SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) August 22, 1995
PUBLIC SERVICE COMPANY OF COLORADO
________________________________________
(exact name of registrant as specified in charter)
Colorado
____________________
(State or other jurisdiction
of incorporation)
1-3280 84-0296600
________________ _________________
(Commission File No.) (IRS Employer
Identification No.)
1225 Seventeenth Street, Denver, Colorado 80202
__________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 571-7511
<PAGE>
ITEM 5. Other Events
Public Service Company of Colorado, a Colorado corporation ("PSC"),
Southwestern Public Service Company ("SPS"), a New Mexico corporation, and
M-P New Co., (the "Company" or "Newco"), a newly formed Delaware
corporation, have entered into an Agreement and Plan of Reorganization,
dated August 22, 1995, (the "Merger Agreement") providing for a business
combination as peer firms involving PSC and SPS in a "merger of equals"
transaction (the "Merger"). The Merger, which was unanimously approved by
the Boards of Directors of the constituent companies, is expected to occur
shortly after all of the conditions to the consummation of the Merger,
including obtaining applicable regulatory approvals, are met or waived.
The regulatory approval process is expected to take approximately 12 to 16
months.
The Merger Agreement and the press release issued in connection therewith
are filed herewith as exhibits 2 and 99, and are incorporated by
reference herein. The description of the Merger Agreement set forth
herein does not purport to be complete and is qualified in its entirety by
the provisions of the Merger Agreement.
As part of the Merger, the holding company of the combined enterprise will
be registered under the Public Utility Holding Company Act of 1935, as
amended ("1935 Act"). The Company, which will serve as the holding
company, will be renamed at a later date and will be the parent company of
both PSC and SPS.
Under the terms of the Merger Agreement, New PSC will be merged with and
into PSC and New SPS will be merged with and into SPS. PSC and SPS shall
be the surviving corporations and shall continue their corporate
existence under the laws of the State of Colorado and the State of New
Mexico, respectively. As a result of the mergers, both PSC and SPS will
become subsidiaries of Newco. Each outstanding share of PSC Common Stock,
par value $5.00 per share, will be canceled and converted into the right
to receive 1.00 share(s) of Newco common stock par value $1.00 per share,
and each outstanding share of SPS Common Stock, par value $1.00 per share,
will be canceled and converted into the right to receive 0.95 share(s) of
Newco Common Stock. As of August 4, 1995, PSC had 63.1 million common
shares outstanding and SPS had 40.9 million common shares outstanding.
Based on such capitalization, the Merger would result in the common
shareholders of PSC owning 61.9% of the common equity of Newco and the
common shareholders of SPS owning 38.1% of the common equity of Newco.
The Merger Agreement and the Merger will not affect the outstanding debt,
including mortgage bonds, and shares of preferred stock of PSC and SPS.
It is anticipated that Newco will adopt the SPS dividend payment level,
adjusted for the exchange ratio. SPS currently pays $2.20 per share
annually and PSC's current annual dividend rate is $2.04 per share.
Based on the exchange ratio, the proforma dividend for the Company would
be $2.32 per share on an annual basis, following completion of the Merger.
The Company's common stock dividend level will be dependent upon the
Company's results of operations, financial position, cash flows and other
factors, and will be evaluated by the Board of Directors.
The Merger is subject to customary closing conditions, including, without
limitation, the receipt of required shareholder approvals of PSC and SPS;
and the receipt of all necessary governmental approvals and the making of
all necessary governmental filings, including approvals and findings of
state utility regulators in Colorado, Texas, New Mexico, Oklahoma, Wyoming
and Kansas and the approval of the Federal Energy Regulatory Commission,
the Securities and Exchange Commission (the "SEC") under the 1935 Act,
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the Nuclear Regulatory Commission, and the filing of the requisite
notification with the Federal Trade Commission and the Department of
Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the expiration of the applicable waiting period thereunder.
The Merger is also subject to the receipt of opinions of counsel that the
transaction will qualify as a tax-free reorganization, and the assurances
from the parties' independent accountants that the Merger will qualify as
a pooling of interests for accounting purposes. In addition, the Merger
is conditioned upon the effectiveness of a registration statement to be
filed with the SEC with respect to the Newco Common Stock to be issued in
the transaction and the approval for listing of such shares on the New
York Stock Exchange. Shareholder meetings to vote upon the Merger will be
convened as soon as practicable and are expected to be held in the first
quarter of 1996.
The Merger Agreement provides that, after the effectiveness of the
transaction (the "Effective Time"), the corporate offices of Newco will be
located in Denver, Colorado with significant operating functions based in
Amarillo, Texas. PSC and SPS will maintain their company headquarters in
Denver and Amarillo, respectively. Newco's Board of Directors will
consist of a total of 14 directors, 8 of whom will be designated by PSC
and 6 of whom will be designated by SPS. At the Effective Time, Delwin D.
Hock, Chairman of the Board and Chief Executive Officer ("CEO") of PSC
will retire. Mr. Bill D. Helton, the current Chairman of the Board and CEO
of SPS, will serve as CEO of Newco from the Effective Time until the
later of (i) June 30, 1999 or (ii) 30 months from the Effective Time and
will serve as Chairman of the Board of Newco until May 31, 2001. Mr.
Wayne H. Brunetti, the current President and Chief Operating Officer of
PSC, will serve as Vice Chairman, President and Chief Operating Officer of
Newco until the date when Mr. Helton ceases to be CEO, at which time he
will be entitled to assume the additional role of CEO. Mr. Brunetti will
assume the position of Chairman when Mr. Helton ceases to be Chairman.
The forms of employment agreements for Mr. Helton and Mr. Brunetti are
attached as exhibits to the Merger Agreement.
The Merger Agreement contains certain covenants of the parties pending the
consummation of the Merger. Generally, during the interim period until
consummation, the parties must carry on their businesses in the ordinary
course consistent with past practice, may not increase dividends on common
stock beyond specified levels, and may not issue capital stock beyond
certain limits. The Merger Agreement also contains restrictions on,
among other things, charter and by-laws amendments, capital expenditures,
acquisitions, dispositions, incurrence of indebtedness, certain increases
in employee compensation and benefits, and affiliate transactions.
