation may also have offices at such
other places as the board of directors or the president may from time to time
designate.
ARTICLE II
Shareholders
Section 1. Place of Holding Meetings. All meetings of the
shareholders shall be held at the principal office of the Corporation in the
City of Pineville, State of Louisiana, except in cases in which the notices
thereof designate some other place, which may be within or without the State of
Louisiana.
Section 2. Quorum; Adjournment of Meetings.
(a) General Rule. Except as otherwise provided in these bylaws, the
presence in person or by proxy at a meeting of shareholders of the holders of
record of a number of the shares of the capital stock of the Corporation issued
and outstanding and entitled to vote thereat that represents a majority of the
votes entitled to be cast thereat shall constitute a quorum at such meeting.
(b) Special Rule. At a meeting of shareholders at least one purpose
of which is to amend or repeal a provision of or to supplement these bylaws or
the articles of incorporation of the Corporation or to act on a merger,
consolidation, reclassification, repurchase, or exchange of securities,
transfer of all or substantially all of the assets of the Corporation,
dissolution, "business combination" as defined in article X of these bylaws, or
similar transaction, a quorum shall for all purposes consist of the presence in
person or by proxy at such meeting of the holders of the number of the shares
of the capital stock of the Corporation issued and outstanding and entitled to
vote thereat that represents 80% of the votes entitled to be cast thereat. At
a meeting
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described in the preceding sentence, the quorum for any class of shares
entitled to vote as a class shall be the holders of the number of shares of
such class that represents 80% of the votes entitled to be cast by all holders
of all shares of such class. Notwithstanding the foregoing, if the change in
the articles of incorporation or bylaws, merger, consolidation,
reclassification, repurchase, or exchange of securities, transfer of all or
substantially all of the assets of the Corporation, dissolution, "business
combination" as defined in article X of these bylaws, or similar transaction in
question shall have been approved, before submission of a proposal relating
thereto to a vote of shareholders, by at least 80% of the "continuing
directors" (hereinafter defined) of the Corporation, then, instead of
subsection (b), subsection (a) of this section 2 shall determine the quorum at
the meeting of shareholders at which such proposal is considered by
shareholders. For purposes of the preceding, a "continuing director" shall
mean a director elected pursuant to a solicitation of proxies by the board of
directors of the Corporation at an annual meeting of shareholders held at least
90 days before the date of determination and who has served continuously since
such election, or a director elected by continuing directors to fill a vacancy.
(c) Adjournments. If less than a quorum shall be in attendance at the
time for which a meeting shall have been called, such meeting may, without any
notice other than by announcement at such meeting, be adjourned from time to
time by the vote of the shareholders present in person or by proxy representing
a majority of the votes so present, for a period not exceeding one month at any
one time, without notice other than by announcement at the meeting, until a
quorum shall attend; provided, however, that a meeting at which a director or
directors are to be elected shall be adjourned only from day to day until such
director or directors have been elected. A meeting at which a quorum is
present may also be adjourned in like manner. At an adjourned meeting at which
a quorum shall attend, any business may be transacted which might have been
transacted if such meeting had been held as originally called.
Section 3. Annual Meeting. Except as otherwise provided by
resolution of the board of directors, the annual meeting of shareholders for
the election of directors shall be held on the third Friday after the first
Monday in April of each year. At each annual meeting, the shareholders shall
elect directors to succeed those whose terms have expired as of the date of
such annual meeting. Such other matters as may properly come before a meeting
may be acted upon at an annual meeting.
Section 4. Special Meeting.
(a) Special meetings of the shareholders for any purpose or purposes
may be called by the president, by a majority of the board of directors, or by
a majority of the executive committee, if any, of the board of directors;
provided, however, that if and whenever dividends payable on any series of the
Corporation's preferred stock shall be in default in an amount equal to the
aggregate dividends payable in any period of 12 consecutive calendar months, a
special meeting shall be called on the demand in writing of the holders of
record of a majority of the outstanding shares of preferred stock; and,
provided further, that a special meeting of shareholders may be
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called by a shareholder or shareholders as provided in the Corporation's
articles of incorporation, these bylaws, or otherwise by law.
(b) Any shareholder requesting that a special meeting of shareholders
be called (the "Requesting Person") shall, at the time of making the request,
submit written evidence, reasonably satisfactory to the secretary of the
Corporation, that the Requesting Person is a shareholder of the Corporation and
shall identify in writing (i) the reason or reasons for which the special
meeting is to be called, (ii) the number of shares of each class of capital
stock of the Corporation owned beneficially by the Requesting Person, (iii) all
other persons with whom the Requesting Person is acting in concert, and (iv)
the number of shares of capital stock beneficially owned by each such person
with whom the Requesting Person is acting in concert. Within 15 days after the
Requesting Person has submitted the aforesaid items to the secretary of the
Corporation, the secretary of the Corporation shall determine whether the
evidence of the Requesting Person's status as a shareholder submitted by the
Requesting Person is reasonably satisfactory and shall notify the Requesting
Person in writing of his determination. If the Requesting Person fails to
submit the requisite information in the form or at the time indicated, or if
the secretary of the Corporation fails to find such evidence of shareholder
status reasonably satisfactory, then the request to call a special meeting of
shareholders shall be deemed invalid (by reason of failure to comply with these
bylaws) and no special meeting of shareholders shall be held pursuant to such
request. Beneficial ownership shall be determined in accordance with section 1
of article X of these bylaws. Nothing in this subsection (b) shall affect the
rights of the Corporation's shareholders as provided in section 3(b) of article
6 of the Corporation's articles of incorporation or as provided in subsection
(a) immediately preceding with respect to the rights of the Corporation's
preferred shareholders.
Section 5. Conduct of Meetings. Meetings of shareholders shall be
presided over by the president of the Corporation or, if he is not present at a
meeting, by such other person as the board of directors shall designate or, if
no such person is designated by the board of directors, the most senior officer
of the Corporation present at the meeting. The secretary of the Corporation,
if present, shall act as secretary of each meeting of shareholders; if he is
not present at a meeting, then such person as may be designated by the
presiding officer shall act as secretary of the meeting. Meetings of
shareholders shall follow reasonable and fair procedure. Subject to the
foregoing, the conduct of any meeting of shareholders and the determination of
procedure and rules shall be within the absolute discretion of the presiding
officer (the "Chairman of the Meeting"), and there shall be no appeal from any
ruling of the Chairman of the Meeting with respect to procedure or rules.
Accordingly, in any meeting of shareholders or part thereof, the Chairman of
the Meeting shall have the sole power to determine appropriate rules or to
dispense with theretofore prevailing rules. Without limiting the foregoing,
the following rules shall apply:
(a) The Chairman of the Meeting may ask or require that anyone not a
bona fide shareholder or proxy leave the meeting.
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(b) A resolution or motion shall be considered for vote only if
proposed by a shareholder or duly authorized proxy, and seconded by an
individual, who is a shareholder or a duly authorized proxy, other than the
individual who proposed the resolution or motion, subject to compliance with
any other requirements concerning such a proposed resolution or motion
contained in these bylaws. The Chairman of the Meeting may propose any motion
for vote. The order of business at all meetings of shareholders shall be
determined by the Chairman of the Meeting.
(c) The Chairman of the Meeting may impose any reasonable limits with
respect to participation in the meeting by shareholders, including, but not
limited to, limits on the amount of time at the meeting taken up by the remarks
or questions of any shareholder, limits on the numbers of questions per
shareholder, and limits as to the subject matter and timing of questions and
remarks by shareholders.
(d) Before any meetings of shareholders, the board of directors may
appoint any persons other than nominees for office to act as inspectors of
election at the meeting or its adjournment. If no inspectors of election are
so appointed, the Chairman of the Meeting may, and on the request of any
shareholder or a shareholder's proxy shall, appoint inspectors of election at
the meeting of shareholders. The number of inspectors shall be three. If any
person appointed as inspector fails to appear or fails or refuses to act, the
Chairman of the Meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill such vacancy.
The duties of these inspectors shall be as follows:
(1) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies;
(2) Receive votes or ballots;
(3) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(4) Count and tabulate all votes;
(5) Report to the board of directors the results based on the
information assembled by the inspectors; and
(6) Do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
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Notwithstanding the foregoing, the final certification of the results of any
election or other matter acted upon at a meeting of shareholders shall be made
by the board of directors.
Section 6. Voting. Except as otherwise provided by the articles of
incorporation, each holder of shares of capital stock of the Corporation shall
be entitled, at each meeting of shareholders, to one vote for each share of
such stock standing in his name on the books of the corporation on the date of
such meeting or, if the board of directors, pursuant to section 5 of article IX
of these bylaws, shall have fixed a record date for the purpose of such meeting
or shall have fixed a date as of which the books of the Corporation shall be
temporarily closed against transfers of shares, then as of such date; except
that in the election of directors of the Corporation, each holder of shares of
common stock of the Corporation shall have the right to multiply the number of
votes to which he may be entitled by the number of directors to be elected, and
he may cast all such votes for one candidate or he may distribute them among
any two or more candidates. A shareholder may vote either in person or by
proxy appointed by an instrument in writing, subscribed by such shareholder or
by his duly authorized attorney. Except as otherwise provided by law, the
articles of incorporation, or these bylaws, all elections shall be had and all
questions shall be decided by a majority of the votes cast at a duly
constituted meeting at which a quorum is present.
