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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1999
REGISTRATION NO. 333-71643-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
---------------------
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
CLECO CORPORATION
CLECO HOLDING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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72-0244480
LOUISIANA 4911 72-1445282
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF (PRIMARY STANDARD INDUSTRIAL IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NUMBER)
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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.
CLECO HOLDING CORPORATION 400 POYDRAS STREET
2030 DONAHUE FERRY ROAD NEW ORLEANS, LOUISIANA 70130-3245
PINEVILLE, LOUISIANA 71360-5226 (504) 566-1311
(318) 484-7400
(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.
------------------------
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.
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PROXY STATEMENT AND PROSPECTUS
CLECO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1999
23,300,000 SHARES OF COMMON STOCK ($2.00 PAR VALUE)
353,919 SHARES OF PREFERRED STOCK ($100.00 PAR VALUE)
Cleco Corporation 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 May 14, 1999, at the
Radisson Hotel Bentley, 200 DeSoto Street, Alexandria, Louisiana. The voting
stock of Cleco consists of common and preferred shareholders voting together as
a class, with each share of common and $100 preferred being entitled to one vote
per share. At the annual meeting, holders of record of Cleco voting stock at the
close of business on April 5, 1999 will vote upon proposals relating to:
- 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 on a
one-for-one basis; the amendment of the holding company articles of
incorporation; the appointment of the directors elected at the annual
meeting and 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;
- The election of three directors who will each serve until the annual
meeting in 2002;
- The appointment of PricewaterhouseCoopers LLP as independent auditors for
the year ending December 31, 1999; and
- Any other business that may properly come before the meeting.
The proposal to adopt the holding company structure requires a two-thirds
vote of the voting stock as well as a two-thirds vote of the preferred stock
voting together as a separate class.
------------------------
THE 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
MAY 10, 1999.
------------------------
This proxy statement and prospectus and the accompanying proxy card are
dated April 9, 1999, and are first being mailed on or about April 9, 1999 to
record shareholders of Cleco as of April 5, 1999.
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TABLE OF CONTENTS
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SUMMARY OF THE HOLDING COMPANY PROPOSAL...................................................................... 4
The Record Date Is April 5, 1999; the Vote Required to Approve the Holding Company
Proposal Is Two-Thirds of Cleco's Common and Preferred Stock............................................. 4
Cleco Common and Preferred Stock Will Be Automatically Exchanged for Holding Company
Common and Preferred Stock............................................................................... 4
Common Shareholders Have No Dissenters' Rights, While Shareholders of Cleco Preferred
Stock May................................................................................................ 5
Shareholder Rights After the Holding Company Proposal is Effective Will Be Governed by
the Holding Company's Articles and Bylaws................................................................ 5
The Holding Company May or May Not Make Dividend Payments.................................................. 5
There Are Generally No Federal and Louisiana Income Tax Consequences of the Holding
Company Proposal......................................................................................... 5
The Holding Company Proposal Will Be Implemented Pursuant to the Plan of Reorganization
and Share Exchange Agreement............................................................................. 6
Cleco's Board of Directors Recommends the Holding Company Proposal......................................... 6
INTRODUCTION................................................................................................. 7
Record Date and Voting Rights.............................................................................. 7
Execution and Revocation of Your Proxy..................................................................... 8
Attendance and Procedures at the Annual Meeting............................................................ 8
PROPOSAL NUMBER 1--THE HOLDING COMPANY PROPOSAL.............................................................. 9
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........................................ 9
Cleco Will Remain Regulated by the LPSC and FERC; the Holding Company Will Be
Relatively Unregulated................................................................................... 11
Holding Company Subsidiaries............................................................................... 12
Holding Company Directors and Officers..................................................................... 13
Dividends for Holding Company Shareholders................................................................. 13
The Holding Company Articles of Incorporation and Bylaws................................................... 14
Holding Company Capital Stock.............................................................................. 14
Authorized Shares.......................................................................................... 15
Debts of Cleco Will Remain at Cleco........................................................................ 15
Conditions to the Share Exchange........................................................................... 15
Amendment or Termination................................................................................... 16
Listing of Holding Company Common Stock on the NYSE and PSE................................................ 16
Material Federal and Louisiana Income Tax Consequences..................................................... 17
Accounting Treatment....................................................................................... 18
Exchange or Redemption of Cleco Preferred Stock............................................................ 18
Dissenters' Rights for Preferred Shareholders.............................................................. 18
Validity of Holding Company Common Stock................................................................... 19
PROPOSAL NUMBER 2--ELECTION OF THREE CLASS II DIRECTORS...................................................... 20
Class II Directors (nominees to be elected at the annual meeting; terms of office expire in
2002).................................................................................................... 20
Class I Directors (terms of office expire in 2001)......................................................... 21
Class III Directors (terms of office expire in 2000)....................................................... 21
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Organization and Compensation of the Board of Directors.................................................... 21
Interests of the Board of Directors........................................................................ 22
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT............................................................... 23
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE...................................................... 25
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.............................................................. 25
EXECUTIVE COMPENSATION....................................................................................... 26
General.................................................................................................... 26
Summary Compensation Table................................................................................. 26
Stock Option Plans......................................................................................... 27
Long-Term Incentive Plan--Awards in 1998................................................................... 29
Retirement Plans........................................................................................... 29
Severance Agreements....................................................................................... 30
Compensation Committee Report on Executive Compensation.................................................... 32
1998 Compensation for the Chief Executive Officer.......................................................... 33
The Compensation Committee................................................................................. 34
Performance Graph.......................................................................................... 34
PROPOSAL NUMBER 3--APPOINTMENT OF INDEPENDENT AUDITORS....................................................... 36
ANNUAL REPORT................................................................................................ 36
PROPOSALS BY SHAREHOLDERS.................................................................................... 36
OTHER MATTERS................................................................................................ 36
ADDITIONAL INFORMATION....................................................................................... 36
APPENDIX A--ARTICLES OF INCORPORATION........................................................................ A-1
APPENDIX B--FORM OF PHELPS DUNBAR, L.L.P. TAX OPINION........................................................ B-1
APPENDIX C--PLAN OF REORGANIZATION AND SHARE EXCHANGE AGREEMENT.............................................. C-1
APPENDIX D--DESCRIPTION OF DISSENTERS' RIGHTS................................................................ D-1
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SUMMARY OF THE HOLDING COMPANY PROPOSAL
The holding company proposal is a proposal to adopt a public utility holding
company structure for Cleco. Following implementation of the holding company
proposal, Cleco will be renamed Cleco Utility Group Inc. and become a subsidiary
of the Holding Company, which will be renamed Cleco Corporation. The Holding
Company will not have business operations of its own, but will hold all of the
interests in the utility and other subsidiaries. The Holding Company common
stock will be publicly-traded. As a subsidiary of a publicly-traded holding
company, all shares of Cleco will be held by the Holding Company and shares of
Cleco's stock will not be publicly-traded any longer. The former owners of Cleco
common stock will then own publicly-traded 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. 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. 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 Cleco's existing lines of business.
Cleco already has taken steps to remove some assets from LPSC jurisdiction.
On March 25, 1999 the LPSC approved the sale of the assets of Cleco's Coughlin
Power Station to Cleco Evangeline LLC, which is currently a subsidiary of Cleco
and as such is indirectly subject to LPSC regulation. Under the holding company
proposal, Cleco Evangeline will become a subsidiary of the Holding Company, and
will not be subject to LPSC regulation. Cleco has taken steps to move forward
with the Coughlin transaction based upon the belief that the holding company
proposal will be approved or that Cleco Evangeline otherwise could be removed
from LPSC regulation. If the holding company proposal is not approved, Cleco
will have to reevaluate the desirability and structure of the Coughlin Station
Repowering Project.
This summary contains all material information about the holding company
proposal. Additional information about the holding company proposal is also
included in other sections of this proxy statement and prospectus. To understand
the holding company proposal more fully, you should carefully read this entire
document and the documents we refer to.
THE RECORD DATE IS APRIL 5, 1999; THE VOTE REQUIRED TO APPROVE THE HOLDING
COMPANY PROPOSAL IS TWO-THIRDS OF CLECO'S COMMON AND PREFERRED STOCK.
The Cleco voting stock includes shares of common stock and $100 preferred
stock, with each share of common and preferred having one vote per share. The
record date is the close of business on April 5, 1999. The following votes will
be required to approve the holding company proposal:
- At least two-thirds of the Cleco voting stock present at the annual
meeting; and
- At least two-thirds of all outstanding shares of Cleco preferred stock
voting as a separate class.
If you are a holder of Cleco preferred stock, including the preferred stock held
in the Savings and Investment Plan, and you vote for the holding company
proposal, your vote also will be counted as a vote for the exchange of your
series of Cleco preferred stock for a series of Holding Company preferred stock.
If your series does not approve the exchange by a vote of at least two-thirds of
the shares of the series present at the annual meeting, your series will be
redeemed.
CLECO COMMON AND PREFERRED STOCK WILL BE AUTOMATICALLY EXCHANGED FOR HOLDING
COMPANY COMMON AND PREFERRED STOCK.
If the holding company proposal is approved, all Cleco common stock will be
exchanged for shares of Holding Company common stock on a one-for-one basis.
Also, each series of Cleco preferred stock
4
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that approves the holding company proposal 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 of Cleco preferred stock does not
approve the proposal, the series will be redeemed. For detailed information
about the redemption of shares, see "Exchange or Redemption of Cleco Preferred
Stock" on page 18.
You will not have to actually exchange your Cleco stock certificates for
Holding Company stock certificates. If 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.
COMMON SHAREHOLDERS HAVE NO DISSENTERS' RIGHTS, WHILE SHAREHOLDERS OF CLECO
PREFERRED STOCK MAY.
Holders of Cleco common stock will not have dissenters' rights. Holders of
Cleco preferred stock or a series of Cleco preferred stock will have the right
to dissent if the exchange is approved by less than 80% of the total shares of
preferred stock or such series issued and outstanding. In order to perfect
dissenters' rights, preferred shareholders will be required to follow the
procedures outlined in the section of this proxy statement and prospectus
entitled "Dissenters' Rights for Preferred Shareholders" on page 18.
SHAREHOLDER RIGHTS AFTER THE HOLDING COMPANY PROPOSAL IS EFFECTIVE WILL BE
GOVERNED BY THE HOLDING COMPANY'S ARTICLES AND BYLAWS.