The Merger Agreement may be terminated under certain circumstances,
including (1) by mutual written consent of the Board of Directors of PSC
and SPS; (2) by PSC or SPS if the Merger is not consummated on or before
December 31, 1996 (provided, however, that such termination date shall be
extended to June 30, 1997 if all conditions to closing the Merger, other
than the receipt of statutory approvals by any of the parties, are
capable of being satisfied by December 31, 1996); (3) by PSC or SPS if
approval of either PSC's or SPS's shareholders with respect to the Merger
is not obtained or if any state or federal law, rule or regulation or
court order prohibits the Merger or causes a material adverse effect on
either PSC or SPS; (4) by a non-breaching party if there exist breaches of
any representations or warranties contained in the Merger Agreement which,
individually or in the aggregate, would result in a material adverse
effect on the breaching party and which are not cured within (20) days
after notice; (5) by a non-breaching party if there occur breaches of
specified covenants or material breaches of any other covenant or
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agreement which are not cured within twenty (20) days after notice; (6) by
either party if the Board of Directors of the other party shall withdraw
or adversely modify or fail to reaffirm its recommendation of the Merger;
or (7) by either party, under certain circumstances, as a result of a
third-party tender offer or business combination proposal which such
party's board of directors determines in good faith that their fiduciary
duties require be accepted (based on counsel's opinion), after the other
party has first been given an opportunity to make concessions and
adjustments in the terms of the Merger Agreement.
The Merger Agreement provides that if it is terminated pursuant to the
circumstances described in clause (4), (5) or (6) of the previous
paragraph, then, if such breach is not willful, the non-breaching or non-
withdrawing party is entitled to reimbursement of its out-of-pocket
expenses, not to exceed $10 million. In the event of a willful breach or
failure to comply, including under the circumstances described in clause
(6) of the previous paragraph, the non-breaching or non-withdrawing party
will be entitled to its out-of-pocket expenses, (which shall be limited to
$10 million) and an additional fee equal to $35 million. In addition, the
Merger Agreement provides that if such agreement is terminated under the
circumstances described in clause (7) of the previous paragraph, the party
accepting the offer shall pay to the other party an amount equal to its
out-of-pocket expenses, not to exceed $10 million, plus an additional fee
of $35 million, payable prior to entering into an agreement with a third
party. The Merger Agreement also requires payment of a termination fee of
$35 million (and reimbursement of out-of-pocket expenses, not to exceed
$10 million) by one party (the "Payor") to the other in certain
circumstances, if (i) the Merger Agreement is terminated (y) under
circumstances described in clause (2), (3), (4), (5) or (6) or (z) as a
result of the Payor's material failure to convene a shareholder meeting,
distribute proxy materials and, subject to its board of directors'
fiduciary duties, recommend the Merger to its shareholders; and (ii) at
the time of such termination or prior to the meeting of such party's
shareholders there shall have been a third-party tender offer or business
combination proposal which shall not have been rejected by the Payor and
withdrawn by such third party. Such termination fee and out-of-pocket
expenses referred to in the previous sentence shall be paid upon
termination. If the Merger Agreement is terminated as provided in one of
the first three sentences of this paragraph and if any business
combination involving the Payor is accepted within one year of termination
and is consummated within two and one half years from the date of
acceptance of such business combination, the Payor shall pay to the other
party an additional fee of $25 million. All payments made as described in
this paragraph, except reimbursement for out-of-pocket expenses, shall be
payable, to the extent not prohibited by law, in shares of common stock of
the Payor. The termination fees payable by PSC or SPS under these
provisions may not exceed $60 million in the aggregate, excluding
reimbursement of out-of-pocket expenses.
Based on fiscal 1994 results, the Company will have combined annual
revenues of approximately $3 billion and total assets of approximately $6
billion. The companies project a savings of approximately $770 million
in the first 10 years after the transaction is completed. The proposed
allocation of the net savings between ratepayers and shareholders of PSC
and SPS will be submitted to the various regulatory agencies later this
year.
The Company will serve approximately 1.5 million electric customers in
Colorado, Texas, New Mexico, Wyoming, Oklahoma and Kansas and will
provide natural gas service to 933,000 customers in Colorado and Wyoming.
The business of the Company will consist of utility operations and various
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non-utility enterprises, including independent power projects.
PSC recognizes that the divestiture of its existing gas operations is a
possibility under the new registered holding company structure, but will
seek approval from the SEC to maintain this business. If divestiture is
ultimately required, the SEC has historically allowed companies sufficient
time to accomplish divestitures in a manner that protects shareholder
value.
On August 22, 1995, PSC amended (the "Rights Amendment") its Rights
Agreement (the "Rights Agreement") dated as of February 26, 1991 between
PSC and Mellon Bank, N.A., as Rights Agent, to provide that Newco will not
be deemed to be an "Acquiring Person" as defined in the Rights Agreement,
as a result of the execution, delivery and performance of the Merger
Agreement or the consummation of the transactions contemplated therein,
with the effect of exempting Newco and the transactions contemplated by
the Merger Agreement from the Rights Agreement. The foregoing description
of the Rights Amendment is qualified in its entirety by reference to the
terms of the Rights Amendment, a copy which is attached hereto as Exhibit
99 (b).
ITEM 7. Financial Statements and Exhibits
(c) Exhibits. The following exhibits are filed herewith:
2 Agreement and Plan of Reorganization, dated August
22, 1995, by and among Public Service Company of
Colorado, Southwestern Public Service Company and
M-P New Co.
99(a) Press release, dated August 22, 1995, of Public
Service Company of Colorado and Southwestern Public
Service Company.
99(b) Amendment, as of August 22, 1995, to Rights
Agreement dated as of February 26, 1991, between
Public Service Company of Colorado and Mellon Bank,
N.A.
5
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PUBLIC SERVICE COMPANY OF COLORADO
/s/ R. C. Kelly
-----------------------------------------
R. C. Kelly
Senior Vice President, Finance,
Treasurer and Chief Financial Officer
Dated: August 22, 1995
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EXHIBIT INDEX
2 Agreement and Plan of Reorganization, dated August 22, 1995, by
and among Public Service Company of Colorado, Southwestern
Public Service Company and M-P New Co.