Section 7. Notice.
(a) Unless otherwise provided by the articles of incorporation,
written or printed notice, stating the place, day, and hour of each meeting of
shareholders, and, in the case of a special meeting, the business proposed to
be transacted thereat, shall be given in the manner provided in article XI of
these bylaws to each shareholder entitled to vote at such meeting, at least 15
days before an annual meeting and at least five days before a special meeting.
(b) Except as provided in subsection (c) of this section, to be
properly brought before any meeting of the shareholders, business must be
either (i) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the board of directors pursuant to subsection (a) of
this section 7, (ii) otherwise properly brought before the meeting by or at the
direction of the board of directors, or (iii) otherwise properly brought before
the meeting by a shareholder. In addition to any other applicable
requirements, including (without limitation) requirements imposed by federal
securities laws pertaining to proxies, for business to be properly brought
before any meeting by a shareholder, the shareholder must have given timely
notice thereof in writing to the secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation at least 120 days prior to the
meeting; provided, however, that in the event that less than 135 days' notice
or prior public disclosure of the date of any meeting of shareholders is given
or made to shareholders by the Corporation, notice by the shareholder to be
timely must be so received not later than the close of business of the 15th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs. A shareholder's
notice to the secretary of the Corporation shall set forth in writing as to
each matter
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the shareholder proposes to bring before any meeting of the shareholders (i) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (ii) the name and
record address of the shareholder proposing such business, (iii) the name of
all other persons with whom the shareholder is acting in concert, (iv) the
class and number of shares of the Corporation which are beneficially owned by
the shareholder, (v) the class and number of shares of the Corporation which
are beneficially owned by each such person with whom the shareholder is acting
in concert, and (vi) any material interest of the shareholder, or any such
person with whom the shareholder is acting in concert, in such business.
Beneficial ownership shall be determined in accordance with section 1 of
article X of these bylaws.
Except as provided in subsection (c) of this section 7, notwithstanding
anything in these bylaws to the contrary, no business shall be conducted at any
meeting of the shareholders except in accordance with the procedures set forth
in this section 7 of article II, provided, however, that nothing in this
section 7 of article II shall be deemed to preclude discussion by any
shareholder as to any business properly brought before any meeting of the
shareholders.
The Chairman of the Meeting shall, if the facts warrant, determine and
declare at any meeting of the shareholders that business was not properly
brought before the meeting of shareholders in accordance with the provisions of
this section 7 of article II, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted. A determination whether a matter is or is not
properly before the meeting shall not depend on whether such proposal has been
or will be included in any proxy statement delivered or to be delivered to the
Corporation's shareholders.
Nothing in this subsection (b) shall affect the rights of the
Corporation's shareholders as provided in section 3(b) of article 6 of the
Corporation's articles of incorporation or as provided in subsection (a) of
section 4 of article II of these bylaws with respect to the rights of the
Corporation's preferred shareholders.
(c) Nothing in subsection (b) of this section 7 shall apply to the
following provisions of these bylaws or any proposal by a shareholder or
shareholders with respect to any matter governed by any of the following
provisions:
Article II, section 8(a);
Article III, section 1(c);
Article III, section 1(e); and
Article XIII, section 2.
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Section 8. Amendment of Articles of Incorporation.
(a) Shareholder Proposals. No proposal by a shareholder to amend or
supplement the articles of incorporation of the Corporation shall be voted upon
at a meeting of shareholders unless, at least 180 days before such meeting of
shareholders, such shareholder shall have delivered in writing to the secretary
of the Corporation (i) notice of such proposal and the text of such amendment
or supplement, (ii) evidence, reasonably satisfactory to the secretary of the
Corporation, of such shareholder's status as such and of the number of shares
of each class of the capital stock of the Corporation beneficially owned by
such shareholder, (iii) a list of the names of other beneficial owners of
shares of the capital stock of the Corporation, if any, with whom such
shareholder is acting in concert, and of the number of shares of each class of
the capital stock of the Corporation beneficially owned by each such beneficial
owner, and (iv) an opinion of counsel, which counsel and the form and substance
of which opinion shall be reasonably satisfactory to the board of directors of
the Corporation, to the effect that the articles of incorporation of the
Corporation, as proposed to be so amended or supplemented, would not be in
conflict with the laws of the State of Louisiana. Within 30 days after such
shareholder shall have delivered the aforesaid items to the secretary of the
Corporation, the secretary and the board of directors of the Corporation shall
respectively determine whether the items to be ruled upon by them are
reasonably satisfactory and shall notify such shareholder in writing of their
respective determinations. If such shareholder fails to submit a required item
in the form or within the time indicated, or if the secretary or the board of
directors of the Corporation determines that the items to be ruled upon by them
are not reasonably satisfactory, then such proposal by such shareholder may not
be voted upon by the shareholders of the Corporation at such meeting of
shareholders. Beneficial ownership shall be determined in accordance with
section 1 of article X of these bylaws.
(b) Effectiveness. No provision amending or supplementing, or
purporting to amend or supplement, the articles of incorporation of the
Corporation that would have an effect, direct or indirect, on any of the
following items may be included in articles of amendment signed by any officer,
agent or representative of the Corporation on behalf of the Corporation or
delivered to the Secretary of State of Louisiana for filing of record until the
later of (i) one year following the adoption by the shareholders of such
amendment or supplement or (ii) 10 days after the adjournment sine die of the
annual meeting of shareholders next succeeding the adoption by the shareholders
of the Corporation of such amendment or supplement:
(1) quorum at a regular or special meeting of shareholders;
(2) procedures for amendment of the articles of incorporation
or bylaws of the Corporation upon a proposal by a shareholder of the
Corporation;
(3) the effective date of an amendment to the articles of
incorporation or bylaws of the Corporation, or the time at which steps
may be taken to effect an amendment to the articles of incorporation or
bylaws of the Corporation; or
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(4) votes of shareholders of the Corporation required to
approve (i) an amendment or supplement to or repeal of the bylaws of the
Corporation, (ii) an amendment or supplement to the articles of
incorporation of the Corporation, or (iii) a merger, consolidation,
share exchange, reclassification of securities, repurchase of shares,
transfer of all or substantially all of the assets of the Corporation,
dissolution, "business combination" as defined in article X of these
bylaws, or similar transaction.
Section 9. Effectiveness of Other Amendments to Articles of
Incorporation. No provision amending or supplementing, or purporting to amend
or supplement, the articles of incorporation of the Corporation that would have
an effect, direct or indirect, on any of the following items may be included in
articles of amendment signed by any officer, agent or representative of the
Corporation on behalf of the Corporation or delivered to the Secretary of State
of Louisiana for filing of record until the later of (i) one year following the
adoption by the shareholders of such amendment or supplement or (ii) 10 days
after the adjournment sine die of the annual meeting of the shareholders next
succeeding the adoption by the shareholders of the Corporation of such
amendment or supplement:
(1) the number of directors of the Corporation;
(2) the classification of the board of directors of the Corporation
into three classes of as nearly as possible equal size;
(3) the procedures for nomination by a shareholder of persons to be
elected as directors of the Corporation;
(4) qualifications of directors of the Corporation or the declaration
by the board of directors of a vacancy in the office of director;
(5) removal of directors or officer of the Corporation;
(6) power of directors of the Corporation;
(7) the filling of vacancies on the board of directors of the
Corporation and the election of directors to fill newly created directorships;
(8) powers of committees of the board of directors of the
Corporation;
(9) the calling of special meetings of shareholders;
(10) determinations of the presiding person at a meeting of
shareholders; or
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(11) votes of shareholders of the Corporation required to approve the
removal of a director;
provided, however, that the foregoing shall apply to item (9) above only with
respect to a provision adopted by the shareholders subsequent to the annual
meeting of shareholders in April 1991 or an adjournment thereof.
ARTICLE III
Directors
Section 1. Certain General Provisions.
(a) Number. The corporate powers of the Corporation shall be vested
in and exercised, and the business and affairs of the Corporation shall be
managed, by a board of directors which shall consist of ten directors.
(b) Classification. The board of directors of the Corporation shall
be divided into three classes of as nearly as possible equal size, with the
term of office of directors of one class expiring each year. At each annual
meeting of shareholders, the successors to the class of directors whose terms
shall have expired at such meeting shall be elected to hold office for a term
expiring at the third annual meeting succeeding such meeting.