The rights of the holders of Holding Company common stock and preferred
stock will be governed by the Holding Company articles of incorporation, which
are attached as Appendix A to this proxy statement and prospectus, and the
Holding Company bylaws. Although the articles of incorporation and bylaws are
virtually identical to Cleco's existing articles of incorporation and bylaws,
there are a few differences, for example, the duration of the Holding Company is
perpetual while the duration of Cleco is 99 years from the date of its
incorporation, January 2, 1935.
THE HOLDING COMPANY MAY OR MAY NOT MAKE DIVIDEND PAYMENTS.
Dividends on Holding Company common and preferred stock will be declared by
the Holding Company board of directors and paid by the Holding Company.
Dividends on Holding Company common stock are expected to be paid initially at
least at the same rate and on the same schedule as are now paid on Cleco common
stock. Continued dividends on Holding Company common stock will depend on two
factors:
- The dividends and other distributions that Cleco and the other Holding
Company subsidiaries pay to the Holding Company; and
- The capital requirements of the Holding Company and its subsidiaries.
There cannot 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 retain the dividends paid to it by
subsidiaries for its own capital needs or may use the dividends in the business
of its subsidiaries or other affiliates.
THERE ARE GENERALLY NO FEDERAL AND LOUISIANA INCOME TAX CONSEQUENCES OF THE
HOLDING COMPANY PROPOSAL.
The form of tax opinion from Phelps Dunbar, L.L.P., Cleco's special tax
counsel, states that no gain or loss will be recognized by the Holding Company,
Cleco, or the shareholders participating in the share exchange under federal and
Louisiana income tax laws as a result of the implementation of the holding
company proposal. Each shareholder's aggregate tax basis and holding period for
the shares of Holding Company common stock will be the same as such
shareholder's basis and holding period for the Cleco common stock, and the
aggregate tax basis and holding period for the shares of Holding Company
preferred stock will be the same as for the Cleco preferred stock.
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Holders of Cleco preferred stock whose shares are redeemed for cash or who
validly exercise dissenters' rights and receive cash will generally recognize
gain or loss.
These opinions are based on various assumptions and factual representations,
which are summarized in the tax opinion attached as Appendix B to this proxy
statement and prospectus.
THE HOLDING COMPANY PROPOSAL WILL BE IMPLEMENTED PURSUANT TO THE PLAN OF
REORGANIZATION AND SHARE EXCHANGE AGREEMENT.
The holding company proposal will be implemented pursuant to the plan of
reorganization and share exchange agreement, attached as Appendix C to this
proxy statement and prospectus. It is anticipated that the share exchange will
be effective on or about July 1, 1999. Implementation is subject to shareholder
approval, the continued effectiveness of the LPSC and FERC regulatory approvals,
the listing of Holding Company common stock on the NYSE, receipt of the Phelps
Dunbar tax opinion and the filing of an amendment to the Holding Company
articles of incorporation.
CLECO'S BOARD OF DIRECTORS RECOMMENDS THE HOLDING COMPANY PROPOSAL.
Cleco's board of directors unanimously approved the holding company proposal
and recommends that you vote "FOR" the holding company proposal at the annual
meeting.
THIS SUMMARY CONTAINS ALL MATERIAL INFORMATION ABOUT THE HOLDING COMPANY
PROPOSAL. YOU SHOULD RELY ONLY ON THE SUMMARY AND INFORMATION CONTAINED
ELSEWHERE 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 OFFERED SECURITIES. THIS PROXY
STATEMENT AND PROSPECTUS DOES NOT CONSTITUTE THE OFFER OF SECURITIES OR 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
OFFERED SECURITIES SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN A CHANGE IN THE AFFAIRS OF CLECO SINCE APRIL 9, 1999.
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INTRODUCTION
The enclosed proxy is solicited on behalf of the Cleco board of directors to
be voted at the annual meeting. The management of Cleco will solicit proxies by
mail, telephone, facsimile, via the internet or overnight delivery. Proxies also
may be solicited in advertisements and in person by Cleco officers and
employees. Cleco has hired Morrow & Company, Inc., 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 April 5, 1999,
beginning on or about April 9, 1999.
All duly executed proxies will be voted in accordance with their
instructions. If no instructions are in a proxy, the shares represented by such
proxy will be voted at the annual meeting or any adjournments "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.
Cleco has its principal executive offices at 2030 Donahue Ferry Road,
Pineville, Louisiana 71360-5226, telephone number: (318) 484-7400.
RECORD DATE AND VOTING RIGHTS.
Holders of record of outstanding voting stock as of the close of business on
April 5, 1999 are entitled to receive notice of the annual meeting. As of April
5, 1999, there were 346,871.1239 shares of Cleco preferred stock outstanding and
22,529,932 shares of Cleco common stock outstanding. As of April 5, 1999, all
officers and directors of Cleco, as a group, beneficially owned 4.49 percent of
the outstanding shares of Cleco common stock and 47.32 percent of the
outstanding shares of Cleco preferred stock. See "Security Ownership of
Directors and Management" on page 23 of this proxy statement and prospectus.
This proxy provides you with the opportunity to specify your approval or
disapproval of, or abstention with respect to, the following proposals:
- Proposal 1--the holding company proposal;
- Proposal 2--the election of three directors; and
- Proposal 3--the retention of independent auditors for 1999.
Under Louisiana law, the Cleco articles of incorporation, and the Cleco
bylaws, an abstention by a shareholder who is either present in person at the
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 as present 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 is
by plurality of the voting stock, with the holders of Cleco common stock being
able to cumulate their votes. The appointment of the independent auditors is
determined by a majority vote of the voting stock present at the annual meeting.
If your shares are held in a brokerage account in a street name, your broker may
vote your shares at its discretion unless
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it receives proper instructions from you on each of the proposals to be
considered at the annual meeting.
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 the Dividend Reinvestment Plan, or DRIP.
If you are an employee of Cleco and participate in the Cleco 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, if you participate in the Savings and Investment Plan, you
may vote the number of shares of Cleco preferred stock equivalent to your
interest in such preferred stock under the plan as of the record date. You may
vote by instructing the trustee pursuant to the proxy 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.
Please call Cleco's office of Shareholder Assistance at 1-800-253-2652 with
any questions relating to the proposals to be considered at the annual meeting.
EXECUTION AND REVOCATION OF YOUR 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, "FOR" the appointment of
PricewaterhouseCoopers LLP as the independent auditors and in accordance with
the recommendations of the Cleco board of directors 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 a series of Holding
Company preferred stock if no voting specification is made. Unless specific
instructions are set forth in the proxy, the persons acting as proxies also have
the right to cumulate shares of common stock in any manner they deem
appropriate.
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, one authorized
representative 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 if there is a failure to obtain a quorum or if there are
insufficient affirmative votes to approve any proposal.
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PROPOSAL NUMBER 1--THE HOLDING COMPANY PROPOSAL
The Holding Company is a Louisiana corporation that was 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.
The Holding Company will own all of the outstanding Cleco common stock, and
it also will own all of the outstanding interests in Cleco's subsidiaries. New
businesses also may be operated as subsidiaries of, or as joint ventures or
under other arrangements with, the Holding Company's subsidiaries and their
affiliates. 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 or investments in other assets or companies and repurchases of
Holding Company common stock, from dividends and other distributions it receives
from its subsidiaries, 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 will have earnings or pay any
dividends to the Holding Company.
Approval of the holding company proposal includes approval of the following:
- The plan of reorganization and share exchange agreement;
- The amendment of the Holding Company articles of incorporation;
- The appointment of the directors elected at the annual meeting and the
current Cleco directors as directors of the Holding Company; and
- All other actions appropriate to form and operate the Holding Company and
its subsidiaries.
The Cleco board of directors, in its sole discretion, may amend or terminate the
plan of reorganization and share exchange agreement, or amend the Holding
Company articles of incorporation or bylaws, at any time before implementation
of the holding company proposal. However, no amendment may materially and
adversely affect the rights of common or preferred shareholders.
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, already are organized under a
public utility holding company structure.
CHANGING REGULATION. Cleco has operated primarily as a traditional electric
utility, constructing, owning, and operating electric utility generation,
transmission, and distribution facilities. However, the regulation of utilities
and the markets that Cleco has traditionally served are changing. In recent
years, federal and state initiatives have promoted the development of
competition in the generation and sale of electricity. These initiatives have
sought to separate the services that electric utilities traditionally have
provided, such as retail sales and related distribution or wholesale sales and
related transmission, 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 orders of nationwide effect
requiring electric utilities, including Cleco, to file open access transmission
tariffs that will make utility transmission systems available to wholesale
sellers and buyers of electric energy on a
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non-discriminatory basis. Also, 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. These actions, while unpredictable in outcome, must be taken
seriously as potential precursors of competitive open markets for retail
electric sales in Louisiana.
NEW BUSINESS OPPORTUNITIES. Industry changes inside and outside Cleco's
Louisiana service territory are presenting Cleco with new business
opportunities. Two of Cleco's subsidiaries already have begun to take advantage
of these new opportunities:
- Cleco Energy LLC markets natural gas energy at the wholesale level and has
expanded its activities in competitive markets in the south central region
of the United States.
- Cleco Evangeline LLC is refurbishing and expanding the Coughlin Power
Station, which will be operated outside of LPSC jurisdiction. If
completed, the Coughlin Power Station would be the first new power plant
in Cleco's service area in over a decade and Cleco believes it will enable
Cleco to efficiently and effectively compete with non-utility generators
and independent power producers in serving the region's power needs.
In connection with the Coughlin Station Repowering Project, Cleco and Cleco
Evangeline have entered into various contracts to purchase equipment. These
contracts are contracts to purchase three combustion turbines, three related
heat recovery steam generators, and three related main power transformers. The
financial obligations to the vendors represented by these and the project's
other current contractual commitments as of December 31, 1998, were
approximately $133.1 million. In addition, as of December 31, 1998, Cleco had
engaged in approximately $33.3 million of short term borrowings through its
commercial paper program to finance the repowering project. It is anticipated
that in 1999 Cleco Evangeline will secure permanent financing for the project,
reimburse Cleco for its initial financing, and assume all of the referenced
contracts. If the holding company proposal is not approved, it is likely that
Cleco will be required to restructure its current plans for the project. The
restructuring likely will consist of continuing the project as an LPSC
jurisdictional project of Cleco, continuing the project in a partnership with
other parties, or discontinuing the project and either selling the project or
its equipment to other parties.