99(a) Press release, dated August 22, 1995, of Public Service Company
of Colorado and Southwestern Public Service Company.
99(b) Amendment, as of August 22, 1995, to Rights Agreement dated as
of February 26, 1991, between Public Service Company of
Colorado and Mellon Bank, N.A.
<PAGE>
AGREEMENT AND PLAN
OF REORGANIZATION
by and among
PUBLIC SERVICE COMPANY OF COLORADO,
SOUTHWESTERN PUBLIC SERVICE COMPANY
and
M-P NEW CO.
Dated as of August 22, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGERS
Section 1.1 Formation of Merger Subsidiaries . . . . . . . . 2
Section 1.2 Certain Other Actions . . . . . . . . . . . . . . 2
Section 1.3 The Mergers . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Effective Time of the Mergers . . . . . . . . . . 3
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of Mergers on Capital Stock . . . . . . . 3
Section 2.2 Exchange of Common Stock Certificates . . . . . . 4
ARTICLE III
THE CLOSING
Section 3.1 Closing . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PSCo
Section 4.1 Organization and Qualification . . . . . . . . . 7
Section 4.2 Subsidiaries . . . . . . . . . . . . . . . . . . 8
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . 8
Section 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance . . . . . . . . . . . . . 9
Section 4.5 Reports and Financial Statements . . . . . . . . 10
Section 4.6 Absence of Certain Changes or Events . . . . . . 11
Section 4.7 Litigation . . . . . . . . . . . . . . . . . . . 11
Section 4.8 Registration Statement and Proxy Statement . . . 11
Section 4.9 Tax Matters . . . . . . . . . . . . . . . . . . . 12
Section 4.10 Employee Matters; ERISA . . . . . . . . . . . . . 15
Section 4.11 Environmental Protection . . . . . . . . . . . . 19
Section 4.12 Regulation as a Utility . . . . . . . . . . . . . 21
Section 4.13 Vote Required . . . . . . . . . . . . . . . . . . 22
Section 4.14 Accounting Matters . . . . . . . . . . . . . . . 22
Section 4.15 Opinion of Financial Advisor . . . . . . . . . . 22
Section 4.16 Insurance . . . . . . . . . . . . . . . . . . . . 22
Section 4.17 Ownership of SPS Common Stock . . . . . . . . . . 22
Section 4.18 PSCo Rights Agreement . . . . . . . . . . . . . . 22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SPS
Section 5.1 Organization and Qualification . . . . . . . . . 23
Section 5.2 Subsidiaries . . . . . . . . . . . . . . . . . . 23
Section 5.3 Capitalization . . . . . . . . . . . . . . . . . 24
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Section 5.4 Authority; Non-Contravention; Statutory
Approvals; Compliance . . . . . . . . . . . . . 24
Section 5.5 Reports and Financial Statements . . . . . . . . 25
Section 5.6 Absence of Certain Changes or Events . . . . . . 26
Section 5.7 Litigation . . . . . . . . . . . . . . . . . . . 26
Section 5.8 Registration Statement and Proxy Statement . . . 26
Section 5.9 Tax Matters . . . . . . . . . . . . . . . . . . . 27
Section 5.10 Employee Matters; ERISA . . . . . . . . . . . . . 30
Section 5.11 Environmental Protection . . . . . . . . . . . . 34
Section 5.12 Regulation as a Utility . . . . . . . . . . . . . 35
Section 5.13 Vote Required . . . . . . . . . . . . . . . . . . 35
Section 5.14 Accounting Matters . . . . . . . . . . . . . . . 35
Section 5.15 Opinion of Financial Advisor . . . . . . . . . . 35
Section 5.16 Insurance . . . . . . . . . . . . . . . . . . . . 35
Section 5.17 Ownership of PSCo Common Stock . . . . . . . . . 36
Section 5.18 SPS Rights Agreement . . . . . . . . . . . . . . 36
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 6.1 Ordinary Course of Business . . . . . . . . . . . 36
Section 6.2 Dividends . . . . . . . . . . . . . . . . . . . . 37
Section 6.3 Issuance of Securities . . . . . . . . . . . . . 37
Section 6.4 Charter Documents . . . . . . . . . . . . . . . . 37
Section 6.5 Acquisitions . . . . . . . . . . . . . . . . . . 38
Section 6.6 No Dispositions . . . . . . . . . . . . . . . . . 38
Section 6.7 Indebtedness . . . . . . . . . . . . . . . . . . 38
Section 6.8 Capital Expenditures . . . . . . . . . . . . . . 38
Section 6.9 Compensation, Benefits . . . . . . . . . . . . . 39
Section 6.10 1935 Act . . . . . . . . . . . . . . . . . . . . 39
Section 6.11 Accounting . . . . . . . . . . . . . . . . . . . 39
Section 6.12 Pooling . . . . . . . . . . . . . . . . . . . . . 39
Section 6.13 Tax-Free Status . . . . . . . . . . . . . . . . . 40
Section 6.14 Discharge of Liabilities . . . . . . . . . . . . 40
Section 6.15 Cooperation, Notification . . . . . . . . . . . . 40
Section 6.16 Rate Matters . . . . . . . . . . . . . . . . . . 40
Section 6.17 Third-Party Consents . . . . . . . . . . . . . . 40
Section 6.18 No Breach, Etc . . . . . . . . . . . . . . . . . 41
Section 6.19 Tax-Exempt Status . . . . . . . . . . . . . . . . 41
Section 6.20 Transition Management . . . . . . . . . . . . . . 41
Section 6.21 Insurance . . . . . . . . . . . . . . . . . . . . 41
Section 6.22 Permits . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information . . . . . . . . . . . . . . 41
Section 7.2 Joint Proxy Statement and Registration Statement 42
Section 7.3 Regulatory Matters . . . . . . . . . . . . . . . 43
Section 7.4 Shareholder Approvals . . . . . . . . . . . . . . 44
Section 7.5 Directors' and Officers' Indemnification . . . . 44
Section 7.6 Disclosure Schedules . . . . . . . . . . . . . . 46
Section 7.7 Public Announcements . . . . . . . . . . . . . . 46
Section 7.8 Rule 145 Affiliates . . . . . . . . . . . . . . . 46
Section 7.9 Employee Agreements and Workforce Matters . . . . 47
Section 7.10 Employee Benefit Plans . . . . . . . . . . . . . 47
Section 7.11 Incentive, Stock and Other Plans . . . . . . . . 48
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Section 7.12 No Solicitations . . . . . . . . . . . . . . . . 48
Section 7.13 Company Board of Directors . . . . . . . . . . . 49
Section 7.14 Company Directors and Officers . . . . . . . . . 50
Section 7.15 Employment Contracts . . . . . . . . . . . . . . 50
Section 7.16 Corporate Offices . . . . . . . . . . . . . . . . 50
Section 7.17 Expenses . . . . . . . . . . . . . . . . . . . . 50
Section 7.18 Further Assurances . . . . . . . . . . . . . . . 50
Section 7.19 Registration Rights . . . . . . . . . . . . . . . 51
Section 7.20 Charter and By-Law Amendments . . . . . . . . . . 52
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger to Which it is Party . . . . . . . 52
Section 8.2 Conditions to Obligation of SPS to Effect the SPS
Merger . . . . . . . . . . . . . . . . . . . . . 53
Section 8.3 Conditions to Obligation of PSCo to Effect the
PSCo Merger . . . . . . . . . . . . . . . . . . 54
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination . . . . . . . . . . . . . . . . . . . 55
Section 9.2 Effect of Termination . . . . . . . . . . . . . . 58
Section 9.3 Termination Fee; Expenses . . . . . . . . . . . . 58
Section 9.4 Amendment . . . . . . . . . . . . . . . . . . . . 61
Section 9.5 Waiver . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties,
Covenants and Agreements . . . . . . . . . . . 61
Section 10.2 Brokers . . . . . . . . . . . . . . . . . . . . 61
Section 10.3 Notices . . . . . . . . . . . . . . . . . . . . 62