(c) Nominations. Nominations for election of members of the board of
directors may be made by the board of directors or by a shareholder. The name
of a person to be nominated by a shareholder (a "Nominator") as a member of the
board of directors of the Corporation must be submitted in writing to the
secretary of the Corporation not fewer than 180 days before the date of the
meeting of shareholders at which such person is proposed to be nominated. The
Nominator shall also submit written evidence, reasonably satisfactory to the
secretary of the Corporation, that the Nominator is a shareholder of the
Corporation and shall identify in writing (i) the number of shares of each
class of capital stock of the Corporation beneficially owned by the Nominator,
(ii) all other persons with whom the Nominator is acting in concert, and (iii)
the number of shares of capital stock of the corporation beneficially owned by
each such person with whom the Nominator is acting in concert. At such time,
the Nominator shall also submit in writing (1) the information with respect to
each such proposed nominee which would be required to be provided in a proxy
statement prepared in accordance with regulation 14A under the Securities
Exchange Act of 1934, as amended, (2) to the extent not provided in the
information submitted pursuant to (1) immediately preceding or otherwise
provided pursuant to this subsection (c), (w) a description of all arrangements
or understandings between the Nominator and each such proposed nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the Nominator, (x) the name, age,
business address and residence address, business experience or other
qualifications of each such proposed nominee, (y) the principal occupation or
employment of
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each such proposed nominee, and (z) the number of shares of capital stock
beneficially owned by each such proposed nominee, and (3) a notarized affidavit
executed by each such proposed nominee to the effect (x) that, if elected as a
member of the board of directors, he will serve, (y) that he has reviewed the
provisions of section 1 of this article III of these bylaws, and (z) that he is
eligible for election as a member of the board of directors. Within 30 days
after the Nominator has submitted the aforesaid items to the secretary of the
Corporation, the secretary of the Corporation shall determine whether the
evidence of the Nominator's status as a shareholder submitted by the Nominator
is reasonably satisfactory and shall notify the Nominator in writing of his
determination with respect thereto. The failure of the secretary of the
Corporation to find such evidence reasonably satisfactory, or the failure of
the Nominator to submit the requisite information in the form or within the
time indicated, shall make the person to be nominated ineligible for nomination
at the meeting of shareholders at which such person is proposed to be
nominated. Beneficial ownership shall be determined in accordance with section
1 of article X of these bylaws.
(d) Qualifications; Declaration of Vacancy.
(1) No person shall be eligible for election or reelection as
a director after attaining age 72, and no person who is or shall have
been a full-time officer or employee of the Corporation or any
subsidiary thereof shall be eligible for election or reelection as a
director after attaining age 65 or (even if under 65) after such
director's employment by the Corporation has terminated.
(2) Upon attaining the age of 72 or 65, as specified in
paragraph (1) immediately preceding, a director may continue to serve as
a director of the Corporation until no later than the next succeeding
annual meeting of shareholders, at which time, unless he has previously
ceased to be a member of the board of directors of the Corporation, his
position as a director shall cease. Notwithstanding the foregoing, with
regard to a director of the Corporation who is also an officer or
employee of the Corporation or any subsidiary thereof, such director's
position as a director shall cease immediately upon termination of such
director's employment by the Corporation.
(3) No person shall be eligible for election or reelection or
to continue to serve as a member of the board of directors who is an
officer, director, agent, representative, partner, employee, or nominee
of, or otherwise acting at the direction of, or acting in concert with,
(y) a "public utility company" (other than one owned or controlled by
the Corporation) or "holding company" (other than one owned or
controlled by the Corporation) as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended, or "public utility"
(other than one owned or controlled by the Corporation) as such term is
defined in Section 201(e) of the Federal Power Act of 1920, as amended,
or (z) an "affiliate" (as defined in rule 405 (17 C.F.R. Section
230.405) under the Securities Act of 1933, as amended) of any of the
persons or entities specified in clause (y) immediately preceding.
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(4) Upon the occurrence of any of the events described in
paragraph (2) of this subsection (d), the affected director shall cease
to be a director of the Corporation at the time specified in such
paragraph. Determination of the eligibility of a person for election,
reelection, or continued service on the board of directors under other
provisions of this subsection (d) or otherwise as provided by applicable
law including, but not limited to, occurrence of an event specified in
section 81.C(2) of the Louisiana Business Corporation Law, shall,
subject to the provisions of paragraph (6) below, be made by vote of a
majority of the members of the board of directors. If the board of
directors, pursuant to such a determination, determines that a person is
ineligible for election, reelection, or continued service on the board
of directors, such ineligibility shall be effective immediately upon
such determination, and, if the affected person is a director of the
Corporation at the time of such determination, his position as a
director shall cease at such time.
Within 30 days after a Nominator has submitted the name of a
person to be nominated as a member of the board of directors, the board
of directors shall determine whether the proposed nominee is eligible
for election under this subsection (d) and shall notify the Nominator in
writing of its determination. If the board of directors shall determine
that such proposed nominee is not eligible for election, such person
shall be ineligible to be nominated at the meeting of shareholders for
which his nomination was proposed.
(5) If a director of the Corporation ceases to be a director
(x) at the annual meeting of shareholders next succeeding the day upon
which he attained the age of 72 or 65, as specified in paragraphs (1),
(2), and (4) of this subsection (d), and if there is time remaining in
the regularly scheduled term of office of such director, (y) because of
termination of employment, as provided in paragraphs (1), (2), and (4)
of this subsection (d), or (z) upon the determination of the board of
directors of the Corporation pursuant to paragraph (4) of this
subsection (d) that a director of the Corporation is no longer qualified
to continue serving as a director of the Corporation, the board of
directors shall declare the office held by such director vacant and may
fill such vacancy as provided in section 2 of this article III of these
bylaws.
(6) Without limiting the ability of the board of directors as
provided by applicable law to declare vacant the position of a director
on the board of directors, if a member of the board of directors has
been adjudged by a court of competent jurisdiction to be guilty of
fraud, criminal conduct (other than minor traffic violations), gross
abuse of office amounting to a breach of trust, or similar misconduct,
and no appeal (or further appeal) therefrom is permitted under
applicable law, the other directors then in office, by unanimous vote,
may declare the position occupied by such director vacant, and such
other directors may fill such vacancy as provided in section 2 of this
article III of these bylaws.
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(e) Removal. In this subsection (e), the terms "remove" and "removal"
and their related grammatical forms shall refer only to the process of
dismissal provided for in this subsection, and shall not be deemed to refer to
disqualification of a director, cessation of a director to be such, or
declaration of a vacancy in the office of director as provided for in
subsection (d) of this section 1 or otherwise as permitted by law.
A member of the board of directors may be removed by the shareholders of
the Corporation only for cause. Any such removal for cause shall be at a
special meeting of shareholders called for such purpose. The vote of the
holders of shares conferring 80% of the total votes of all shares of capital
stock of the Corporation voting as a single class shall be necessary to remove
a director; provided, however, that if a director has been elected by the
exercise of the privilege of cumulative voting, such director may not be
removed if the votes cast against his removal would be sufficient to elect him
if then cumulatively voted at an election of the class of directors of which he
is a part. For purposes of this subsection (e), cause for removal shall exist
only if a director shall have been adjudged by a court of competent
jurisdiction to be guilty of fraud, criminal conduct (other than minor traffic
violations), gross abuse of office amounting to a breach of trust, or similar
misconduct, and no appeal (or further appeal) therefrom shall be permitted
under applicable law.
No proposal by a shareholder to remove a director of the Corporation
shall be voted upon at a meeting of shareholders unless, at least 180 days
before such meeting, such shareholder shall have delivered in writing to the
secretary of the Corporation (1) notice of such proposal, (2) a statement of
the grounds on which such director is proposed to be removed, (3) evidence,
reasonably satisfactory to the secretary of the Corporation, of such
shareholder's status as such and of the number of shares of each class of the
capital stock of the Corporation beneficially owned by such shareholder, (4) a
list of the names of other beneficial owners of shares of the capital stock of
the Corporation, if any, with whom such shareholder is acting in concert, and
of the number of shares of each class of the capital stock of the Corporation
beneficially owned by each such beneficial owner, and (5) an opinion of
counsel, which counsel and the form and substance of which opinion shall be
reasonably satisfactory to the board of directors of the Corporation (excluding
the director proposed to be removed), to the effect that, if adopted at a duly
called special meeting of the shareholders of the Corporation by the vote of
the holders of shares conferring 80% of the total votes of all shares of the
capital stock of the Corporation voting as single class, such removal would not
be in conflict with the laws of the State of Louisiana, the articles of
incorporation of the Corporation, or these bylaws. Within 30 days after such
shareholder shall have delivered the aforesaid items to the secretary of the
Corporation, the secretary and the board of directors of the Corporation shall
respectively determine whether the items to be ruled upon by them are
reasonably satisfactory and shall notify such shareholder in writing of their
respective determinations. If such shareholder fails to submit a required item
in the form or within the time indicated, or if the secretary or the board of
directors of the Corporation determines that the items to be ruled upon by
them, respectively, as provided above are not reasonably satisfactory, then
such proposal by such shareholder may not be voted upon by
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the shareholders of the Corporation at such meeting of shareholders. Beneficial
ownership shall be determined as specified in section 1 of article X of these
bylaws.
(f) Powers. Subject to the provisions of the laws of the State of
Louisiana, the articles of incorporation of the Corporation, and these bylaws,
the board of directors shall have and exercise, in addition to such powers as
are set forth in the articles of incorporation, all of the powers which may be
exercised by the Corporation, including, but without thereby limiting the
generality of the above, the power to create and to delegate, with power to
subdelegate, any of its powers to any committee, officer, or agent; provided,
however, that the board of directors shall not have the power to delegate its
authority to:
(1) amend, repeal, or supplement the bylaws of the
Corporation;
(2) take definitive action on a merger, consolidation,
reclassification or exchange of securities, repurchase by the
Corporation of any of its equity securities, transfer of all or
substantially all of the assets of the Corporation, dissolution,
"business combination" as defined in article X of these bylaws, or
similar action;
(3) elect or remove a director or officer of the Corporation;
(4) submit a proposal to shareholders for action by
shareholders;
(5) appoint a director to or remove a director from a
committee of the board of directors; or
(6) declare a dividend on the capital stock of the
Corporation.