Cleco's management is considering other opportunities for participating in
the construction, ownership and operation of new electric generation projects
within Louisiana. The holding company structure will facilitate competitive new
generation projects and allow profits from these projects to be retained for the
benefit of Cleco's system and the Holding Company's shareholders.
The corporate separation afforded by the holding company structure will
accommodate the separation of Cleco's ancillary lines of business from Cleco's
remaining core utility business, while retaining common ownership of these
businesses under the Holding Company. When new business opportunities arise, new
lines of businesses can be operated through the Holding Company subsidiaries.
Management believes that the separation of business functions will facilitate
the development of ancillary businesses, and better insulate Cleco and its
customers from the risks associated with the operations of ancillary business
activities.
FLEXIBLE FINANCING. 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 material impact on the capital
structure of Cleco. For example:
- The Holding Company, in addition to receiving dividends from Cleco, will
be able to obtain funds through its own debt or equity financings. Its
debts and/or equity will not be subject to regulation by the LPSC or the
FERC.
- 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.
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- The other businesses may obtain funds from the Holding Company, from
affiliates, including 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. The LPSC's order authorizing 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.
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 will be operated as subsidiaries of the Holding Company. Cleco will
be more effectively insulated from the potential volatility of these operations
because the activities of sister companies of Cleco will not be reflected in the
utility's financial statements. Any unfavorable financial results or liabilities
of these companies generally will not adversely affect Cleco's equity capital.
Cleco's utility business is expected to constitute the principal part of the
Holding Company's earnings for the foreseeable future after the restructuring.
CLECO WILL REMAIN REGULATED BY THE LPSC AND FERC; THE HOLDING COMPANY WILL BE
RELATIVELY UNREGULATED.
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, terms and conditions of service
for electric distribution and retail sales as well as 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.
The LPSC conditioned its approval of the holding company proposal. Among the
LPSC's conditions are:
- The LPSC may conduct periodic reviews to determine whether the holding
company reorganization has had a negative impact on Cleco. The LPSC has
the right to take any action deemed necessary to protect the quality of
service and reasonableness and affordability of customer rates;
- The LPSC may review and consider any negative impact that the holding
company reorganization has had on Cleco's results of operations in any
future rate-making proceeding of Cleco; and
- Cleco's LPSC jurisdictional assets may not be encumbered to provide
security interests for any obligations incurred by the Holding Company or
by any other affiliate of Cleco.
Pursuant to the FERC's order approving the holding company proposal, if the
Holding Company seeks to merge with another public utility holding company,
Cleco and any other affected public utility are required to seek the FERC's
approval of the indirect merger of the utilities or, alternatively, to rebut the
presumption that such a holding company merger would not result in the indirect
merger of the utilities.
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 Cleco's relationship with the Holding Company or its
other subsidiaries. However, the Holding Company will be a "public utility
holding company" under the Public Utility Holding Company Act of 1935, as
amended, or PUHCA.
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The Staff of the SEC administers PUHCA. It has recommended that PUHCA be
repealed. Several bills have been introduced in Congress to do this, but none
has been enacted to date. Unless or until PUHCA is repealed, the Holding Company
will invoke an exemption under Section 3(a)(1) of PUHCA on two grounds:
- First, both the Holding Company and Cleco are organized and will carry on
their businesses substantially in the State of Louisiana; and
- 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 although Holding Company subsidiaries will engage in
interstate commerce. The exemption will exempt the Holding Company from the
provisions of PUHCA, 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 if a substantial question of
law or fact exists as to whether the Holding Company is within the exemption, or
if it appears that the exemption may be detrimental to the public interest or
the interest of investors or consumers. Cleco does not believe there is any
basis upon which the SEC would deny or revoke the Holding Company's exemption
from PUHCA.
HOLDING COMPANY SUBSIDIARIES.
The Holding Company will directly own five companies: Cleco, CLE Resources,
Inc., Cleco Midstream Resources LLC, Cleco Services LLC, and Cleco Support Group
LLC. Cleco currently directly owns CLE Intrastate Pipeline Company, Inc., CLE
Resources, Inc., Cleco Midstream Resources LLC, Cleco Services LLC, and Cleco
Support Group LLC. The anticipated businesses of these subsidiaries are
summarized below:
- Cleco will continue to provide generation, transmission, distribution and
sales 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.
- Since CLE Resources, Inc.'s present-day function of providing some of the
financing for Cleco's affiliates will be replaced by the Holding Company,
it is anticipated that CLE Resources, Inc., may be dissolved at an
appropriate time after the holding company proposal is implemented.
- Cleco Midstream Resources LLC will continue to serve as an intermediary
holding company, with its own subsidiaries engaged in energy procurement,
generation, and energy sales businesses. These subsidiaries will not be
subject to the LPSC's jurisdiction. Cleco Midstream's current subsidiaries
are:
- Cleco Columbian LLC--a potential electric co-generation and wholesale
electric marketing project, located within Cleco's service area, that
is in an early developmental stage;
- Cleco Energy LLC--a joint venture with two other parties, primarily
engaging in the wholesale marketing of natural gas as well as natural
gas production, gathering and transmission;
- Cleco Evangeline LLC--an electric generation and wholesale marketing
project that is in a developmental stage;
- 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; and
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- Cleco Trading & Marketing LLC--a services company that plans to engage
in the marketing of electricity in competitive wholesale markets.
- CLE Intrastate Pipeline Company, Inc., which is currently owned by Cleco
but will become a subsidiary of Cleco Midstream Resources LLC, 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.
- Cleco Services LLC 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.
- Cleco Support Group LLC will provide joint and common office support
services to the Holding Company and its affiliates in the areas of
information technology support; financial, cash management, accounting and
auditing services; human resources; corporate communications; project
consulting; and other administrative services.
In the future, the Holding Company also may form other subsidiaries, which in
turn may form subsidiaries, and enter into joint ventures or other business
relationships in order to engage in competitive businesses. These entities may
expand into businesses that are incidental or complementary to Cleco's existing
lines of business.
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 permit the internal
sharing of human resources, services and materials between affiliates, while
insuring that these arrangements are commercially reasonable and consistent with
regulatory rules against affiliate abuse of public utilities. 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 after the holding company proposal is implemented.
The Holding Company and its 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, 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 financial impact on the Holding Company.
HOLDING COMPANY DIRECTORS AND OFFICERS.
Upon implementation of the holding company proposal, the directors elected
at the annual meeting and any other directors serving on Cleco's board of
directors automatically will become directors of the Holding Company. In the
future, the directors of Cleco and the directors of the Holding Company may or
may not be the same persons.
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
initially will have few employees. In the future, the Holding Company may employ
additional officers and employees.
DIVIDENDS FOR HOLDING COMPANY SHAREHOLDERS.
Following implementation of the holding company proposal, former holders of
Cleco common stock will hold Holding Company common stock and receive dividends
if, as and when declared by the Holding Company board of directors. Cleco
preferred stock exchanged for Holding Company preferred stock will be paid
dividends by the Holding Company if, as and when declared by the Holding Company
board of directors. If a series does not approve of the exchange, the shares of
that series will be redeemed. Any preferred stock issued by Cleco in the future
will be subject to prior approval of the LPSC.
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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. Cleco's ability to pay dividends is
based primarily on its earnings, earned surplus and on maintenance of minimum
capitalization requirements. The payment of dividends is also subject to limits
contained in debt agreements and instruments, which will continue after the
holding company proposal is implemented. As long as shares of Holding Company
preferred stock are outstanding, dividends also will be subject to limits based
on the amount of equity represented in the outstanding shares of Holding Company
common stock and on Holding Company'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 retain 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.
Dividends on Holding Company common stock are expected to be paid initially
at least at the same rate and 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. If Cleco declares a dividend, and
the Holding Company proposal is implemented prior to the record or payment date
for the dividend, then the record or payment date will be adopted by the Holding
Company and the dividend will be paid on Holding Company common stock.
THE HOLDING COMPANY ARTICLES OF INCORPORATION AND BYLAWS.
Upon implementation of the holding company proposal, the rights of holders
of Holding Company common stock will be governed by the Holding Company articles
of incorporation and bylaws, rather than the Cleco articles of incorporation and
bylaws. Approval of the holding company proposal also will be considered
approval and ratification of the Holding Company articles of incorporation. The
Holding Company articles of incorporation may be amended at any time prior to
implementation of the holding company proposal, provided that no amendment may
materially and adversely affect the rights of common or preferred shareholders.
The Holding Company articles of incorporation may be amended at any time after
the implementation of the holding company proposal in accordance with the terms
of the articles of incorporation and Louisiana law. References in this proxy
statement and prospectus to the Holding Company articles of incorporation and
bylaws are qualified in their entirety by reference to those documents.
HOLDING COMPANY CAPITAL STOCK.
AUTHORIZED SHARES. The Holding Company articles of incorporation authorize
the Holding Company to issue 50,000,000 shares of Holding Company common stock,
$2 par value, and 1,491,900 shares of Holding Company preferred stock of the par
value of $100 per share and 3,000,000 shares of Holding Company preferred stock
of the par value of $25 per share. The Holding Company board of directors is
authorized to issue Holding Company preferred stock periodically with the
designations, relative rights, preferences and limitations that it determines
appropriate.
The authorized shares of Cleco include 50,000,000 shares of common stock, $2
par value, of which 22,529,932 were outstanding as of April 5, 1999, 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 April 5,
1999, there were 346,871.1239 shares of $100 preferred stock outstanding and no
shares of $25 preferred stock outstanding.
Shares of Holding Company common stock and 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 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.
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LIQUIDATION RIGHTS. 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, subject to any prior rights of Holding Company
preferred stock.