Section 10.4 Miscellaneous . . . . . . . . . . . . . . . . . 62
Section 10.5 Interpretation . . . . . . . . . . . . . . . . . 63
Section 10.6 Counterparts; Effect . . . . . . . . . . . . . . 63
Section 10.7 Parties in Interest . . . . . . . . . . . . . . 63
Section 10.8 Specific Performance . . . . . . . . . . . . . . 64
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INDEX OF DEFINED TERMS
Term Page
Affiliate Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Applicable Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Atomic Energy Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Business Combination . . . . . . . . . . . . . . . . . . . . . . . . . 56
CBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Closing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Colorado Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Common Shares Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Charter Amendments . . . . . . . . . . . . . . . . . . . . . . 52
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Converted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 46
Dissenting Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . 19
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Final Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . 9
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . 21
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . 12
Joint Proxy/Registration Statement . . . . . . . . . . . . . . . . . . 42
Joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Kansas Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Merger Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger Sub A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger Sub B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
New Mexico Commission . . . . . . . . . . . . . . . . . . . . . . . . . 25
1935 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
NMBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Non-terminating Party . . . . . . . . . . . . . . . . . . . . . . . . . 58
NRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Oklahoma Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Out-of-Pocket Expenses . . . . . . . . . . . . . . . . . . . . . . . . 58
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-v-
<PAGE>
Term Page
Power Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PSCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PSCo Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PSCo Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PSCo Conversion Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 3
PSCo Designee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
PSCo Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . 46
PSCo ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . 15
PSCo Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 11
PSCo Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . 7
PSCo Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PSCo Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 2
PSCo Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 4
PSCo Required Consents . . . . . . . . . . . . . . . . . . . . . . . . 9
PSCo Required Statutory Approvals . . . . . . . . . . . . . . . . . . . 10
PSCo Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
PSCo Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 22
PSCo SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PSCo Shareholders' Approvals . . . . . . . . . . . . . . . . . . . . . 22
PSCo Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 44
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . 11
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Shareholder Disapproval . . . . . . . . . . . . . . . . . . . . . . . . 59
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SPS Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SPS Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SPS Conversion Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 3
SPS Designee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SPS Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . 46
SPS ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SPS Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 26
SPS Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . 23
SPS Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SPS Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 2
SPS Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SPS Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . 24
SPS Required Statutory Approvals . . . . . . . . . . . . . . . . . . . 25
SPS Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SPS Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 36
SPS SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SPS Shareholders' Approval . . . . . . . . . . . . . . . . . . . . . . 35
SPS Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Stock Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Takeover Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Target Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tax Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Texas Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Wyoming Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-vi-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of August 22,
1995 (this "Agreement"), by and among Public Service Company of Colorado,
a corporation formed under the laws of the State of Colorado ("PSCo"),
Southwestern Public Service Company, a corporation formed under the laws
of the State of New Mexico ("SPS"), and M-P New Co., a corporation formed
under the laws of the State of Delaware, 50% of whose outstanding capital
stock is owned by PSCo and 50% of whose capital stock is owned by SPS (the
"Company").
WHEREAS, PSCo and SPS have determined to engage in a business
combination as peer firms in a merger of equals;
WHEREAS, in furtherance thereof, the respective Boards of
Directors of PSCo, SPS and the Company have approved the consummation of a
reorganization provided for in this Agreement, pursuant to which two
wholly owned, newly formed subsidiaries of the Company will merge with and
into PSCo and SPS on the terms and conditions set forth in this Agreement
(such transactions are referred to herein individually as the PSCo Merger
and the SPS Merger (as defined in Section 1.3) and collectively as the
"Mergers"), as a result of which the common shareholders of PSCo and SPS
will together own all of the outstanding shares of common stock of the
Company and each share of each other class of capital stock of PSCo and
SPS shall be unaffected and remain outstanding;
WHEREAS, for federal income tax purposes, it is intended that
the Mergers shall collectively qualify as a transaction described in
Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"),
and that the shareholders of PSCo and SPS will not recognize any gain or
loss as a result thereof, except with respect to any cash received; and
WHEREAS, the parties hereto intend to cause the organization
of a service company subsidiary of the Company and a subsidiary of the
Company which will hold the shares of existing non-utility subsidiaries of
PSCo and SPS.