(g) Change in Number of Directors. No amendment or supplement to or
repeal of subsection (a) of section 1 of article III of these bylaws that would
have the effect of increasing the number of authorized directors of the
Corporation by more than two during any 12-month period shall be permitted
unless at least 80% of the "continuing directors" then in office (as defined in
subsection (b) of section 2 of article II of these bylaws) shall authorize such
action. If the number of directorships is changed for any reason, any increase
or decrease in the number of directorships shall be apportioned among the
classes so as to make all classes as nearly equal in number as possible.
(h) Rights of Preferred Shareholders, etc. Nothing in this section 1
of this article III of these bylaws shall affect the rights of the
Corporation's shareholders as provided in section 3(b) of article 6 of the
Corporation's articles of incorporation.
Section 2. Filling of Vacancies. Except to the extent required by law
or section 3(b) of article 6 of the articles of incorporation of the
Corporation, newly created directorships resulting from any increase in the
authorized number of directors and any vacancies in the board
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of directors resulting from the attainment by a director of the age of 72 or
65, as specified in paragraphs (1), (2), (4), and (5) of subsection (d) of
section 1 of this article III, or from death, resignation, disqualification or
removal of a director, or from failure of the shareholders to elect the full
number of authorized directors, or from any other cause shall be filled by the
affirmative vote of at least a majority of the remaining directors (or
director) then in office, even though less than a quorum of the whole board.
Any director elected in accordance with the preceding sentence shall hold
office for the remainder of the full term of the class of directors in which
the new directorship was created or the vacancy occurred. Except to the extent
required by law or section 3(b) of article 6 of the articles of incorporation
of the Corporation, the shareholders shall have no right to fill any vacancies
in the board of directors.
Section 3. Annual and Regular Meetings. Within 45 days after each
annual meeting of shareholders, and if possible on the date of each annual
meeting of shareholders immediately following each such meeting, the board of
directors shall hold an annual meeting for the purpose of electing officers and
transacting other corporate business. Such meeting shall be called in the
manner for calling regular or special meetings of the board of directors.
Other regular meetings of the board of directors shall be held on the
fourth Friday in January and on the third Friday after the first Monday in the
months of July and October at such places as the president may direct in the
notices of such meetings. At least five days' notice by mail or written
telecommunication shall be given to each director of the time and place of
holding each regular meeting of the board of directors.
Section 4. Special Meetings. A special meeting of the board of
directors may be called by the president, to be held at such place as he may
direct in the notice of such meeting, on four days' notice by mail or three
days' notice by written telecommunication, to each director. A special meeting
shall be called by the president in like manner on the written request of at
least 50% of the members of the board.
Section 5. Place of Meetings; Telephone Meetings. A meeting of the
board of directors may be held either within or without the State of Louisiana.
The time and place of holding a regular or special meeting of the board of
directors may be changed and another place and time fixed for such regular or
special meeting by a majority of the members of the board.
The members of the board of directors, and a committee thereof, may
participate in and hold a meeting of the board or of such committee by means of
conference telephone or similar communications equipment provided that all
persons participating in such meeting can hear and communicate with one
another. Participation in a meeting pursuant to this provision shall constitute
presence in person at such meeting, except where a person participates in such
meeting for the express purpose of objecting to the transaction of any business
on the grounds that such meeting was not lawfully called or convened.
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Section 6. Quorum. A majority of the directors shall constitute a
quorum, but a smaller number may adjourn a meeting from time to time without
further notice until a quorum is secured. If a quorum is present, the directors
present can continue to do business until adjournment notwithstanding the
subsequent withdrawal of enough directors to leave less than a quorum or the
refusal of any director present to vote.
Section 7. Compensation. Each director shall be entitled to receive
from the Corporation reimbursement of his expenses incurred in attending any
regular or special meeting of the board and, by resolution of the board, such
other compensation as it may approve. Such reimbursement and compensation shall
be payable whether or not an adjournment be had because of the absence of a
quorum. Nothing herein contained shall be construed to preclude any director
from serving the Corporation in another capacity and receiving compensation
therefor.
Section 8. Committees. From time to time, the board of directors may
appoint, from its own number, in addition to the committees provided for in
these bylaws, such other committee or committees for such purpose or purposes
as it shall determine. Subject to the limitations imposed by these bylaws, the
articles of incorporation, and the laws of the State of Louisiana, each
committee of the board of directors shall have such powers as shall be
specified in the resolution of appointment.
ARTICLE IV
Indemnification
Section 1. Right to Indemnification - General. The Corporation shall
indemnify any person who was or is, or is threatened to be made, a party to or
otherwise involved in any pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing
or other proceeding, whether civil, criminal, administrative or investigative
(any such threatened, pending or completed proceeding being hereinafter called
a "Proceeding") by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another business,
foreign or nonprofit corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise (whether the basis of his involvement in such
Proceeding is alleged action in an official capacity or in any other capacity
while serving as such), to the fullest extent permitted by applicable law in
effect on October 1, 1986, and to such greater extent as applicable law may
thereafter from time to time permit, from and against expenses, including
attorney's fees, judgments, fines, amounts paid or to be paid in settlement,
liability and loss, ERISA excise taxes, actually and reasonably incurred by him
or on his behalf or suffered in connection with such Proceeding or any claim,
issue or matter therein; provided, however, that, except as provided in section
5 of this article, the Corporation shall indemnify any such person claiming
indemnity in connection with a Proceeding initiated by such person only if such
Proceeding was authorized by the board of directors.
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Section 2. Certain Provisions Respecting Indemnification for and
Advancement of Expenses.
(a) To the extent that a person referred to in section 1 of this
article is required to serve as a witness in any Proceeding referred to
therein, he shall be indemnified against all Expenses (as hereinafter defined)
actually and reasonably incurred by him or on his behalf in connection with
serving as a witness.
(b) The Corporation shall from time to time pay, in advance of final
disposition, all Expenses incurred by or on behalf of any person referred to in
section 1 of this article claiming indemnity thereunder in respect of any
Proceeding referred to therein. Each such advance shall be made within ten days
after the receipt by the Corporation of a statement from the claimant
requesting the advance, which statement shall reasonably evidence the relevant
Expenses and be accompanied or preceded by any such undertaking as may be
required by applicable law respecting the contingent repayment of such
Expenses. Whenever and to the extent applicable law requires the board of
directors to act in the specific case with respect to the payment of Expenses
in advance of the final disposition of any Proceeding, the board of directors
shall act with respect thereto within the period specified in the preceding
sentence and shall withhold the payment of Expenses in advance only if there is
a reasonable and prompt determination by the board of directors by a majority
vote of a quorum of Disinterested Directors (as hereinafter defined), or (if
such quorum is not obtainable or, even if obtainable, a quorum of Disinterested
Directors so directs) by Independent Counsel (as hereinafter defined) in a
written opinion, that advancement of Expenses is inappropriate, even taking
into account any undertaking given with respect to the repayment of such
Expenses, because based on the facts then known there is no reasonable
likelihood that the claimant would be able ultimately to demonstrate that he
met the standard of conduct necessary for indemnification with respect to such
Expenses.
Section 3. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this article, a claimant shall
submit to the Corporation a written application. The secretary of the
Corporation shall, promptly upon receipt of such an application for
indemnification, advise the board of directors in writing of the application.
In connection with any such application, the claimant shall provide such
documentation and information as is reasonably requested by the Corporation and
reasonably available to him and relevant to a determination of entitlement to
indemnification.
(b) A person's entitlement to indemnification under this article,
unless ordered by a court, shall be determined, as required or permitted by
applicable law: (i) by the board of directors by a majority vote of a quorum
consisting of Disinterested Directors, (ii) if a quorum of the board of
directors consisting of Disinterested Directors is not obtainable or, even if
obtainable, a quorum of Disinterested Directors so directs, by Independent
Counsel in a written opinion, or (iii) by the shareholders of the Corporation;
provided, however, that if a Change of Control (as hereinafter defined) shall
have occurred, no determination of entitlement to
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indemnification adverse to the claimant shall be made other than one made or
concurred in by Independent Counsel, selected as provided in paragraph (d) of
this section, in a written opinion.
(c) If the determination of entitlement to indemnification is to be
made by Independent Counsel in the absence of a Change of Control, the
Corporation shall furnish notice to the claimant within ten days after receipt
of the application for indemnification specifying the identity and address of
Independent Counsel. The claimant may, within fourteen days after receipt of
such written notice of selection, deliver to the Corporation a written
objection to such selection, subject to paragraph (e) of this section. If such
an objection is made, either the Corporation or the claimant may petition any
court of competent jurisdiction for a determination that the objection has no
reasonable basis or for the appointment as Independent Counsel of counsel
selected by the court.
(d) If there has been a Change of Control, Independent Counsel to act
as and to the extent required by paragraph (b) of this section or paragraph (b)
of section 2 shall be selected by the claimant, who shall give the Corporation
written notice advising of the identity and address of the Independent Counsel
so selected. The Corporation may, within seven days after receipt of such
written notice of selection, deliver to the claimant a written objection to
such selection, subject to paragraph (e) of this section. The claimant may,
within five days after the receipt of such objection, select other counsel to
act as Independent Counsel, and the Corporation may, within seven days after
receipt of such written notice of selection, deliver to the claimant a written
objection, as aforesaid, to such second selection. In the case of any such
objection the claimant may petition any court of competent jurisdiction for a
determination that the objection has no reasonable basis or for the appointment
as Independent Counsel of counsel selected by the court.