VOTING RIGHTS. On all matters for which the vote of common stock is
required, holders of Holding Company common stock and Holding Company $100
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. The Holding Company articles of incorporation
also provide for $25 preferred stock which would have one-fourth of a vote per
share. No shares of $25 preferred stock are currently outstanding or will be
issued in connection with the share exchange. Unless the shares of preferred
stock are redeemed at the same time as the closing of the transaction, the
Holding Company may not dissolve, liquidate, merge or transfer all or
substantially all of its assets without approval of two-thirds of the total
outstanding shares of preferred stock. Holders of any shares of Holding Company
preferred stock issued after the share exchange will have the voting rights
described above, and any other voting rights set forth in the articles of
incorporation, granted by the board of directors in connection with the issuance
of a series of Holding Company preferred stock, or granted by law.
TRANSFER AGENT, REGISTRAR AND DIVIDEND AGENT. The transfer agent, registrar
and dividend agent for Holding Company common and preferred stock will be First
Chicago Trust Company of New York, P.O. Box 2500, Jersey City, New Jersey
07303-2500.
AUTHORIZED SHARES.
After the implementation of the holding company proposal, there will be
authorized but unissued shares of common stock and preferred stock. 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. The
Holding Company articles of incorporation grant the Holding Company board of
directors, as the Cleco articles of incorporation grant the Cleco board of
directors, broad corporate power to establish the rights and preferences of
Holding Company preferred stock. The Holding Company articles of incorporation
provide, as do the Cleco articles of incorporation, 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 could include the following:
- The right to convert or exchange the stock into shares of Holding Company
or acquiring company common stock or other securities; and
- The right to demand redemption of the stock at a specified price under
prescribed circumstances related to a change of control.
DEBTS OF CLECO WILL REMAIN AT 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 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.
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:
- 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
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remain in full force and effect, and shall not include, in the sole
judgment of the Cleco board of directors, unacceptable conditions;
- 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;
- Cleco shall have received the tax opinion of Phelps Dunbar, and the
opinion shall not be withdrawn or conditioned in a manner unacceptable to
Cleco;
- The amendment to the Holding Company articles of incorporation shall have
been filed with the Louisiana Secretary of State; and
- 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 Louisiana Business Corporation Law, or LBCL.
With respect to the regulatory approvals, Cleco and the Holding Company
filed an application for LPSC approval of the holding company proposal as a
change in control of Cleco's LPSC jurisdictional assets. The LPSC approved the
application 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.
Consequently, Cleco also filed an application for FERC approval. The FERC
approved the application on January 29, 1999.
The Holding Company anticipates that it will file its listing application
with the NYSE on or about April 30, 1999. It anticipates that the listing
application will be approved prior to implementation of the share exchange.
Cleco has received a form of the Phelps Dunbar tax opinion to be delivered
at closing. Cleco does not intend to seek any rulings from federal tax
authorities, but will rely on the opinion of Phelps Dunbar. Cleco does not know
of any facts that may cause Phelps Dunbar not to deliver its tax opinion at
closing.
The Holding Company's articles of incorporation were filed October 30, 1998
and will be amended upon effectiveness of the share exchange.
AMENDMENT OR TERMINATION.
Cleco's board of directors and the Holding Company's board of directors may,
at their sole option, amend or terminate the plan of reorganization and share
exchange agreement or amend the Holding Company articles or 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.
Following implementation of the proposal, the Holding Company's articles of
incorporation and bylaws may be amended in accordance with their terms, and
subject to applicable law.
LISTING OF HOLDING COMPANY COMMON STOCK ON THE NYSE AND PSE.
The Holding Company is applying to have Holding Company common stock listed
on the NYSE and PSE to trade under the symbol "CNL". It is expected that such
listings will become effective when the proposal is implemented. Quotations will
be carried in newspapers as they have been for Cleco common stock. Following
implementation of the proposal, Cleco common stock will no longer trade on any
stock exchange, and will be delisted and deregistered pursuant to Section 12 of
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 traded or listed.
Pursuant to the plan of reorganization and share exchange agreement, all
shares of Cleco common stock, including uncertificated whole and fractional
shares, held under the 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
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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 the appropriate amendments to each of the plans.
MATERIAL FEDERAL AND LOUISIANA INCOME TAX CONSEQUENCES.
Cleco and the Holding Company have received a form of the opinion from
Phelps Dunbar, L.L.P., their special tax counsel, regarding material federal and
Louisiana income tax consequences of the implementation of the holding company
proposal.
The following is a summary of Phelps Dunbar's form of opinion as to material
federal and Louisiana income tax consequences, which is based on various
assumptions and factual representations:
(1) 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 reorganization and share exchange agreement;
(2) 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;
(3) 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;
(4) The aggregate tax basis of shares of Holding Company common stock
received by a former holder of shares of Cleco common stock in the share
exchange will equal the tax basis of such former holder's shares of Cleco
common stock exchanged, and the holding period for such shares of Holding
Company common stock will include the holding period for shares of Cleco
common stock exchanged to the extent that such shares of Cleco common
stock were held as a capital asset at the effective time of the share
exchange;
(5) The aggregate tax basis of shares of Holding Company preferred stock
received by a former holder of shares of Cleco preferred stock in the
share exchange will equal the tax basis of such former holder's shares of
Cleco preferred stock exchanged, and the holding period for such shares
of Holding Company preferred stock will include the holding period for
shares of Cleco preferred stock exchanged to the extent that such shares
of Cleco preferred stock were held as a capital asset at the effective
time of the share exchange;
(6) Gain or loss will be recognized by a holder of Cleco preferred stock
whose shares are redeemed for cash or who validly exercises dissenters'
rights and receives cash, and such cash will be treated as having been
distributed in redemption of such holder's Cleco preferred stock; and
(7) No current income, gain or loss will be recognized by the Holding
Company or Cleco on the transfer of the Cleco subsidiaries to the Holding
Company immediately after the share exchange.
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 cost
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, such as 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
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possible federal and Louisiana 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.
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. 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.
EXCHANGE OR REDEMPTION OF CLECO PREFERRED STOCK.
Shares of Holding Company preferred stock will have the same rights,
preferences and privileges as shares of Cleco preferred stock. The LPSC's order
of December 18, 1998, requires that the utility company not have shares of
preferred stock outstanding. If a series votes against such exchange and the
holding company proposal is adopted, the shares of that series will be redeemed.
Generally, the Cleco articles of incorporation provide that in order to redeem a
series of preferred stock, the Cleco board of directors must approve the
redemption and provide to the holders of the series at least 30 days prior
notice of the redemption. The redemption will be effective upon the date set
forth in the notice if Cleco has deposited the aggregate redemption price,
including accrued and unpaid dividends on the shares, with a bank or trust
company. If a holder of preferred stock in the redeemed series does not claim
the redemption price within six years after deposit of the price, the funds will
revert to Cleco. There are five classes of Cleco preferred stock with the
following redemption prices:
<TABLE>
<CAPTION>
SERIES REDEMPTION PRICE
- ---------------------------------------------- ----------------------------------------------
<S> <C>
4.5% $101
4.5%, Series of 1955 $102
4.65%, Series of 1964 $102
4.75%, Series of 1965 $100
Convertible, Series of 1991 $101.6250 if redeemed between April 1, 1999
and April 1, 2000
</TABLE>
DISSENTERS' RIGHTS FOR PREFERRED SHAREHOLDERS.
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 of which are attached as Appendix D
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 80% of the total voting
power of the class of shares voting on a particular issue. There is an exception
providing that holders of shares that are listed on a national securities
exchange, such as the NYSE, do not have dissenters' rights. Consequently,
holders of Cleco common stock will not have dissenters' rights. All holders of
Cleco preferred stock are voting on the share exchange as a single class. If
such vote is by less than 80% 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 addition, if a series of Cleco
preferred stock approves the exchange of such series by less than 80% vote, then
the holder of a share in such series may dissent from the share exchange.
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In order to dissent, a shareholder must file with Cleco a written objection
to the share exchange at or before 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 the required vote, Cleco must provide by
registered mail notice of the 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,
determined as of the day before the annual meeting. The demand must be made
within 20 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 within 20 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 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, Cleco shall deposit the amount
offered with the court. If the amount finally awarded by the court, exclusive of
interest and costs, is more than the amount offered and deposited, then all
costs of the court proceedings shall be paid by Cleco. If the amount awarded by
the court is equal to or less than the amount 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 file with Cleco a written objection
to the share exchange prior to or at the annual meeting and vote their shares,
in person or by proxy, against the proposed plan of reorganization and share
exchange agreement 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 D 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 to be rendered by
Phelps Dunbar, attached as Appendix B 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.
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, L.L.P., counsel to
Cleco and the Holding Company, 400 Poydras Street, New Orleans, Louisiana
70130-3245.
19
<PAGE>
PROPOSAL NUMBER 2--ELECTION OF THREE CLASS II DIRECTORS
Cleco's bylaws provide for the division of Cleco's board of directors 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. Cleco's board of directors has a total of 10 directors: four are in
Class I, three are in Class II and three 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 Cleco's board of directors 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 to cumulate the votes attributable to shares of Cleco common stock
represented by the proxy, and 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 page 21 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.
Cleco's board of directors 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.
Below is 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)
- 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, who is 56 years old,
has been a director of Cleco since 1993 and is a member of the Audit
Committee. He is also a director of Hibernia Corporation and Hibernia
National Bank.
- Edward M. Simmons is chairman of the board and chief executive officer of
McIlhenny Company, which makes 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, who is 70 years old, has been a director of Cleco
since 1992 and he previously served on Cleco's board of directors during
the period 1971-1981. He is chairman of the Compensation Committee and a
member of the Executive Committee. He also serves as a director of Pan
American Life Insurance Company and Piccadilly Cafeterias, Inc.
- 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, who is 53 years old,
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.
20
<PAGE>
CLASS I DIRECTORS (TERMS OF OFFICE EXPIRE IN 2001)
- 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, who is 59 years old, has been a director of Cleco since 1993 and
is a member of the Compensation Committee.
- 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,
who is 60 years old, 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.
- 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, who is 48 years old, joined Cleco in 1981
and served as manager, investor relations and finance until 1985, when he
became vice president of financial services.
- Gregory L. Nesbitt has served as Chairman of Cleco's board of directors
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 vice president from 1988 to
1991. Mr. Nesbitt, who is 61 years old, 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)
- 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, who is 55 years old, has
served as a director of Cleco since 1981 and is a member of the
Compensation Committee.
- 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, who is 63 years old, has been a
director of Cleco since 1986 and is chairman of the Audit Committee and a
member of the Executive Committee.