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein,
the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
THE MERGERS
Section 1.1 Formation of Merger Subsidiaries. To effectuate
the transactions contemplated herein, upon receipt of any required approv-
als, PSCo and SPS respectively, shall cause the following corporations
(together, the "Merger Subsidiaries") to be organized:
(a) PSCO Merger Corp., a corporation organized under the
laws of the State of Colorado ("Merger Sub A"), the articles of
incorporation and bylaws of which shall be in such forms as shall be
determined by PSCo with the consent of SPS, which consent shall not be
unreasonably withheld, and the authorized capital stock of which shall
initially consist of 100 shares of common stock, without par value, which
shall be issued to the Company at a price of $1.00 per share.
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(b) SPS Merger Corp., a corporation organized under the laws
of the State of New Mexico ("Merger Sub B"), the articles of incorporation
and bylaws of which shall be in such forms as shall be determined by SPS
with the consent of PSCo, which consent shall not be unreasonably
withheld, and the authorized capital stock of which shall initially
consist of 100 shares of common stock, without par value, which shall be
issued to the Company at a price of $1.00 per share.
Section 1.2 Certain Other Actions. In connection with the
organization of the Merger Subsidiaries, as soon as practicable following
the creation of the Merger Subsidiaries, the Company shall: (a) designate
the respective directors and officers of the Merger Subsidiaries; (b)
cause the directors and officers of the Merger Subsidiaries to take such
steps as may be necessary or appropriate to complete the organization of
the Merger Subsidiaries; (c) adopt (as sole shareholder of each of the
Merger Subsidiaries) each of the Merger Agreements (as defined in Section
1.3); (d) cause each Merger Agreement to be approved by the Merger Subsid-
iary party thereto; and (e) cause each Merger Subsidiary to perform its
obligations under the Merger Agreement to which it is a party.
Section 1.3 The Mergers. Pursuant to agreements and plans of
merger, forms of which are attached hereto as Exhibit A and Exhibit B
(respectively, the "PSCo Merger Agreement" and the "SPS Merger Agreement"
and, together, the "Merger Agreements"), and upon the terms and subject to
the conditions of this Agreement, at the Effective Time (as defined in
Section 1.4):
(a) Merger Sub A shall be merged with and into PSCo (the
"PSCo Merger") in accordance with the applicable provisions of the laws of
the State of Colorado. PSCo shall be the surviving corporation in the
PSCo Merger and shall continue its corporate existence under the laws of
the State of Colorado. As a result of the PSCo Merger, PSCo shall become
a subsidiary of the Company. The effects and consequences of the PSCo
Merger shall be as set forth in the PSCo Merger Agreement and in Section
7-111-106 of the Colorado Business Corporation Act (the "CBCA").
(b) Merger Sub B shall be merged with and into SPS (the "SPS
Merger") in accordance with the laws of the State of New Mexico. SPS
shall be the surviving corporation in the SPS Merger and shall continue
its existence under the laws of the State of New Mexico. As a result of
the SPS Merger, SPS shall become a subsidiary of the Company. The effects
and consequences of the SPS Merger shall be as set forth in the SPS Merger
Agreement and in Section 53-14-6 of the New Mexico Business Corporation
Act (the "NMBCA").
Section 1.4 Effective Time of the Mergers. On the Closing
Date (as defined in Section 3.1), articles of merger with respect to the
PSCo Merger shall be executed and filed by the parties hereto with the
Department of State of the State of Colorado pursuant to Section 7-111-105
of the CBCA and articles of merger with respect to the SPS Merger shall be
executed and filed by the parties hereto with the Department of State of
the State of New Mexico pursuant to Section 53-14-4 of the NMBCA. The
Mergers shall both become effective simultaneously and at the time that
PSCo and SPS shall agree as specified in the articles of merger for the
Mergers (the time the Mergers become effective being hereinafter called
the "Effective Time").
ARTICLE II
TREATMENT OF SHARES
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<PAGE>
Section 2.1 Effect of Mergers on Capital Stock. At the
Effective Time, by virtue of the Mergers and without any action on the
part of any holder of any capital stock of PSCo, SPS, Merger Sub A, Merger
Sub B or the Company:
(a) Cancellation of Certain Common Stock. Each share of
PSCo common stock, par value $5.00 per share ("PSCo Common Stock"), and
each share of SPS common stock, par value $1.00 per share ("SPS Common
Stock"), together with any PSCo Rights (as defined in Section 4.18) or SPS
Rights (as defined in Section 5.18), that are owned by PSCo or any of its
subsidiaries (as defined in Section 4.1) or by SPS or any of its
subsidiaries, as the case may be, shall be cancelled and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(b) Conversion of Certain Common Stock. Each share of PSCo
Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares cancelled pursuant to Section 2.1(a) and shares
with respect to which the holder thereof duly exercises the right to
dissent under applicable law) shall be converted into the right to receive
1.00 share[s] ("PSCo Conversion Ratio") of Company common stock, par value
$1.00 per share ("Company Common Stock"), and each share of SPS Common
Stock issued and outstanding immediately prior to the Effective Time
(other than shares cancelled pursuant to Section 2.1(a) and shares with
respect to which the holder thereof duly exercises the right to dissent
under applicable law) shall be converted into the right to receive 0.95
share[s] ("SPS Conversion Ratio") of Company Common Stock. Upon such
conversions as provided for herein and in the respective Merger
Agreements, each holder of a certificate formerly representing any such
shares of PSCo Common Stock or SPS Common Stock shall cease to have any
rights with respect thereto, except the right to receive the shares of
Company Common Stock to be issued in consideration therefor (and cash in
lieu of fractional shares) upon the surrender of such certificate in
accordance with Section 2.2.
(c) Cancellation of Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time shall be cancelled, and no consideration shall be delivered
in exchange therefor.
(d) Preferred Stock Unchanged. Each of the PSCo Preferred
Shares, par value $100.00 per share and each share of PSCo Preferred
Stock, par value $25.00 per share (collectively, "PSCo Preferred Stock"),
and each share of SPS Preferred Stock, par value $100.00 per share and
each share of SPS Preferred Stock, par value $25.00 per share
(collectively, "SPS Preferred Stock") shall be unchanged in and shall
remain outstanding after the Mergers.