(e) Any objection to the selection of Independent Counsel may be
asserted only on the ground that the counsel so selected does not qualify as
Independent Counsel under the definition contained in section 7 of this
article, and the objection shall set forth with particularity the basis of such
assertion. No counsel selected by the Corporation or by the claimant may serve
as Independent Counsel if a timely objection has been made to his selection
unless a court has determined that such objection has no reasonable basis.
(f) The Corporation shall pay any and all reasonable fees and
expenses of Independent Counsel acting pursuant to this article and in any
proceeding in which such counsel is a party or a witness in respect of its
investigation and report. The Corporation shall pay all reasonable fees and
expenses incident to the procedures of this section regardless of the manner in
which Independent Counsel is selected or appointed.
Section 4. Presumptions and Effect of Certain Proceedings.
(a) A person referred to in section 1 of this article claiming a
right to indemnification under this article shall be presumed (except as may be
otherwise expressly provided in this article
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or required by applicable law) to be entitled to such indemnification upon
submission of an application for indemnification in accordance with section 3,
and the Corporation shall have the burden of proof to overcome the presumption
in any determination contrary to the presumption.
(b) Unless the determination is to be made by Independent Counsel, if
the person or persons empowered under section 3 of this article to determine
entitlement to indemnification shall not have made and furnished the
determination in writing to the claimant within 60 days after receipt by the
Corporation of the application for indemnification, the determination of
entitlement to indemnification shall be deemed to have been made in favor of
the claimant unless the claimant knowingly misrepresented a material fact in
connection with the application or such indemnification is prohibited by law.
The termination of any Proceeding, or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contender or
its equivalent, shall not of itself adversely affect the right of a claimant to
indemnification or create a presumption that a claimant did not act in a manner
which would deny him the right to indemnification.
Section 5. Right of Claimant to Bring Suit.
(a) If (i) a determination is made pursuant to the procedures
contemplated by section 3 of this article that a claimant is not entitled to
indemnification under this article, (ii) advancement of Expenses is not timely
made pursuant to paragraph (b) of section 2 of this article, (iii) Independent
Counsel has not made and delivered a written opinion as to entitlement to
indemnification within 90 days after the selection or appointment of counsel
has become final by virtue of the lapse of time for objection or the overruling
of objections or appointment of counsel by a court, or (iv) payment of a claim
for indemnification is not made within five days after a favorable
determination of entitlement to indemnification has been made or deemed to have
been made pursuant to section 3 or 4 of this article, the claimant shall be
entitled to bring suit against the Corporation to establish his entitlement to
such indemnification or advancement of Expenses and to recover the unpaid
amount of his claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for Expenses incurred in defending any
Proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant did
not meet the applicable standard of conduct which makes it permissible for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be upon the Corporation. Neither the failure of the
Corporation (including its board of directors, Independent Counsel or its
shareholders) to have made a determination before the commencement of such
action that indemnification of the claimant is proper under the circumstances
because he has met such applicable standard of conduct, nor an actual
determination by the Corporation (including its board of directors, Independent
Counsel or its shareholders) that the claimant has not met the applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct, and the
claimant shall be entitled to a de novo trial on the merits as to any such
matter as to which no determination or an adverse determination has been made.
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(b) If a claimant is successful in whole or in part in prosecuting
any claim referred to in paragraph (a) of this section, the claimant shall also
be entitled to recover from the Corporation, and shall be indemnified by the
Corporation against, any and all Expenses actually and reasonably incurred by
him in prosecuting such claim.
Section 6. Non-Exclusivity and Survival of Rights. The rights of
indemnification and to receive advancement of Expenses contemplated by this
article shall not be deemed exclusive of any other rights to which any person
may at any time be entitled under any bylaw, agreement, authorization of
shareholders or directors (regardless of whether directors authorizing such
indemnification are beneficiaries thereof), or otherwise, both as to action in
his official capacity and as to action in another capacity; provided that no
other indemnification measure shall permit indemnification of any person for
the results of such person's willful or intentional misconduct.
The Corporation may procure or maintain insurance or other similar
arrangement, at its expense, to protect itself and any director, officer,
employee or agent of the Corporation or other corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss
asserted against or incurred by such person, whether or not the Corporation
would have the power to indemnify such person against such expense or
liability.
In considering the cost and availability of such insurance, the
Corporation, in the exercise of its business judgment, may purchase insurance
which provides for any and all of (i) deductibles, (ii) limits on payments
required to be made by the insurer, or (iii) coverage which may not be as
comprehensive as that previously included in insurance purchased by the
Corporation. The purchase of insurance with deductibles, limits on payments and
coverage exclusions will be deemed to be in the best interest of the
Corporation but may not be in the best interest of certain of the persons
covered thereby. As to the Corporation, purchasing insurance with deductibles,
limits on payments, and coverage exclusions is similar to the Corporation's
practice of self-insurance in other areas. In order to protect the officers and
directors of the Corporation, the Corporation shall indemnify and hold each of
them harmless as provided in section 1 of this article IV, without regard to
whether the Corporation would otherwise be entitled to indemnify such officer
or director under the other provisions of this article IV, to the extent (i) of
such deductibles, (ii) of amounts exceeding payments required to be made by an
insurer or (iii) that prior policies of officers and directors liability
insurance held by the Corporation would have provided for payment to such
officer or director. Notwithstanding the foregoing provisions of this section
6, no person shall be entitled to indemnification for the results of such
person's willful or intentional misconduct. This section 6 is authorized by
section 83(E) of the Louisiana Business Corporation Law as in effect on October
1, 1986, and further is intended to establish an arrangement of self-insurance
pursuant to section 83(F) of the Louisiana Business Corporation Law as in
effect on October 1, 1986.
The right to indemnification conferred in this article shall be a
contract right, and no amendment, alteration or repeal of this article or any
provision thereof shall restrict the indemnification rights granted by this
article as to any person claiming indemnification with
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respect to acts, events and circumstances that occurred, in whole or in part,
before such amendment, alteration or repeal. The provisions of this article
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of his heirs, executors and
legal representatives.
Section 7. Definitions. For purposes of this article:
(a) "Change of Control" means the occurrence after October 1, 1986 of
any of the following events or circumstances: (1) there shall have occurred an
event required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Securities Exchange Act of 1934, as amended (the
"Act"), whether or not the Corporation is then subject to such reporting
requirement; (2) (i) any "person" (as such term is used in Section 13(d) and
14(d) of the Act) shall have become the "beneficial owner", (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Corporation
representing 30% or more of the combined voting power of the Corporation's then
outstanding voting securities without the prior approval of at least two-thirds
of the members of the board of directors in office immediately before such
person's attaining such percentage interest; (3) the Corporation is a party to
a merger, consolidation, sale of assets or other reorganization, or the subject
of a proxy contest, as a consequence of which members of the board of directors
in office immediately before such transaction or event constitute less than a
majority of the board of directors thereafter; (4) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the board of directors (including for this purpose any new director whose
election or nomination for election by the Corporation's shareholders was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period) cease for any reason to
constitute at least a majority of the board of directors.
(b) "Disinterested Director" means a director of the Corporation who
is not and was not a party to the Proceeding in respect of which
indemnification is sought as provided in this article.
(c) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.
(d) "Independent Counsel" means a law firm, or a member of a law
firm, with substantial experience in matters of corporation law that neither
presently is, nor in the five years before his selection or appointment has
been, retained to represent: (i) the Corporation or person claiming
indemnification in any matter material to either, or (ii) any other party to
the Proceeding giving rise to a claim for indemnification hereunder, and is not
otherwise precluded under applicable professional standards from acting in the
capacity herein contemplated.
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ARTICLE V
Executive Committee
Section 1. Election and Tenure. The board of directors may appoint an
executive committee consisting of such number of directors as it may appoint,
to serve at the pleasure of the board of directors, but in any event not beyond
the next annual meeting of the board of directors. The board may at any time,
without notice, remove and replace any member of the executive committee.
Section 2. Powers. Subject to the provisions of subsection (f) of
section 1 of article III of these bylaws, the executive committee shall have
and may exercise all powers of the board of directors between meetings of the
board.
Section 3. Meetings. The executive committee shall meet at stated
times or on notice to all by one of its number, in which notice the time and
place of the meeting shall be set forth. The executive committee shall fix its
own rules of procedure, and a majority shall constitute a quorum; but the
affirmative vote of a majority of the whole committee shall be necessary in
every case. The executive committee shall keep regular minutes of its
proceedings and report the same to the board of directors.
Section 4. Compensation. Members of the executive committee, other
than officers of the Corporation, shall receive such compensation for their
services as shall be prescribed by the board of directors. Each member of the
executive committee shall be entitled to receive from the Corporation
reimbursement of his expenses incurred in attending a meeting of such
committee.
ARTICLE VI
Audit Committee
Section 1. Election and Tenure. The board of directors may appoint an
audit committee, consisting of such number of directors as it may appoint, to
serve at the pleasure of the board of directors, but in any event not beyond
the next annual meeting of the board of directors. The board may at any time,
without notice, remove and replace any member of the audit committee.