- 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, who is 69 years
old, 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
Cleco's board of directors 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. Cleco's board of directors has no standing nominating committee.
The Audit Committee recommends to Cleco's board of directors the appointment
of the independent auditors of Cleco, reviews the scope of audits, reviews and
recommends to Cleco's board of directors 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
21
<PAGE>
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 Cleco's
board of directors, remuneration arrangements and compensation plans involving
Cleco's board of directors, officers and employees, and administers the granting
of restricted stock and other awards to eligible employees under the Long-Term
Incentive Plan and the annual incentive compensation program, described below.
The Compensation Committee held three meetings in 1998.
Cleco's board of directors held four regular meetings and two special
meetings during 1998. At intervals between formal meetings, members of Cleco's
board of directors 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 Cleco's board of directors and of the committees of Cleco's board
of directors 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 non-employee director
receives an annual retainer of $18,000 for serving as a director. Each
non-employee 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 Cleco's board of directors 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 each
director, in cash, Cleco common stock or a combination of both. Cleco also
reimburses directors for travel and related expenses incurred in attending
meetings of Cleco's board of directors or such committees.
Under the Long-Term Incentive Plan, amended and restated effective as of
1998, each non-employee director is entitled to receive an automatic grant of
options to purchase 2,500 shares of Cleco common stock; the grant is made at the
beginning of each director's term. Each grant is immediately exercisable, has a
10-year term, and permits the holder to purchase shares at their fair market
value on the date of grant. For fiscal 1998, the initial year of the option
grants, a prorated grant was made to each non-employee director, based upon the
number of years remaining in each director's then current term. For fiscal 1998,
Ms. Cadoria and Mr. Crowell received options to purchase 2,500 shares, Messrs.
Garrett, James and Martin received options to purchase 1,667 shares, and Messrs.
Ratcliff, Simmons and Walker received options to purchase 834 shares.
Cleco also has in effect a deferred compensation plan for its non-employee
directors. Under the plan, a director may elect to defer all or part of his or
her fees. 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, a maximum annual benefit of $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. Crowell is a member of Crowell & Owens. Crowell & Owens performed
legal services for Cleco in 1998 and will be retained to perform
comparable services in 1999. The amount paid to Crowell & Owens for legal
services performed in 1998 for Cleco was less than $1,000.
- 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 LLC. The contract amount of $518,917.01 was
paid in full on March 15, 1999.
22
<PAGE>
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.
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 "beneficially own" 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 and shares granted as
restricted stock awards under the Long-Term Incentive Plan. Mr Dubroc holds 576
shares under the Savings and Investment Plan. The other executive officers
included in the amount shown for all directors and executive officers as a group
hold 1,277 shares under the Savings and Investment Plan. Restricted stock awards
under the Long-Term Incentive Plan were granted to the named executive officers
as follows:
<TABLE>
<S> <C>
- Mr. Nesbitt 16,485
shares
- Mr. Eppler 7,393
shares
- Mr Howlin 3,526 shares
- Ms. Powell 3,939
shares
- Mr. Dubroc 3,269 shares
</TABLE>
The other executive officers included in the amount shown for all directors,
nominees and executive officers as a group were granted 8,111 shares as
restricted stock awards under the Long-Term Incentive Plan.
Shares listed under the "Other" column are those as to which the named
individual shares voting and dispositive power with another person. 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 Savings and Investment Plan.
23
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF COMMON
STOCK AMOUNT AND NATURE OF
--------------------------------------------------- BENEFICIAL OWNERSHIP OF
OPTIONS PREFERRED STOCK
EXERCISABLE -------------------------
WITHIN 60 PERCENT NUMBER OF PERCENT
DIRECT DAYS OTHER OF CLASS SHARES(1) OF CLASS
--------- ----------- ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS AND NOMINEES
Sherian G. Cadoria................. 1,000 2,500 *
Richard B. Crowell................. 22,305 2,500 51,800(2) *
David M. Eppler(3)................. 13,877 2,800 2,246(4) * 468 *
J. Patrick Garrett................. 2,790 1,667 *
F. Ben James, Jr. ................. 2,400 1,667 *
A. DeLoach Martin, Jr. ............ 18,800 1,667 *
Gregory L. Nesbitt(5).............. 56,922 1,195(4) * 249 *
Robert T. Ratcliff................. 1,192 834 *
Edward M. Simmons.................. 2,323 834 *
William H. Walker, Jr. ............ 1,828 834 *
NAMED OFFICERS
Darrell J. Dubroc.................. 3,845(6) 1,114(4) * 232 *
Thomas J. Howlin................... 3,631 125(4) * 26 *
Catherine C. Powell................ 6,018 1,277(4) * 266 *
All directors, nominees and
executive officers as a group (18
persons, including those listed
above)........................... 158,080 15,303 834,911(7) 4.54 164,156(7) 46.37
</TABLE>
- ------------------------
* Less than 1% of class.
(1) Represents the number of preferred shares allocated under the Savings and
Investment Plan that are convertible into common stock.
(2) Includes 51,800 shares owned by members of Mr. Crowell's family and family
trusts, for which beneficial ownership is disclaimed.
(3) Mr. Eppler is also the President and Chief Operating Officer of Cleco.
(4) Represents the number of shares of common stock into which preferred stock
held in the Savings and Investment Plan is convertible.
(5) Mr. Nesbitt is also the Chairman and Chief Executive Officer of Cleco.
(6) Includes common stock allocated to Mr. Dubroc's account in the Savings and
Investment Plan over which he has voting power and investment discretion.
(7) The Savings and Investment Plan 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.
24
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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.
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 BENEFICIAL PERCENTAGE
NAME AND ADDRESS OWNERSHIP OF CLASS
- ---------------------------------------------------------------------------------- ------------------ -------------
<S> <C> <C>
UMB Bank, N.A.
Trustee of Cleco's Savings and Investment Plan
1010 Grand Boulevard, Kansas City, MO 64106 286,891(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 286,891 shares are held by
UMB Bank, N.A., as Trustee of the Savings and Investment Plan. Such 286,891
shares are convertible under certain circumstances pursuant to Cleco's
articles of incorporation, and the governing instruments of the Savings and
Investment Plan, into 1,377,077 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 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. The Trustee holds 537,134
shares of Cleco common stock. The Trustee may vote shares of common stock
allocated to a participant's 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 1,914,211 shares, or 8.5%, of the outstanding
shares of Cleco common stock as of December 31, 1998.
25
<PAGE>
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--Financial Services 1997 69,454 71,500 0 0 4,085
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 the following:
- An annual incentive compensation program under which participants may
receive incentive compensation determined by the performance of Cleco
and the individual participants;
- Merit lump-sum payments received by certain named executive officers;
and
- 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.
(3) Restricted stock awards granted under the Long-Term Incentive Plan 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:
- Mr. Nesbitt--13,444 shares with a value of $461,297;
- Mr. Eppler--4,969 shares with a value of $170,499;
- Mr. Howlin--1,501 shares with a value of $51,503;
- Ms. Powell--3,135 shares with a value of $107,570; and
- Mr. Dubroc--1,924 shares with a value of $66,017.
26
<PAGE>
The "LTIP Payouts" column includes the value of restricted stock and
opportunity shares under the Long-Term Incentive Plan that vested in the
following years and related tax gross-up amounts:
- 1996--relating to the performance period January 1, 1993 to December
31, 1995;
- 1997--relating to the performance period January 1, 1994 to December
31, 1996; and
- 1998--relating to the performance period January 1, 1995 to December
31, 1997.
(4) The "All Other Compensation" column includes the following:
- Amounts contributed or accrued by Cleco under the Savings and Investment
Plan on behalf of the named executive officers as follows:
<TABLE>
<CAPTION>
1996 1997 1998
<S> <C> <C> <C>
- Mr. Nesbitt....................................................... $ 6,000 $ 6,334 $ 6,400
- Mr. Eppler........................................................ $ 6,000 $ 6,333 $ 6,400
- Mr. Howlin........................................................ $ 0 $ 0 $ 4,237
- Ms. Powell........................................................ $ 5,488 $ 5,973 $ 6,400
- Mr. Dubroc........................................................ $ 2,547 $ 4,881 $ 6,400
</TABLE>
- Term life insurance premiums paid for the benefit of the named executive
officers as follows:
<TABLE>
<CAPTION>
1996 1997 1998
<S> <C> <C> <C>
- Mr. Nesbitt....................................................... $ 0 $ 0 $ 0
- Mr. Eppler........................................................ $ 483 $ 503 $ 524
- Mr. Howlin........................................................ $ 0 $ 210 $ 980
- Ms. Powell........................................................ $ 195 $ 215 $ 224
- Mr. Dubroc........................................................ $ 45 $ 71 $ 74
</TABLE>
- Unused vacation purchased from the named executives as follows:
<TABLE>
<CAPTION>
1996 1997 1998
<S> <C> <C> <C>
- Mr. Nesbitt....................................................... $ 0 $ 0 $ 0
- Mr. Eppler........................................................ $ 0 $ 0 $ 0
- Mr. Howlin........................................................ $ 0 $ 3,875 $ 0
- Ms. Powell........................................................ $ 0 $ 0 $ 0
- Mr. Dubroc........................................................ $ 0 $ 5,012 $ 0
</TABLE>
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 800,000 shares of Cleco common
stock. It expired in 1991, and no additional 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.
27
<PAGE>
OPTION EXERCISES. 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:
- The number of shares of Cleco common stock acquired upon the exercise of
options during 1998;
- The aggregate dollar value realized upon the exercise of such options;
- The total number of exercisable and unexercisable options held on December
31, 1998; and
- 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 UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT DECEMBER IN-THE-MONEY OPTIONS AT DECEMBER
31, 1998 31, 1998
SHARES ACQUIRED VALUE -------------------------------- --------------------------------
NAME ON 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) All of 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.
1998 GRANTS. The following table sets forth, for each of the five persons
listed in the Summary Compensation Table, information related to grants under
the Long-Term Incentive Plan during 1998. 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, 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.
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 compared to a peer group of other utilities. The total return to
shareholders is computed as the Cleco common stock price appreciation plus
dividends paid during performance cycle. The vesting, or payout, schedule for
the restricted stock awards, based upon Cleco's total return to shareholders
ranking, is as follows:
- No awards will vest if Cleco's ranking is below the 25th percentile;
- Threshold performance provides 25% award payout at the 25th percentile;
and
- Target performance provides 100% award payout from the 45th percentile to
the 55th percentile.