(e) Shares of Dissenting Holders. Any issued and
outstanding shares of SPS Common Stock, PSCo Common Stock, SPS Preferred
Stock or PSCo Preferred Stock held by a person who objects to the Merger
and complies with all applicable provisions of the CBCA or the NMBCA, as
applicable, concerning the right of such person to dissent from the
Mergers and demand appraisal of such shares ("Dissenting Holder") shall
from and after the Effective Time represent only the right to receive such
consideration as may be determined to be due to such Dissenting Holder
with respect to such shares pursuant to the CBCA or the NMBCA, as
applicable, and, in the case of shares of SPS Common Stock and PSCo Common
Stock, shall not be converted as described in Section 2.1(b); provided,
however, that shares outstanding immediately prior to the Effective Time
and held by a Dissenting Holder who shall withdraw the demand for
appraisal, or lose the right of appraisal of such shares, pursuant to the
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CBCA or the NMBCA, as applicable, shall (i) in the case of shares of SPS
Common Stock or PSCo Common Stock, be deemed to be converted, as of the
Effective Time, into the right to receive the Company Common Stock
specified in Section 2.1(b) and cash in lieu of fractional shares in
accordance with Section 2.2, without interest, and (ii) in the case of
shares of SPS Preferred Stock or PSCo Preferred Stock, be unchanged in and
remain outstanding after the Mergers, without interest.
Section 2.2 Exchange of Common Stock Certificates.
(a) Deposit with Exchange Agent. As soon as practicable
after the Effective Time, the Company shall deposit with a bank, trust
company or other agent selected by PSCo and SPS ("Exchange Agent")
certificates representing shares of Company Common Stock required to
effect the conversion of PSCo or SPS, as the case may be, Common Stock
into Company Common Stock referred to in Section 2.1(b).
(b) Exchange Procedures. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of
a certificate or certificates which immediately prior to the Effective
Time represented issued and outstanding shares of PSCo or SPS, as the case
may be, Common Stock ("Certificates") that were converted ("Converted
Shares") into the right to receive shares of Company Common Stock
("Company Shares") pursuant to Section 2.1(b), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the exchange of Certificates for certificates representing
Company Shares. Upon delivery of a Certificate to the Exchange Agent for
exchange, together with a duly executed letter of transmittal and such
other documents as the Exchange Agent shall require, the holder of such
Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole Company Shares and the
amount of cash in lieu of fractional share interests which such holder has
the right to receive pursuant to the provisions of this Article II. In
the event of a transfer of ownership of Converted Shares which is not
registered in the transfer records of PSCo or SPS, as the case may be, a
certificate representing the proper number of Company Shares may be issued
to a transferee if the Certificate representing such Converted Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence satisfactory to the
Exchange Agent that any applicable stock transfer taxes have been paid.
Until delivered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such delivery the certificate representing Company
Shares and cash in lieu of any fractional shares of Company Common Stock
as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time
with respect to Company Shares with a record date after the Effective Time
shall be paid to the holder of any undelivered Certificate with respect to
the Company Shares represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
2.2(d), until the holder of record of such Certificate (or a transferee as
described in Section 2.2(b)) shall have delivered such Certificate as
contemplated in Section 2.2(b). Subject to the effect of unclaimed
property, escheat and other applicable laws, following delivery of any
such Certificate, there shall be paid to the record holder (or transferee)
of the certificates representing whole Company Shares issued in exchange
therefor, without interest, (i) at the time of such delivery, the amount
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<PAGE>
of any cash payable in lieu of a fractional share of Company Common Stock
to which such holder (or transferee) is entitled pursuant to Section
2.2(d) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
Company Shares and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to delivery and a payment date subsequent to delivery
payable with respect to such whole Company Shares, as the case may be.
(d) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Company Common Stock shall be issued
upon the delivery for exchange of Certificates, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
shareholder of the Company.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (x) the number of
full shares of Company Common Stock delivered to the Exchange Agent by the
Company pursuant to Section 2.2(a) over (y) the aggregate number of full
shares of Company Common Stock to be distributed to holders of PSCo or
SPS, as the case may be, Common Stock pursuant to Section 2.2(b) (such
excess being herein called the "Excess Shares"). As soon after the
Effective Time as practicable, the Exchange Agent, as agent for the
holders of PSCo or SPS, as the case may be, Common Stock, shall sell the
Excess Shares at then prevailing prices on the New York Stock Exchange
("NYSE"), all in the manner provided in Section 2.2(d)(iii).
(iii) The sale of the Excess Shares by the Exchange
Agent shall be executed on the NYSE through one or more member firms of
the NYSE and shall be executed in round lots to the extent practicable.
Until the proceeds of such sale or sales have been distributed to the
holders of PSCo or SPS, as the case may be, Common Stock, the Exchange
Agent shall, until remitted pursuant to Section 2.2(f), hold such proceeds
in trust for the holders of PSCo or SPS, as the case may be, Common Stock
("Common Shares Trust"). The Company shall pay all commissions, transfer
taxes and other out-of-pocket transaction costs, including the expenses
and compensation, of the Exchange Agent incurred in connection with such
sale of the Excess Shares. The Exchange Agent shall determine the portion
of the proceeds comprising the Common Shares Trust to which each holder of
PSCo or SPS, as the case may be, Common Stock shall be entitled, if any,
by multiplying the amount of the aggregate proceeds comprising the Common
Shares Trust by a fraction the numerator of which is the amount of the
fractional share interest to which such holder of PSCo or SPS, as the case
may be, Common Stock is entitled and the denominator of which is the
aggregate amount of fractional share interests to which all holders of
PSCo or SPS, as the case may be, Common Stock are entitled.
(iv) As soon as practicable after the sale of Excess
Shares pursuant to clause (iii) above and the determination of the amount
of cash, if any, to be paid to holders of PSCo or SPS, as the case may be,
Common Stock in lieu of any fractional share interests, the Exchange Agent
shall distribute such amounts to holders of PSCo or SPS, as the case may
be, Common Stock who have theretofore delivered Certificates for PSCo or
SPS, as the case may be, Common Stock for exchange pursuant to this
Article II.