Section 2. Audit Committee. The audit committee shall recommend to
the board of directors the accounting firm to be selected by the board or to be
recommended by it for shareholder approval, as independent auditors of the
Corporation and its subsidiaries, and to act on behalf of the board in meeting
and reviewing with the independent auditors, the chief internal auditor, and
the appropriate corporate officers matters relating to corporate financial
reporting and accounting procedures and policies, adequacy of financial,
accounting, and operating
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controls, and the scope of the respective audits of the independent auditors
and the internal auditor. The audit committee shall review the results of each
audit with the respective auditing agency and shall promptly report thereon to
the board of directors. The audit committee shall additionally submit to the
board of directors any recommendations it may have from time to time with
respect to financial reporting and accounting practices and policies and
financial, accounting, and operational controls and safeguards including
establishment and implementation of standards of proper employee and corporate
conduct. Subject to the provisions of subsection (f) of section 1 of article
III of these bylaws, the audit committee shall have such other functions as may
be authorized or directed from time to time by the board of directors.
Section 3. Meetings. The audit committee shall meet at stated times
or on notice to all by one of its number, in which notice the time and place of
the meeting shall be set forth. The audit committee shall fix its own rules of
procedure, and a majority shall constitute a quorum; but the affirmative vote
of a majority of the whole committee shall be necessary in every case. The
audit committee shall keep regular minutes of its proceedings and report the
same to the board of directors.
Section 4. Compensation. Members of the audit committee, other than
officers of the Corporation, shall receive such compensation for their services
as shall be prescribed by the board of directors. Each member of the audit
committee shall be entitled to receive from the Corporation reimbursement of
his expenses incurred in attending a meeting of the audit committee.
ARTICLE VII
Compensation Committee
Section 1. Election and Tenure. The board of directors may appoint a
compensation committee, consisting of such number of directors as it may
appoint, to serve at the pleasure of the board of directors, but in any event
not beyond the next annual meeting of the board of directors. The board may at
any time, without notice, remove and replace any member of the compensation
committee.
Section 2. Compensation Committee. The compensation committee shall
make recommendations to the board of directors concerning the compensation of
the executives and other employees of the Corporation and matters related to
benefits for employees. Subject to the provisions of subsection (f) of section
1 of article III of these bylaws, the compensation committee shall have such
other functions as may be authorized or directed from time to time by the board
of directors.
Section 3. Meetings. The compensation committee shall meet at stated
times or on notice to all by one of its number, in which notice the time and
place of the meeting shall be set forth. The compensation committee shall fix
its own rules of procedure, and a majority shall
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constitute a quorum; but the affirmative vote of the majority of the whole
committee shall be necessary in every case. The compensation committee shall
keep regular minutes of its proceedings and report the same to the board of
directors.
Section 4. Compensation. Members of the compensation committee, other
than officers of the Corporation, shall receive such compensation for their
services as shall be prescribed by the board of directors. Each member of the
compensation committee shall be entitled to receive from the Corporation
reimbursement of his expenses incurred in attending a meeting of the
compensation committee.
ARTICLE VIII
Officers
Section l. Election, Tenure, and Compensation. The officers of the
Corporation shall consist of a president, one or more vice presidents, a
secretary, a treasurer, and such other officers, including a chairman of the
board of directors, as may from time to time be elected or appointed by the
board of directors. Officers of the Corporation shall be elected annually by
the board of directors as provided in section 3 of article III of these bylaws.
If such annual election is not held, the officers then in office shall remain
as such until their respective successors shall be elected and qualify. No
officer, except the chairman of the board of directors, need be a director, and
any two or more offices, except the offices of president and vice president,
may be held by one person. The powers of all officers of the Corporation shall
be subject to the provisions of subsection (f) of section 1 of article III of
these bylaws.
Section 2. Powers and Duties of Chairman of Board of Directors. The
chairman of the board of directors, if any, shall, when present, preside at all
meetings of the board of directors. He shall be chief executive officer of the
Corporation and, as such, he shall (a) have general and active management of
the business of the Corporation, (b) have the general supervision and direction
of the other officers of the Corporation and shall see that their duties are
properly performed, (c) see that all orders and resolutions of the board of
directors are carried into effect, (d) have the power to execute contracts and
conveyances on behalf of the Corporation, and (e) perform such other functions
normally performed by a chief executive officer. The chairman of the board of
directors shall perform such other duties as from time to time may be delegated
to him by the board of directors.
Section 3. Powers and Duties of President. The president shall be the
chief executive officer of the Corporation when no chairman of the board has
been elected and, as such, shall perform the duties specified for the chief
executive officer in section 2 of this article VIII. The president shall be
chief operating officer of the Corporation and, subject to the direction of the
chairman of the board of directors, if any, shall be responsible for the
administration and operation of the Corporation's business. He shall have the
power to execute and deliver contracts
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and conveyances (including without limitation conveyances of real and personal
property to and by the Corporation) for and on behalf of the Corporation.
Section 4. Powers and Duties of Vice President. The board of
directors may appoint one or more vice presidents. Each vice president shall
have the power to execute contracts and conveyances on behalf of the
Corporation, and shall have such other powers and shall perform such other
duties as may be assigned to him by the board of directors or by the president.
Section 5. Powers and Duties of Secretary. The secretary shall attend
and record, in a book kept for such purpose, the proceedings of all meetings of
the shareholders of the Corporation and of the board of directors. He shall
keep an account of stock registered and transferred in such manner as the board
of directors may prescribe. He shall keep the seal of the Corporation and, when
authorized by the board of directors or the executive committee, he shall affix
the seal of the Corporation to any instrument requiring the same, and attest
the same by his signature, or cause the same to be attested by the signature of
an assistant secretary. He shall give proper notice of meetings of shareholders
and directors and shall perform such other duties as shall be assigned to him.
Assistant secretaries shall have such duties as the board of directors may from
time to time prescribe.
Section 6. Powers and Duties of Treasurer. The treasurer shall have
custody of the funds and securities of the Corporation, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation, and shall deposit or cause to be deposited all moneys and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the board of directors. He shall disburse
or cause to be disbursed the funds of the Corporation as may be ordered by the
board of directors, executive committee, or president, taking proper vouchers
for such disbursements, and shall render to the president, and the directors at
the regular meetings of the board of directors, or whenever they require it, an
account of all his transactions as treasurer and of the financial condition of
the Corporation, and at the regular meeting of the board of directors next
preceding the annual shareholders' meeting, a like report for the preceding
fiscal year. He shall give the Corporation a bond, if required by the board of
directors, in such sum and in form and with security satisfactory to the board
of directors, for the faithful performance of the duties of his office and the
restoration to the Corporation, in case of his death, resignation, or removal
from office, of all books, papers, vouchers, moneys, and other property of
whatever kind in his possession belonging to the Corporation. He shall perform
such other duties as the board of directors or executive committee may from
time to time prescribe. Assistant treasurers shall have such duties as the
board of directors may from time to time prescribe.
Section 7. Delegation of Duties. In case of the absence or disability
of any officer of the Corporation, or for any other reason deemed sufficient by
the board of directors, the board of directors may delegate such officer's
powers or duties for the time being to any other officer, to any employee with
management responsibility, or to any director.
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ARTICLE IX
Capital Stock
Section l. Stock Certificates. Certificates representing shares of
the capital stock of the Corporation shall be signed by either the president or
one of the vice presidents of the Corporation and also by the secretary or an
assistant secretary, or the treasurer or an assistant treasurer. Such
certificates shall have affixed an impression of the seal of the Corporation.
Where such certificates are countersigned by a transfer agent and by a
registrar, both of which may be the same institution, the signatures of such
officers and the seal of the Corporation thereon may be facsimiles, engraved or
printed. If an officer of the Corporation who shall have signed a certificate
of capital stock, or whose facsimile signature has been affixed for such
purpose, shall cease to be such officer of the Corporation before the stock
certificate so signed shall have been issued by the Corporation, such stock
certificate may nevertheless be issued and delivered with the same force and
effect as though the person who signed such certificate or whose facsimile
signature has been affixed for such purpose had not ceased to be such officer
of the Corporation.
Section 2. Lost or Destroyed Certificates. The board of directors may
determine the conditions upon which a new certificate for capital stock of the
Corporation may be issued in place of a certificate which is alleged to have
been lost, stolen, or destroyed and may, in its discretion, require the owner
of such certificate or his legal representative to give bond with sufficient
surety to the Corporation to indemnify it against any loss or claim which may
arise by reason of the issue of a new certificate in the place of the one so
alleged to have been lost, stolen, or destroyed.
Section 3. Transfer of Shares. The shares of capital stock of the
Corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the Corporation by
the delivery thereof to the person in charge of the stock or transfer books and
ledgers, or to such other person as the board of directors may designate, by
whom they shall be canceled. New certificates shall thereupon be issued,
representing the shares so transferred. A record shall be made of each
transfer.
Section 4. Dividends. Dividends upon the capital stock may be
declared by the board of directors at a regular or special meeting out of the
net profits or surplus of the Corporation. Before paying a dividend or making a
distribution of profits, there may be set aside out of the accumulated profits
of the Corporation such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve fund for meeting
contingencies or for equalizing dividends or for repairing or maintaining
property of the Corporation or for such other purpose as the directors shall
think conducive to the interests of the Corporation.