28
<PAGE>
Performance awards above the threshold level and below the target level are
prorated.
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, or payout, schedule for the "opportunity shares" included in this
column, based on Cleco's total return to shareholders ranking, is as follows:
- No awards of "opportunity shares" vest if Cleco's ranking is at or below
the 55th percentile; and
- Maximum performance provides 100% "opportunity share" award payout, which
is equal to 50% of number of target shares of restricted stock, at the
75th percentile.
Performance awards of "opportunity shares" above the target level and below the
maximum level are prorated.
LONG-TERM INCENTIVE PLAN--AWARDS IN 1998
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR -------------------------------------
OTHER PERIOD UNTIL NUMBER OF NUMBER OF NUMBER OF
NUMBER OF MATURATION OR THRESHOLD TARGET MAXIMUM
NAME SHARES PAYOUT SHARES SHARES SHARES
- --------------------------------------------- ----------- ------------------ ----------- ----------- -----------
<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>
RETIREMENT PLANS
Cleco's executive officers are participants in the Savings and Investment
Plan, the Pension Plan, and a SERP. Contributions made in 1998 to the Savings
and Investment Plan for the benefit of the named executive officers are listed
in the Summary Compensation Table.
PENSION PLAN. The Pension Plan generally covers employees of Cleco who have
attained age 21 and completed one year of service. The monthly benefit payable
under the Pension Plan at the normal retirement age of 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 ten years prior to termination of
employment. 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, or Code, or
100% of "average compensation", as defined in the Code.
29
<PAGE>
As of December 31, 1998, the following individuals had the following years
of service credited under the Pension Plan:
<TABLE>
<S> <C>
- Mr. Nesbitt 18
years
- Mr. Eppler 17 years
- Mr. Howlin 1 year
- Ms. Powell 7 years
- Mr. Dubroc 13 years
</TABLE>
SERP. Effective July 1, 1992, Cleco established a supplemental executive
retirement plan, or SERP, for the benefit of certain participants designated by
the Compensation Committee. As of December 31, 1998, the Chief Executive Officer
and the four other most highly compensated executive officers participated in
the SERP. The SERP provides participants who complete ten 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, and in 1998 the Compensation Committee shortened the
service requirements for Ms. Powell and Mr. Howlin. 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.
<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 $ 82,303
150,000 97,500 97,500 97,500 97,500 99,803
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 other executive officers and general managers 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,
30
<PAGE>
all during the term of employment. Under the severance agreements, the 1999 base
salaries for the individuals named in the Summary Compensation Table are as
follows:
<TABLE>
<S> <C>
- Mr. Nesbitt $ 350,000
- Mr. Eppler $ 240,000
- Mr. Howlin $ 175,000
- Ms. Powell $ 135,000
- Mr. Dubroc $ 155,000
</TABLE>
Each agreement provides for an initial three-year term that renews annually for
one additional 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 for Mr. Nesbitt, Mr. Eppler, Mr. Howlin, Ms. Powell and Mr.
Dubroc 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 (1) by Cleco for any reason, other than a material breach by the
executive, or (2) 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 (1)
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 (2) pay or reimburse the executive for
relocation costs. Lesser severance benefits are payable to other executive
officers and managers.
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
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:
<TABLE>
<S> <C>
- Mr. Nesbitt $1,176,191
- Mr. Eppler $ 624,284
- Mr. Howlin $ 520,745
- Ms. Powell $ 399,818
- Mr. Dubroc $ 354,413
</TABLE>
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. Lesser change in
control benefits are provided to other executive officers and managers.
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.
31
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed entirely of directors who are not
current or former officers or employees of Cleco. The committee is responsible
for establishing officer compensation programs and/or making recommendations to
Cleco's board of directors about officer compensation. The committee uses the
services of executive compensation consultants to provide professional
assistance, data and advice. The following report describes the compensation
determinations and recommendations made by the Compensation Committee in 1998
with respect to Cleco's executive officers.
The Compensation Committee seeks to ensure that executive compensation is
directly linked to corporate performance and increased shareholder value and is
comparable with pay practices in the industry. The Committee generally seeks to
provide a competitive total compensation package that enables Cleco to attract
and retain key executives. The following guidelines are used by the Committee to
establish compensation policy:
- To provide variable compensation opportunities that link the financial
performance of Cleco with the financial interests of its executive
officers;
- To provide incentives that increase corporate performance and increase
shareholder value, when compared to other electric utilities;
- To establish base salary levels somewhat below the competitive market, but
provide incentive awards above the market when designated performance
objectives are achieved; and
- To increase the stock ownership of key executives.
Historically, the Compensation Committee has structured the compensation
programs for executive officers taking into consideration the compensation
programs of electric utilities of similar size and complexity to Cleco. In
making these determinations, the committee has specifically relied upon
information about companies included in the Edison Electric Institute Index, an
index of approximately 89 investor-owned electric utilities. In addition to its
electric utility business, Cleco and its subsidiaries are now engaged in various
lines of business that are complementary or incidental to electric generation,
transmission and distribution. To reflect the conduct of these non-utility
businesses in its compensation practices, beginning in 1999, the Compensation
Committee intends to base its decisions and recommendations on indices and data
related to non-utility businesses, in addition to the information provided by
the Edison Electric Institute.
The compensation program for executive officers is currently comprised of
three components:
- An annual base salary;
- A performance-based annual bonus; and
- Periodic grants and awards of long-term incentives, which are primarily
restricted stock and related "opportunity shares".
Each of these components is further explained below.
Base salaries are recommended by the Compensation Committee, using
comparisons with the salaries of executives of comparable electric utilities
included in the Edison Electric Institute Index, but actual salaries are based
upon individual performance. It is Cleco's policy to set base salary levels
somewhat below the average of its competitive market, and 1998 base salaries
were consistent with this policy. For 1998, the Named Executives, other than the
Chief Executive Officer, received base salary increases that averaged 9.2%.
The objective of the performance-based annual bonus is to provide "at risk"
compensation, the amount of which is directly related to the attainment of
short-term financial objectives that are designated annually by the Compensation
Committee. Awards are ordinarily based on earnings per share and actual return
on equity goals in relation to the performance of companies in the Edison
32
<PAGE>
Electric Institute Index, with each goal generally of equal weight. Target bonus
levels for executive officers range from 18% to 42% of base salary. Bonus awards
from 0% to 150% of target bonus levels may be made. The amount of any actual
bonus award is further subject to the discretion of the Compensation Committee,
within established guidelines. For example, the Compensation Committee may make
adjustments to reflect extraordinary items of income or expense. Bonuses are
paid in the first quarter of the year following the year for which the award is
earned.
For 1998, Cleco's actual return on equity was in the 60th to 74th percentile
of the companies listed in the Edison Electric Institute Index, and its primary
earnings per share in 1998 was $2.30, exceeding the target goals established by
the Committee. Accordingly, the Compensation Committee approved actual bonus
awards for 1998 at 129% of target bonus levels.
Under the Long-Term Incentive Plan, the named executive officers are
eligible to receive performance-based grants of restricted stock and related
"opportunity shares," restricted unit grant awards and related "opportunity
units," stock options and stock appreciation rights. These grants and awards are
also "at risk" because they are directly linked to Cleco common stock price
appreciation and the achievement of pre-established long-term performance goals.
Awards to executive officers are based on an analysis of the compensation
practices of other utilities that constitute the Edison Electric Institute
Index. Awards are earned after the completion of a three-year performance cycle,
based upon a comparison of Cleco's performance during the cycle to the
performance of other electric utilities in the Edison Electric Institute Index
over the same period.
Grants of restricted stock were made to all named executive officers in
1998, subject to a three-year performance cycle ending December 31, 2000. No
other types of grants under the Long-Term Incentive Plan were made to the named
executive officers during 1998. For the three-year performance cycle 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, actual
awards of restricted stock, which were first granted in 1996, were earned at
100% of the target level. No opportunity shares were awarded for the performance
cycle ended December 31, 1998.
Cleco also provides the named executive officers, including the Chief
Executive Officer, with coverage under the SERP and severance agreements. The
Compensation Committee considers each of these programs to be reasonably
competitive and appropriate for executive officers of Cleco.
Section 162(m) of the Code limits to $1,000,000 in any year the deduction
publicly held companies may claim for compensation paid to a company's chief
executive officer and four other most highly compensated executive officers,
unless certain performance-based requirements are met. Cleco has reviewed this
provision and determined that it 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, none of Cleco's executive compensation
programs are intended to comply with Section 162(m) of the Code, and no change
is currently contemplated in response to Section 162(m).
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. For fiscal year 1998, the Compensation Committee
recommended and Cleco's board of directors approved the following compensation
for Mr. Nesbitt:
- His annual base salary was increased from $300,000 to $325,000, an
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 somewhat below his
peers in the industry.
- Mr. Nesbitt's 1998 performance-based bonus was 54% of his base salary,
which was 129% of his target.
33
<PAGE>
- Restricted stock grants were made to Mr. Nesbitt under the Long-Term
Incentive Plan, subject to the attainment of specified performance goals
during a three-year performance cycle ending December 31, 2000. For the
three-year performance cycle ended December 31, 1998, Mr. Nesbitt's award
was 100% of his target, which was established in 1996, or 3,036 shares.
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 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, 1993 and that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLECO S&P 500 INDEX EEI INDEX (1)
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 $99.85 $101.32 $88.43
1995 $122.79 $139.40 $115.86
1996 $133.75 $171.40 $117.25
1997 $116.30 $228.59 $149.35
1998 $185.04 $292.63 $170.10
December 31,
</TABLE>
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cleco........................................... $ 100.00 $ 99.85 $ 122.79 $ 133.75 $ 116.30 $ 185.04
S&P 500 Index................................... $ 100.00 $ 101.32 $ 139.40 $ 171.40 $ 228.59 $ 292.63
EEI Index(1).................................... $ 100.00 $ 88.43 $ 115.86 $ 117.25 $ 149.35 $ 170.10
</TABLE>
- ------------------------------
(1) As of December 31, 1998, the Edison Electric Institute Index was comprised
of: Allegheny Energy; 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; Central Maine Power
Company; Central Vermont Public Service Corporation; Central & South West
Corporation; Cilcorp Inc.; CINergy Inc.; 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;
34
<PAGE>
IDACORP; Illinova Corp.; Interstate Energy Corporation; 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 Company; New Centuries Energy, Inc.;
New England Electric System; Niagara Mohawk Power Corp.; NIPSCO Industries,
Inc.; Northeast Utilities; Northern States Power Co. (MN); Northwestern
Corporation; OGE Energy; Orange & Rockland Utilities, Inc.; Otter Tail Power
Company; PG&E Corp.; 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.