(e) Closing of Transfer Books. From and after the Effective
Time, the stock transfer books of PSCo with respect to shares of PSCo
Common Stock, and of SPS with respect to shares of SPS Common Stock,
issued and outstanding prior to the Effective Time shall be closed and no
transfer of any such shares shall thereafter be made. If, after the
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<PAGE>
Effective Time, Certificates are presented to the Company, they shall be
cancelled and exchanged for certificates representing the appropriate
number of whole Company Shares and cash in lieu of fractional shares of
Company Common Stock as provided in this Section 2.2.
(f) Termination of Exchange Agent. Any certificates
representing Company Shares deposited with the Exchange Agent pursuant to
Section 2.2(a) and not exchanged within one year after the Effective Time
pursuant to this Section 2.2 shall be returned by the Exchange Agent to
the Company, which shall thereafter act as Exchange Agent. All funds held
by the Exchange Agent for payment to the holders of undelivered
Certificates and unclaimed at the end of one year from the Effective Time
shall be remitted to the Company, after which time any holder of un-
delivered Certificates shall look as a general creditor only to the
Company for payment of such funds to which such holder may be due, subject
to applicable law. The Company shall not be liable to any person for such
shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing (the "Closing") of the
Mergers shall take place at a place to be mutually agreed upon by the
parties hereto at 10:00 A.M., local time, on the second business day
immediately following the date on which the last of the conditions set
forth in Article VIII is fulfilled or waived, or at such other time and
date as SPS and PSCo shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PSCo
PSCo represents and warrants to SPS as follows:
Section 4.1 Organization and Qualification. Except as
disclosed in Section 4.1 of the PSCo Disclosure Schedule (as defined in
Section 7.6(ii)), each of PSCo and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has all requisite corporate
power and authority, and has been duly authorized by all necessary
regulatory approvals and orders, to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, and
is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its
assets and properties makes such qualification necessary other than in
such jurisdictions where the failure to be so qualified and in good
standing will not, when taken together with all other such failures, have
a material adverse effect on the business, operations, properties, assets,
condition (financial or otherwise), prospects or results of operations of
PSCo and its subsidiaries taken as a whole or on the consummation of this
Agreement or the PSCo Merger Agreement (any such material adverse effect
being hereinafter referred to as a "PSCo Material Adverse Effect"). As
used in this Agreement the term "subsidiary" with respect to any person
shall mean any corporation or other entity (including partnerships and
other business associations) in which such person directly or indirectly
owns outstanding capital stock or other voting securities having the
power, under ordinary circumstances, to elect a majority of the directors
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<PAGE>
or similar members of the governing body of such corporation or other
entity, or otherwise to direct the management and policies of such
corporation or other entity.
Section 4.2 Subsidiaries. Section 4.2 of the PSCo Disclosure
Schedule contains a description as of the date hereof of all subsidiaries
and joint ventures of PSCo, including the name of each such entity, the
state or jurisdiction of its incorporation, a brief description of the
principal line or lines of business conducted by each such entity and
PSCo's interest therein. Except as disclosed in Section 4.2 of the PSCo
Disclosure Schedule, none of such entities is a "public utility company",
a "holding company", a "subsidiary company" or an "affiliate" of any
public utility company within the meaning of Section 2(a)(5), 2(a)(7),
2(a)(8) or 2(a)(11) of the Public Utility Holding Company Act of 1935, as
amended (the "1935 Act"), respectively. Except as disclosed in Section
4.2 of the PSCo Disclosure Schedule, all of the issued and outstanding
shares of capital stock of each subsidiary of PSCo are validly issued,
fully paid, nonassessable and free of preemptive rights and are owned
directly or indirectly by PSCo free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any
nature whatsoever, and there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter
into any such agreement or commitment. As used in this Agreement, the
term "joint venture" with respect to any person shall mean any corporation
or other entity (including partnerships and other business associations
and joint ventures) in which such person or one or more of its
subsidiaries owns an equity interest that is less than a majority of any
class of the outstanding voting securities or equity, other than equity
interests held for passive investment purposes that are less than 5% of
any class of the outstanding voting securities or equity.
Section 4.3 Capitalization. The authorized capital stock of
PSCo consists of 140,000,000 shares of PSCo Common Stock and 7,000,000
shares of PSCo Preferred Stock. As of the close of business on July 31,
1995, 62,931,908 shares of PSCo Common Stock and 2,902,412 shares of PSCo
Preferred Stock were issued and outstanding. All of the issued and
outstanding shares of the capital stock of PSCo are validly issued, fully
paid, nonassessable and free of preemptive rights. Except as disclosed in
Section 4.3 of the PSCo Disclosure Schedule and except for the PSCo Rights
(as defined in Section 4.18), as of the date hereof, there are no
outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under
any outstanding security, instrument or other agreement, obligating PSCo
or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the capital stock or other
voting securities of PSCo or obligating PSCo or any of its subsidiaries to
grant, extend or enter into any such agreement or commitment.
Section 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. PSCo has all requisite power and authority
to enter into this Agreement and the PSCo Merger Agreement and, subject to
the PSCo Shareholders' Approvals (as defined in Section 4.13) and the PSCo
Required Statutory Approvals (as defined in Section 4.4(c)), to consummate
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the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the PSCo Merger Agreement and the
consummation by PSCo of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
PSCo, subject to obtaining the PSCo Shareholders' Approvals. This
Agreement has been, and the PSCo Merger Agreement will be, duly and
validly executed and delivered by PSCo and, assuming the due
authorization, execution and delivery of this Agreement by SPS and the
Company and of the PSCo Merger Agreement by Merger Sub A, constitutes, or
will constitute, the legal, valid and binding obligation of PSCo
enforceable against PSCo in accordance with its terms.