Section 5. Closing Transfer Books; Fixing Record Date. The board of
directors may fix the time, not exceeding 60 days preceding the date of a
meeting of shareholders, a dividend
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payment date, or a date for the allotment of rights, during which the books of
the Corporation shall be temporarily closed against transfers of stock; or, in
lieu thereof, the board of directors may fix a date, not exceeding 60 days
preceding the date of a meeting of shareholders, a dividend payment date, or a
date for the allotment of rights, as a date for the taking of a record of the
shareholders entitled to notice of and to vote at such meeting, or entitled to
receive such dividends or such rights, as the case may be; and only
shareholders of record on such date shall be entitled to notice of and to vote
at such meeting, or to receive such dividends or rights, as the case may be.
ARTICLE X
Fair-Price Provisions
Section 1. Definitions. As used in article X of these bylaws, the
following terms shall have the indicated meanings:
(a) "Affiliate," including the term "affiliated person," means a
person that directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with, a specified person.
(b) "Associate," when used to indicate a relationship with any
person, means any of the following:
(1) A corporation or organization, other than the Corporation
or a subsidiary of the Corporation, of which such person is an officer,
director, or partner or is, directly or indirectly, the beneficial owner
of 10% or more of any class of equity securities.
(2) A trust or other estate on which such person has a
substantial beneficial interest or as to which such person serves as
trustee or in a similar fiduciary capacity.
(3) A relative or spouse of such person, or any relative of
such spouse, who has the same home as such person or who is a director
or officer of the Corporation or any of its affiliates.
(c) "Beneficial owner," when used with respect to voting stock, means
any of the following:
(1) A person who individually or with any of his affiliates or
associates beneficially owns voting stock, directly or indirectly.
(2) A person who individually or with any of his affiliates or
associates has either of the following rights:
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(A) To acquire voting stock, whether such right is
exercisable immediately or only after the passage of time,
pursuant to any agreement, arrangement, or understanding or upon
the exercise of conversion rights, exchange rights, warrants, or
options, or otherwise.
(B) To vote voting stock pursuant to any agreement,
arrangement, or understanding.
(3) A person who has any agreement, arrangement, or
understanding for the purpose of acquiring, holding, voting, or
disposing voting stock with any other person who beneficially owns or
whose affiliates beneficially own, directly or indirectly, such shares
of voting stock.
(d) "Business combination" means any of the following:
(1) Except for a merger, consolidation, or share exchange that
does not alter the contract rights of the stock as expressly set forth
in the articles of incorporation of the Corporation or change or convert
in whole or in part the outstanding shares of the Corporation, any
merger, consolidation, or share exchange of the Corporation or any
subsidiary with:
(A) An interested shareholder; or
(B) Another corporation, whether or not itself an
interested shareholder, which is, or after the merger,
consolidation, or share exchange would be, an affiliate of an
interested shareholder that was an interested shareholder before
the transaction.
(2) A sale, lease, transfer, or other disposition, other than
in the ordinary course of business, in one transaction or a series of
transactions in any twelve-month period, to an interested shareholder or
any affiliate of an interested shareholder, other than the Corporation
or any of its subsidiaries, of any assets of the Corporation or any
subsidiary having, measured at the time the transaction or transactions
are approved by the board of directors of the Corporation, an aggregate
book value as of the end of the Corporation's most recently ended fiscal
quarter of 10% or more of the total market value of the outstanding
stock of the Corporation or of its net worth as of the end of its most
recently ended fiscal quarter.
(3) The issuance or transfer by the Corporation or any
subsidiary, in one transaction or a series of transactions, of any
equity securities of the Corporation or any subsidiary which has an
aggregate market value of five percent or more of the total market value
of the outstanding stock of the Corporation, to any interested
shareholder or any affiliate of any interested shareholder, other than
the Corporation or any of its
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subsidiaries, except pursuant to the exercise of warrants or rights to
purchase securities offered pro rata to all holders of the Corporation's
voting stock or any other method affording substantially proportionate
treatment of the holders of voting stock.
(4) The adoption of a plan or proposal for the liquidation or
dissolution of the Corporation in which anything other than cash will be
received by an interested shareholder or an affiliate of an interested
shareholder.
(5) A reclassification of securities, including a reverse
stock split or recapitalization of the Corporation, or any merger,
consolidation, or share exchange of the Corporation with any of its
subsidiaries which has the effect, directly or indirectly, in one
transaction or a series of transactions, of increasing by five percent
or more of the total number of outstanding shares the proportionate
amount of the outstanding shares of any class of equity securities of
the Corporation or any subsidiary which is directly or indirectly owned
by an interested shareholder or an affiliate of an interested
shareholder.
(e) "Common stock" means stock other than preferred or preference
stock.
(f) "Control," including the terms "controlling," "controlled by,"
and "under common control with," means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, by contract, or
otherwise. The beneficial ownership of 10% or more of the votes entitled to be
cast of a corporation's voting stock creates a presumption of control.
(g) "Equity security" means any of the following:
(1) Stock or a similar security, certificate of interest, or
participation on any profit sharing agreement, voting trust certificate,
or certificate of deposit for an equity security.
(2) A security convertible, with or without consideration,
into an equity security, or any warrant or other security carrying any
right to subscribe to or purchase an equity security.
(3) Any put, call, straddle, or other option or privilege of
buying an equity security from or selling an equity security to another
without being bound to do so.
(h) (l) "Interested shareholder" means any person other than the
Corporation or any subsidiary that is either of the following:
(A) The beneficial owner, directly or indirectly, of
10% or more of the voting power of the outstanding voting stock
of the Corporation.
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(B) An affiliate of the Corporation who at any time
within the two-year period immediately before the date in
question was the beneficial owner, directly or indirectly, of l0%
or more of the voting power of the then outstanding voting stock
of the Corporation.
(2) For the purpose of determining whether a person is an
interested shareholder, the number of shares of voting stock deemed to
be outstanding shall include shares deemed owned by the person through
application of subsection (c) of this section, but may not include any
other shares of voting stock which may be issuable pursuant to any
agreement, arrangement, or understanding, or upon exercise of conversion
rights, warrants, or options, or otherwise.
(i) "Market value" means the following:
(A) In the case of stock, the highest closing sale price
during the 30-day period immediately preceding the date in question of a
share of such stock 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 bid quotation with respect to a share of such stock
during the 30-day period 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
determined by the board of directors of the Corporation in good faith.
(B) 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
the board of directors of the Corporation in good faith.
(j) "Subsidiary" means any corporation of which voting stock having a
majority of the votes entitled to be cast is owned, directly or indirectly, by
the Corporation.
(k) "Voting stock" means shares of capital stock of a corporation
entitled to vote generally in the election of directors.
Section 2. Vote Required in Business Combinations. In addition to any
vote otherwise required by law or the articles of incorporation of the
Corporation, a business combination shall be recommended by the board of
directors and approved by the affirmative vote of at least each of the
following:
(a) 80% of the votes entitled to be cast by outstanding shares of
voting stock of the Corporation voting together as a single voting group.
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(b) Two-thirds of the votes entitled to be cast by holders of voting
stock other than voting stock held by the interested shareholder who is or
whose affiliate is a party to the business combination or an affiliate or
associate of the interested shareholder, voting together as a single voting
group.
Section 3. When Voting Requirements Not Applicable.
(a) Definitions. For purposes of subsection (b) of this section, the
following terms shall have the indicated meanings:
(1) "Announcement date" means the first general public
announcement of a proposal or intention to make a proposal of a business
combination or its first communication generally to shareholders of the
Corporation, whichever is earlier.
(2) "Determination date" means the date on which an interested
shareholder first became an interested shareholder.
(3) "Valuation date" means the following:
(A) For a business combination voted upon by
shareholders, the later of (i) the day before the day of the
shareholders' vote or (ii) the day 20 days before the
consummation of the business combination.
(B) For a business combination not voted upon by
shareholders, the date of the consummation of the business
combination.
(b) Conditions. The vote required by section 2 of this article X
shall not apply to a business combination, as defined in section 1 of this
article X, if each of the following conditions is met:
(1) The aggregate amount of the cash and the market value as
of the valuation date of consideration other than cash to be received
per share by holders of common stock in such business combination is at
least equal to the highest of the following:
(A) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting dealers' fees,
paid by the interested shareholder for any shares of common stock of
the same class or series that he acquired:
(i) within the two-year period immediately
before the announcement date of the proposal of the
business combination; or
(ii) in the transaction in which he became an
interested shareholder, whichever is higher; or
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(B) The market value per share of common stock of the
same class or series on the announcement date or on the
determination date, whichever is higher; or
(C) The price per share equal to the market value per
share of common stock of the same class or series determined
pursuant to subparagraph (B) immediately preceding, multiplied by
the fraction of:
(i) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting
dealers' fees, paid by the interested shareholder for
shares of common stock of the same class or series that he
acquired within the two-year period immediately before the
announcement date, over
(ii) The market value per share of common stock
of the same class or series on the first day in such
two-year period on which the interested shareholder
acquired shares of common stock.