35
<PAGE>
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. Cleco's board of directors, 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 board of directors 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.
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.
PROPOSALS BY SHAREHOLDERS
Proposals of shareholders that are otherwise eligible and are intended to be
presented at the Holding Company annual meeting in 2000, if the holding company
proposal passes, or if not, then of Cleco, must be received no later than
December 11, 1999, to be included in the proxy material and form of proxy
relating to such meeting. Proposals should be addressed to: 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 February 29,
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. The bylaws of
the Holding Company and Cleco contain additional requirements that must be met
in order for a matter to be properly brought by a shareholder at any meeting of
shareholders.
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, 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 in its Form 10-K, dated March 17, 1999, which includes the
financial statements for the year ended December 31, 1998. Cleco also filed an
8-K, dated March 25, 1999. The Form 10-K and Form 8-K are incorporated by
reference into this proxy statement and prospectus, as permitted by the
36
<PAGE>
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.
In addition to the Form 10-K and 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. 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 shares of Holding Company common stock and Holding Company
preferred stock offered as part of the holding company proposal. This proxy
statement and prospectus is a part of that Registration Statement and
constitutes a prospectus of the 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 contacting 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 May 10, 1999.
By Order of Cleco's Board of
Directors,
[LOGO]
Gregory L. Nesbitt
Chairman and Chief Executive Officer
April 9, 1999
37
<PAGE>
APPENDIX A
ARTICLES OF INCORPORATION
OF
CLECO CORPORATION
[DATE]
<PAGE>
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 Gregory L. Nesbitt, whose post
office address is 2030 Donahue Ferry Road, Pineville, Louisiana, and David M.
Eppler, 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 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
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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 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 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).
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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 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 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 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.
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
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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 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
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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 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
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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 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 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 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
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Preferred Stock, (iii) fix the authorized number of 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 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
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.
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.
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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 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 $101 per
share 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 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 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 sum payable upon the redemption
thereof (in addition to accrued and unpaid dividends) shall be $102. This
redemption price 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
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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 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 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 $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) 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 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, 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.
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.
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 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.
10.2 REDEMPTION. The 1964 Series Preferred shall be redeemable in whole or
in part at any time or from time to time. The sum payable per share upon the
redemption thereof (in addition to accrued
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and unpaid dividends) shall be $102. This redemption price 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 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
(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,
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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 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 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. 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.
(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
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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) 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, 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.
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.
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
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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 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 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. The sum payable per share upon the
redemption thereof (in addition to accrued and unpaid dividends) shall be $100.
The redemption price 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 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, 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).
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(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 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 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.
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(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. 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) 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" and
"capitalization of the Corporation" 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. ESOP PREFERRED.
12.1 ESOP PREFERRED. The following is a description (supplemental to the
general description of the Preferred Stock of all series contained in these
articles of incorporation) of a series of Preferred
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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 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 12.5 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.
12.2 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 12.6) 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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<PAGE>
12.3 REDEMPTION.
(a) Subject to the limitation in paragraphs (c) and (d) of this subsection
12.3, the ESOP Preferred shall be redeemable, in whole or in part, at the option
of the Corporation at any time at the following redemption prices per share:
<TABLE>
<CAPTION>
DURING THE TWELVE-MONTH PRICE PER
PERIOD BEGINNING APRIL 1 SHARE
- ----------------------------------------------------------------------- -----------
<S> <C>
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
12.3. 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 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
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<PAGE>
(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,
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
12.3, but subject to paragraph (d) of this subsection 12.3, 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 12.3, 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 May 1,
1999, 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 May 1, 1999, 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 May
1, 1999, and persons who thereafter became directors, the nomination of whom was
approved by at least 80% of the directors then in office who were either
directors on May 1, 1999, 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
specified in this paragraph (e) plus in each case an amount equal to all
accrued, accumulated and unpaid dividends
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<PAGE>
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 12.3 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 12.3 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 12.3, applicable at the time, if
at any time, 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, as the same has been
amended from time to time, 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 12.6 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 12.1(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.
12.4 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 12.3 applicable at the time of such voluntary
liquidation, dissolution or winding up, plus an amount equal to all accrued,
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.
12.5 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 $20.8333 par value of
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<PAGE>
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 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.
12.6 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 12.6, 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
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<PAGE>
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 12.6, 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 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 12.6, 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 12.6, 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
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<PAGE>
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 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 12.6, 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 12.6, 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, shall amount to an increase or decrease of at least (1%) in the
Conversion Price. In addition, notwithstanding any other provisions of this
subsection 12.6, 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
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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 12.6, 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 12.6, 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 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 12.6), 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
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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 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 10b-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.
12.7 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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12.8 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 $2.00 per share as defined in section 1 of this article
6, 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 12.6 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 12.6 hereof.
SECTION 13. All shares of capital stock and certificates therefor upon
payment of any transfer taxes required shall be transferable on the books of the
Corporation, and no transfer shall be binding on or have any effect upon the
Corporation unless and until made upon the books of the Corporation.
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 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
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 articles) and shall be
entitled to all immunities now or hereafter granted or permitted by law.
SECTION 3. 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
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or these articles, any and all matters and things may be submitted to and acted
upon and any business transacted at any meeting.
SECTION 4. 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 or
by the board of directors, be held in Pineville, Louisiana, on the third Friday
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 5. 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, and except as specially provided by
law to the contrary, a majority of votes cast shall control.
SECTION 6. 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 7. 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 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
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<PAGE>
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
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.
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 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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<PAGE>
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 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:
<TABLE>
<S> <C>
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
--------------------------------------
NOTARY PUBLIC
</TABLE>
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<PAGE>
APPENDIX B
FORM OF PHELPS DUNBAR, L.L.P. TAX OPINION
, 1999
Cleco Corporation
2030 Donahue Ferry Road
Pineville, Louisiana 71360
Cleco Holding Corporation
2030 Donahue Ferry Road
Pineville, Louisiana 71360
Ladies and Gentlemen:
We have acted as special tax counsel to Cleco Corporation ("Cleco") and
Cleco Holding Corporation ("Holding Company") in connection with the
Registration Statement on Form S-4 ("the Registration Statement") filed by
Holding Company with the Securities and Exchange Commission (the "Commission")
in connection with the Plan of Reorganization and Share Exchange Agreement
entered into between Cleco and Holding Company ("the Exchange Agreement"), and
we have been requested to issue our opinion as to the matters included in the
Registration Statement under the caption entitled "Material Federal and
Louisiana Income Tax Consequences".
In connection with this opinion, we have reviewed the Exchange Agreement,
the Registration Statement and such other documents and public records as we
have deemed necessary or appropriate. Unless otherwise defined herein,
capitalized terms shall have the meanings ascribed to them in the Registration
Statement or the Exchange Agreement, as appropriate.
We also have made such legal and factual examinations and inquiries as we
have deemed advisable or necessary for the purpose of rendering this opinion. We
have examined originals or copies of documents, corporate records and other
writings which we consider relevant for the purposes of this opinion.
In such examination, we have assumed the genuineness of all signatures
appearing on all documents, the legal capacity of all persons signing such
documents, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified,
conformed or photostatic copies, the accuracy and completeness of all corporate
records made available to us by Cleco and Holding Company, and the truth and
accuracy of all facts set forth in all certificates provided to or examined by
us.
The opinions contained herein are based upon the representations and
statements contained in the aforementioned documents and are limited in all
respects to matters of federal and Louisiana income tax law. In rendering our
opinions, we have assumed the following:
(a) The fair market value of the Holding Company common stock received by
each shareholder of Cleco will be approximately equal to the fair market
value of the Cleco common stock surrendered therefor.
(b) The fair market value of the Holding Company preferred stock received by
each shareholder of Cleco will be approximately equal to the fair market
value of the Cleco preferred stock surrendered therefor.
B-1
<PAGE>
Cleco Corporation
Cleco Holding Corporation
, 1999
Page 2
(c) There is no plan or intention by the shareholders of Cleco who own five
percent (5%) or more of the Cleco stock, and to the best of the knowledge
of the management of Cleco, there is no plan or intention on the part of
the remaining shareholders of Cleco to sell, exchange, or otherwise
dispose of a number of shares of Holding Company stock received in the
transaction that would reduce the Cleco shareholders' ownership of
Holding Company stock to a number of shares having a value, as of the
date of the transaction, of less than fifty percent (50%) of the value of
all of the formerly outstanding stock of Cleco as of the same date. For
purposes of this assumption, shares of Cleco stock surrendered by
dissenters or exchanged for cash in lieu of fractional shares of Holding
Company stock will be treated as outstanding Cleco stock on the date of
the transaction. Moreover, shares of Cleco stock and shares of Holding
Company stock held by Cleco shareholders and otherwise sold, redeemed, or
disposed of prior or subsequent to the transaction will be considered in
making this assumption.
(d) Cleco has no plan or intention to issue additional shares of its stock
that would result in Holding Company losing control of Cleco within the
meaning of Section 368(c)(1) of the Internal Revenue Code of 1986, as
amended ("Code Section").
(e) Holding Company has no plan or intention to liquidate Cleco, to merge
Cleco into another corporation, to cause Cleco to sell or otherwise
dispose of any of its assets, except for dispositions made in the
ordinary course of business, or to sell or otherwise dispose of any of
the Cleco stock acquired in the transaction, except for transfers
described in Code Section 368(a)(2)(C).
(f) Holding Company has no present plan or intention to reacquire any of its
stock issued in the transaction.
(g) Holding Company, Cleco, and the shareholders of Cleco will pay their
respective expenses, if any, incurred in connection with the transaction.
(h) Holding Company will acquire Cleco stock solely in exchange for Holding
Company voting stock. For purposes of this assumption, Cleco stock
redeemed for cash or other property furnished by Holding Company will be
considered as acquired by Holding Company. Further, no liabilities of
Cleco or the Cleco shareholders will be assumed by Holding Company, nor
will any of the Cleco stock be subject to any liabilities.