(2) The aggregate amount of the cash and the market value as
of the valuation date of consideration other than cash to be received
per share by holders of shares of any class or series of outstanding
stock other than common stock is at least equal to the highest of the
following, whether or not the interested shareholder has previously
acquired shares of a particular class or series of stock:
(A) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting dealers'
fees, paid by the interested shareholder for any shares of such
class of stock that he acquired:
(i) within the two-year period immediately before
the announcement date of the proposal of the business
combination; or
(ii) in the transaction in which he became an
interested shareholder, whichever is higher; or
(B) The highest preferential amount per share to which
the holders of shares of such class of stock are entitled in the
event of voluntary or involuntary liquidation, dissolution, or
winding up of the Corporation; or
(C) The market value per share of such class of stock
on the announcement date or on the determination date, whichever
is higher; or
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(D) The price per share equal to the market value per
share of such class of stock determined pursuant to subparagraph
(C) immediately preceding, multiplied by the fraction of:
(i) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting
dealers' fees, paid by the interested shareholder for such
shares of voting stock acquired by him within the two-year
period immediately before the announcement date, over
(ii) The market value per share of the same class
of voting stock on the first day on such two-year period
on which the interested shareholder acquired shares of the
same class of voting stock.
(3) The consideration to be received by holders of any class
or series of outstanding stock is to be in cash or in the same form as
the interested shareholder previously paid for shares of the same class
or series of stock. If the interested shareholder has paid for shares of
any class of stock with varying forms of consideration, the form of
consideration for such class of stock shall be either cash or the form
used to acquire the largest number of shares of such class or series of
stock that he previously acquired.
(4) (A) After the interested shareholder has become an
interested shareholder and before the consummation of such business
combination:
(i) There shall have been no failure to declare
and pay at the regular date therefor any full periodic
dividends, cumulative or not, on any outstanding preferred
stock of the Corporation;
(ii) There shall have been:
(aa) No reduction in the annual rate of
dividends paid on any class or series of stock of
the Corporation that is not preferred stock except
as necessary to reflect any subdivision of such
stock; and
(bb) An increase in such annual rate of
dividends as shall have been necessary to reflect
reclassification, including reverse stock split,
recapitalization, reorganization, or similar
transaction, which shall have the effect of
reducing the number of outstanding shares of such
stock; and
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(iii) The interested shareholder did not become
the beneficial owner of additional shares of stock of the
Corporation except as part of the transaction which
resulted in such interested shareholder's becoming an
interested shareholder or by virtue of proportionate stock
splits or stock dividends.
(B) The provisions of (i) and (ii) of subparagraph (A)
shall not apply if neither an interested shareholder nor an
affiliate or associate of an interested shareholder voted as a
director of the Corporation in a manner inconsistent with (i) and
(ii), and the interested shareholder, within 10 days after an act
or failure to act inconsistent with such subparagraphs' shall
have notified the board of directors of the Corporation in
writing that the interested shareholder disapproves thereof and
requests in good faith that the board of directors rectify such
act or failure to act.
(5) After the interested shareholder has become an interested
shareholder, the interested shareholder may not have received the
benefit, directly or indirectly, except proportionately as a
shareholder, of loans, advances, guarantees, pledges, or other financial
assistance, or tax credits or other tax advantages, provided by the
Corporation or any of its subsidiaries, whether in anticipation of or in
connection with such business combination or otherwise.
(c) Other Provisions.
(1) Section 2 of this article X shall not apply to a business
combination with a particular interested shareholder or his existing or
future affiliates that has been approved or exempted therefrom by
resolution of the board of directors of the Corporation; provided,
however, that any such resolution shall have been adopted before the
time that such interested shareholder first became an interested
shareholder.
(2) Unless by its terms a resolution adopted under this
subsection is made irrevocable, it may be altered or repealed by the
board of directors, but this shall not affect a business combination
that has been consummated or is the subject of an existing agreement
entered into before the alteration or repeal.
ARTICLE XI
Notices
Section 1. Manner of Giving Notice. Notice required to be given under
the provisions of these bylaws to a director, officer, or shareholder shall not
be construed to mean personal notice, but may be given by depositing written or
printed notice in a post office or letter box in a postpaid wrapper addressed
to such director, officer, or shareholder at such address as appears on
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the books of the Corporation, such notice to be deemed to have been given at
the time when the same shall have been thus mailed; or, if such person has
provided a telecommunications address to the Corporation, such notice may be
given by prepaid written telecommunication sent to such address and in such
event shall be deemed to have been given at the time when the same shall have
been transmitted.
Section 2. Waiver of Notice. Any shareholder, officer, or director
may waive, in writing or by written telecommunication, whether before or after
the time stated, any notice required to be given under these bylaws.
ARTICLE XII
Miscellaneous
Section 1. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of January and end on the last day of December in each
year.
Section 2. Checks and Drafts. All checks, drafts, and orders for the
payment of money shall be signed by the treasurer or by such other officer or
officers or agents as the board of directors may from time to time designate.
No check shall be signed in blank.
Section 3. Books and Records. The books, accounts, and records of the
Corporation shall, subject to the limitations fixed by law, be open to
inspection by the shareholders at such times and subject to such regulations as
the board of directors may prescribe.
Section 4. Separability. If one or more of the provisions of these
bylaws shall be held to be invalid, illegal, or unenforceable, such invalidity,
illegality, or unenforceability shall not affect any other provision hereof and
these bylaws shall be construed as if such invalid, illegal, or unenforceable
provision or provisions had never been contained herein.
ARTICLE XIII
Amendment of Bylaws
Section 1. Voting. These bylaws may be amended, repealed, or
supplemented at any regular meeting of the board of directors, or at any
special meeting called for such purpose, by the affirmative vote of a majority
of the board of directors; provided, however, that in each instance an
amendment, repeal, or supplement shall not be inconsistent with the law or the
articles of incorporation of the Corporation and shall be subject to the power
of the shareholders to amend, repeal, or supplement the bylaws so made but only
upon the affirmative vote of at least 80% of all shares of capital stock
entitled to vote thereon.
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Section 2. Shareholder Proposals. No proposal by a shareholder to
amend, repeal, or supplement the bylaws of the Corporation may be voted upon at
a meeting of shareholders unless, at least 180 days before such meeting of
shareholders, such shareholder shall have delivered in writing to the secretary
of the Corporation (a) notice of such proposal and the text of the proposed
amendment, repeal, or supplement, (b) evidence, reasonably satisfactory to the
secretary of the Corporation, of such shareholder's status as such and of the
number of shares of each class of capital stock of the Corporation of which
such shareholder is the beneficial owner, (c) a list of the names of other
beneficial owners of shares of the capital stock of the Corporation, if any,
with whom such shareholder is acting in concert, and the number of shares of
each class of capital stock of the Corporation beneficially owned by each such
beneficial owner, and (d) an opinion of counsel, which counsel and the form and
substance of which opinion shall be reasonably satisfactory to the board of
directors of the Corporation, to the effect that the bylaws (if any) resulting
from the adoption of such proposal would not be in conflict with the articles
of incorporation of the Corporation or the laws of the State of Louisiana.
Within 30 days after such shareholder shall have submitted the aforesaid items,
the secretary and the board of directors of the Corporation shall respectively
determine whether the items to be ruled upon by them are reasonably
satisfactory and shall notify such shareholder in writing of their respective
determinations. If such shareholder fails to submit a required item in the form
or within the time indicated, or if the secretary or the board of directors of
the Corporation determine that the items to be ruled upon by them are not
reasonably satisfactory, then such proposal by such shareholder may not be
voted upon by the shareholders of the Corporation at such meeting of
shareholders. Beneficial ownership shall be determined in accordance with
section 1 of article X of these bylaws.
Section 3. Effective Date. No amendment or supplement to or repeal of
any of the following provisions of these bylaws, whether resulting from action
of the directors or the shareholders, shall take effect until the later of (i)
one year following the adoption of such amendment, supplement, or repeal, or
(ii) 10 days after the adjournment sine die of the annual meeting of
shareholders next succeeding the adoption of such amendment, supplement, or
repeal:
Article II, section 2;
Article II, section 8;
Article X; and
Article XIII.
ARTICLE XIV
Other Amendments to Bylaws
Section 1. Effective Date. No amendment or supplement to or repeal of
any of the following provisions of these bylaws, whether resulting from action
of the directors or the shareholders, shall take effect until the later of (i)
one year following the adoption of such
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amendment, supplement, or repeal, or (ii) 10 days after the adjournment sine
die of the annual meeting of shareholders next succeeding the adoption of such
amendment, supplement, or repeal:
Article II, section 4;
Article II, section 5;
Article II, section 7;
Article II, section 9;
Article III, section 1;
Article III, section 2; and
Article XIV;
provided, however, that the board of directors shall have the power at any
time, free from the foregoing restrictions, but subject to the provisions of
subsection (g) of section 1 of article III of these bylaws, to amend or
otherwise change subsections (a) and (d)(1) of section 1 of article III of
these bylaws, and, with respect to any amendments to or changes in such
subsection (d)(1), to make appropriate conforming changes in such section 1.
ARTICLE XV
Control Share Acquisition Statute
Section 1. Pursuant to section 136 of the Louisiana Business
Corporation Law as in effect on January 25, 1991, the provisions of sections
135 through 140.2 of the Louisiana Business Corporation Law, enacted as part of
Title 12 of the Louisiana Revised Statutes, shall not apply to "control share
acquisitions" (as defined therein) of this Corporation.
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