(i) At the time of the transaction, Cleco will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person would acquire stock in Cleco that, if
exercised or converted, would affect Holding Company's acquisition or
retention of control of Cleco, as defined in Code Section 368(c)(1).
(j) Holding Company does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any stock of Cleco.
(k) Following the transaction, Cleco will continue its historic business or
use a significant portion of its historic business assets in a business.
(l) Neither Holding Company nor Cleco is an investment company as defined in
Code Section 368(a)(2)(F)(iii) and (iv).
(m) Cleco will pay its dissenting shareholders the value of their stock out
of its own funds. No funds will be supplied for that purpose, directly or
indirectly, by Holding Company, nor will Holding Company directly or
indirectly reimburse Cleco for any payments to dissenters.
B-2
<PAGE>
Cleco Corporation
Cleco Holding Corporation
, 1999
Page 3
(n) On the date of the transaction, the fair market value of the assets of
Cleco will exceed the sum of its liabilities plus the liabilities, if
any, to which the assets are subject.
(o) The payment of cash in lieu of fractional shares of Holding Company
stock is solely for the purpose of avoiding the expense and inconvenience
to Holding Company of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that
will be paid to the Cleco shareholders in lieu of issuing fractional
shares of Holding Company stock will not exceed one percent (1%) of the
total consideration that will be issued in the share exchange to the
Cleco shareholders in exchange for their shares of Cleco stock. The
fractional share interests of each Cleco shareholder will be aggregated,
and no Cleco shareholder will receive cash in an amount equal to or
greater than the value of one (1) share of Holding Company common stock
and/or one (1) share of Holding Company preferred stock.
(p) For federal income tax purposes, Holding Company will make a
corresponding negative basis adjustment in its Cleco stock under Treasury
Regulations Section 1.1502-32.
(q) For federal and Louisiana income tax purposes, Cleco's gain under Code
Section 311(b), if any, on the transfer of its subsidiaries to the
Holding Company will be deferred under Treasury Regulations Section
1.1502-13 and Louisiana Revised Statutes 47:287.733(B), respectively.
(r) For Louisiana income tax purposes, Cleco's Louisiana accumulated
earnings and profits are greater than the total aggregate fair market
values of the Cleco subsidiaries that will be transferred to the Holding
Company immediately after the share exchange.
On the basis of our examination of the aforementioned documents, the
representations contained therein and the assumptions set forth above, and
having considered the applicable federal and Louisiana income tax laws in
existence on the date hereof, we are of the opinion that:
(i) The share exchange will qualify as a reorganization under Code Section
368(a)(1)(B);
(ii) 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 Reorganization and Share Exchange Agreement;
(iii) 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;
(iv) 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;
(v) The aggregate tax basis of shares of Holding Company common stock
received by a former holder of shares of Cleco common stock in the
share exchange 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;
(vi) The aggregate tax basis of shares of Holding Company preferred stock
received by a former holder of shares of Cleco preferred stock in the
share exchange will equal the tax basis of such former holder's shares
of Cleco preferred stock exchanged therefor, and the holding
B-3
<PAGE>
Cleco Corporation
Cleco Holding Corporation
, 1999
Page 4
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;
(vii) Gain or loss will be recognized by a holder of Cleco preferred stock
whose shares are redeemed for cash or who validly exercises
dissenters' rights and receives cash, and such cash will be treated as
having been distributed in redemption of such holder's Cleco preferred
stock, subject to the provisions and limitations of Code Section 302;
and
(viii) No current income, gain or loss will be recognized by the Holding
Company or Cleco on the transfer of the Cleco subsidiaries to the
Holding Company immediately after the share exchange.
This opinion may not apply to holders of shares of Cleco stock that are
foreign corporations or individuals who are not citizens or residents of the
United States.
The foregoing opinions are expressly limited to the federal and Louisiana
income tax consequences of the share exchange that are enumerated above. We
express no opinion as to any other federal or Louisiana income tax consequences
of the share exchange or to tax matters governed by the laws of any state, other
than the State of Louisiana. Furthermore, no opinion is expressed herein as to
the effect of any future acts of the parties or future changes in existing law.
We undertake no responsibility to advise you of any changes after the date
hereof in the law or the facts presently in effect that would alter the scope or
substance of the opinions herein expressed.
This opinion is based on various statutory provisions, regulations
promulgated thereunder, and interpretations thereof by the Internal Revenue
Service and the Louisiana Department of Revenue and the courts having
jurisdiction over such matters as of and effective on the date hereof, any one
or more of which are subject to change either prospectively or retroactively.
There can be no assurance that contrary positions may not be successfully
asserted by the Internal Revenue Service or the Louisiana Department of Revenue,
or that a court considering such matters would not hold otherwise. Moreover, no
opinion is rendered with respect to the effect, if any, which pending or
proposed legislation may have on any of the foregoing matters.
This letter expresses our legal opinion as to the foregoing matters based on
our professional judgment at this time; it is not, however, to be construed as a
guaranty, nor is it a warranty that a court considering such matters would not
rule in a manner contrary to the opinions set forth above.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us in the prospectus under the caption "Legal
Matters". In giving this consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or the General Rules and Regulations of the Commission thereunder.
Very truly yours,
PHELPS DUNBAR, L.L.P.
B-4
<PAGE>
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. 50,000,000 shares of Common Stock, par value $2.00 per share ("Subject
Corporation Common Stock"), of which were issued and outstanding as of
March , 1999 (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. 1,491,900 shares of Preferred Stock, $100 par value, of which
were outstanding as of March , 1999, and 3,000,000 shares of Preferred
Stock, $25 par value, of which no shares were outstanding as of March , 1999
(collectively the "Subject Corporation Preferred Stock") (which number of issued
and outstanding shares of $100 Preferred Stock 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 50,000,000
shares of Common Stock, par value $2.00 per share ("Acquiring Corporation Common
Stock"), of which ten (10) shares are issued and outstanding and owned by the
Subject Corporation, 1,491,900 shares of Preferred Stock, $100 par value, of
which no shares are issued and outstanding, and 3,000,000 shares of Preferred
Stock, $25 par value, of which no shares are issued and outstanding;
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 "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").
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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 (i) the holders of
at least two-thirds (2/3) of the voting power present at a duly noticed meeting
representing the Subject Corporation Common and Preferred Stock, voting together
as a single class, and (ii) the holders of at least two-thirds (2/3) of the
issued and outstanding shares of Preferred Stock, voting together as a single
class shall be necessary to approve and adopt the Exchange and this Agreement.
In addition, the affirmative vote of two-thirds (2/3) of the shares of each
separate series of Preferred Stock present at the meeting voting as a separate
series shall be required to approve and adopt the Exchange and this Agreement
with respect to such series. If any particular series of Preferred Stock does
not approve and adopt the Exchange and this Agreement by each vote, such series
will be redeemed in accordance with the provisions of the Articles of
Incorporation of the Subject Corporation.
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 in a series that
approves the Exchange and this Agreement issued and outstanding immediately
prior to the Effective Time shall be automatically exchanged for one share of
Acquiring Corporation Preferred Stock, with such terms and preferences as are
stated in the Acquiring Corporation's Articles of Incorporation as in effect at
the Effective Time, each of which shares shall be fully paid and nonassessable
by the Acquiring Corporation;
(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
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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. At or before the Effective Time, the Subject Corporation shall
distribute to the Acquiring Corporation its ownership interests in all of its
subsidiaries or other entities.
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 relating to the Acquiring Corporation Common
and Preferred Stock to be issued or reserved for issuance in connection with the
Exchange shall have been declared effective;
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 (and, if required, any other exchange on which
shares of such Common Stock are listed);
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, and accepted for filing by, the Secretary of State.
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ARTICLE V
Following the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of Subject Corporation Common and
Preferred Stock exchanged hereby 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 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 which is
exchanged hereby 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 to be
exchanged hereby 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.
<TABLE>
<S> <C>
Cleco Corporation Cleco Holding Corporation
By: By:
</TABLE>
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APPENDIX D
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.
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
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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 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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<PAGE>
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 with this proxy statement
and prospectus. The Exhibits not so designated have been previously filed with
the SEC and are incorporated by reference.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------------------- -------------------------------------------------------------------------------------------------
<C> <S>
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
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)
</TABLE>
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<TABLE>
<C> <S>
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 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)
</TABLE>
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<TABLE>
<C> <S>
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)
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 February 21, 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)
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)
</TABLE>
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<TABLE>
<C> <S>
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) nb](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
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
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
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)
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
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)
99.1 Notice of Annual Meeting of Shareholders
99.2 Form of Proxy Solicited on Behalf of the Board of Directors
99.3 Form of Proxy Solicited on Behalf of the Trustee of the Cleco Corporation Savings and Investment
Plan
</TABLE>
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<PAGE>
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:
(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) 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;
(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-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Post-Effective Amendment Number 1 to its Registration
Statement on Form S-4, Commission File Number 333-71643-01, to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Pineville,
State of Louisiana, on June 30, 1999.
<TABLE>
<S> <C> <C>
CLECO CORPORATION
CLECO HOLDING CORPORATION
By: /s/ GREGORY L. NESBITT
-----------------------------------------
Gregory L. Nesbitt
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
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 June 30, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ GREGORY L. NESBITT
------------------------------------------- Chairman, Chief Executive Officer, Director and
Gregory L. Nesbitt Attorney-in-Fact
*
------------------------------------------- Senior Vice President--Financial Services and Chief
Thomas J. Howlin Financial Officer and Principal Accounting Officer
*
------------------------------------------- Director
Sherian G. Cadoria
*
------------------------------------------- Director
Richard B. Crowell
*
------------------------------------------- President, Chief Operating Officer and Director
David M. Eppler
*
------------------------------------------- Director
J. Patrick Garrett
*
------------------------------------------- Director
F. Ben James, Jr.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
*
------------------------------------------- Director
A. DeLoach Martin, Jr.
*
------------------------------------------- Director
Robert T. Ratcliff
*
------------------------------------------- Director
Edward M. Simmons
*
------------------------------------------- Director
William H. Walker, Jr.
* executed by power of attorney
</TABLE>
II-8