(b) Non-Contravention. Except as disclosed in Section
4.4(b) of the PSCo Disclosure Schedule, the execution and delivery of this
Agreement by PSCo do not, and the execution and delivery by PSCo of the
PSCo Merger Agreement and the consummation of the transactions
contemplated hereby and thereby will not, violate, conflict with or result
in a breach of any provision of, or constitute a default (with or without
notice or lapse of time or both) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination, cancellation or acceleration of any obligation under or the
loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or
assets (any such violation, conflict, breach, default, right of
termination, cancellation or acceleration, loss or creation, a
"Violation") of PSCo or any of its subsidiaries or, to the best knowledge
of PSCo, any of its joint ventures, under any provisions of (i) the
articles of incorporation, bylaws or similar governing documents of PSCo
or any of its subsidiaries or joint ventures, (ii) subject to obtaining
the PSCo Required Statutory Approvals and the receipt of the PSCo
Shareholders' Approvals, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court,
governmental or regulatory body (including a stock exchange or other self-
regulatory body) or authority, domestic or foreign (each, a "Governmental
Authority"), applicable to PSCo or any of its subsidiaries or joint
ventures or any of their respective properties or assets or (iii) subject
to obtaining the third-party consents or other approvals set forth in
Section 4.4(b) of the PSCo Disclosure Schedule (the "PSCo Required
Consents"), any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which PSCo or any of its
subsidiaries or joint ventures is now a party or by which any of them or
any of their respective properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such Violations as
would not have, in the aggregate, a PSCo Material Adverse Effect.
(c) Statutory Approvals. Except as disclosed in Section
4.4(c) of the PSCo Disclosure Schedule, no declaration, filing or
registration with, or notice to or authorization, consent, finding by or
approval of, any Governmental Authority is necessary for the execution and
delivery of this Agreement or the PSCo Merger Agreement by PSCo or the
consummation by PSCo of the transactions contemplated hereby or thereby,
the failure to obtain, make or give which would have, in the aggregate, a
PSCo Material Adverse Effect (the "PSCo Required Statutory Approvals"), it
being understood that references in this Agreement to "obtaining" such
PSCo Required Statutory Approvals shall mean making such declarations,
filings or registrations; giving such notice; obtaining such consents or
approvals; and having such waiting periods expire as are necessary to
avoid a violation of law.
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(d) Compliance. Except as disclosed in Section 4.4(d) or
4.11 of the PSCo Disclosure Schedule or as disclosed in the PSCo SEC
Reports (as defined in Section 4.5), neither PSCo nor any of its
subsidiaries nor, to the best knowledge of PSCo, any of its joint ventures
is in violation of or under investigation with respect to, or has been
given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without
limitation, any applicable Environmental Laws (as defined in Section
4.11(g)) of any Governmental Authority, except for violations that, in the
aggregate, do not have, and, to the best knowledge of PSCo, are not
reasonably likely to have, a PSCo Material Adverse Effect. Except as
disclosed in Section 4.4(d) or 4.11 of the PSCo Disclosure Schedule, PSCo,
its subsidiaries and, to the best knowledge of PSCo, its joint ventures
have all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their
respective businesses as currently conducted (collectively, "Permits"),
except those the failure to obtain which, in the aggregate, would not have
a PSCo Material Adverse Effect.
Section 4.5 Reports and Financial Statements. The filings
required to be made by PSCo and its subsidiaries since January 1, 1990
under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
applicable Colorado and Wyoming laws and regulations, the Federal Power
Act (the "Power Act"), the Natural Gas Act, the 1935 Act or the Atomic
Energy Act of 1954, as amended (the "Atomic Energy Act") have been filed
with the Securities and Exchange Commission (the "SEC"), the Colorado
Public Utility Commission (the "Colorado Commission"), the Wyoming Public
Service Commission (the "Wyoming Commission"), the Federal Energy
Regulatory Commission (the "FERC") or the Nuclear Regulatory Commission
(the "NRC"), as the case may be, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, and complied in all material respects
with all applicable requirements of the appropriate act and the rules and
regulations thereunder. PSCo has made available to SPS a true and
complete copy of each report, schedule, registration statement and
definitive proxy statement filed by PSCo with the SEC since
January 1, 1990 and through the date hereof (as such documents have since
the time of their filing been amended, the "PSCo SEC Reports"). The PSCo
SEC Reports, including without limitation any financial statements or
schedules included therein, at the time filed, and any forms, reports or
other documents filed by PSCo with the SEC after the date hereof, did not
and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements
and unaudited interim financial statements of PSCo included in the PSCo
SEC Reports (collectively, the "PSCo Financial Statements") have been
prepared, and will be prepared, in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as
may be indicated therein or in the notes thereto and except with respect
to unaudited statements as permitted by Form 10-Q) and fairly present the
consolidated financial position of PSCo as of the respective dates thereof
or the consolidated results of operations and cash flows for the
respective periods then ended, as the case may be, subject, in the case of
the unaudited interim financial statements, to normal, recurring audit
adjustments. True, accurate and complete copies of the articles of
incorporation and bylaws of PSCo, as in effect on the date hereof, have
been delivered to SPS.
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Section 4.6 Absence of Certain Changes or Events. Except as
disclosed in the PSCo SEC Reports filed prior to the date hereof or as
disclosed in Section 4.6 of the PSCo Disclosure Schedule, from December
31, 1994 through the date hereof each of PSCo and each of its subsidiaries
has conducted its business only in the ordinary course of business
consistent with past practice and no event has occurred which has had, and
no fact or condition exists that would have or, to the best knowledge of
PSCo, is reasonably likely to have, a PSCo Material Adverse Effect. For
purposes of this Section 4.6, the amount of any fine or penalty imposed or
assessed against PSCo after the date of this Agreement may be taken into
account in determining whether a PSCo Material Adverse Effect has occurred
regardless of whether or not the event, fact or condition which lead to
the imposition or assessment of the fine or penalty has been disclosed in
the PSCo SEC Reports or the PSCo Disclosure Schedule.
Section 4.7 Litigation. Except as disclosed in the PSCo SEC
Reports filed prior to the date hereof or as disclosed in Section 4.7, 4.9
or 4.11 of the PSCo Disclosure Schedule, (i) there are no claims, suits,
actions or proceedings pending or, to the best knowledge of PSCo,
threatened, nor are there any investigations or reviews pending or, to the
best knowledge of PSCo, threatened against, relating to or affecting PSCo
or any of its subsidiaries, (ii) there have not been any developments
since December 31, 1994 with respect to any such disclosed claims, suits,
actions, proceedings, investigations or reviews and (iii) there are no
judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority
or any arbitrator applicable to PSCo or any of its subsidiaries that in
the aggregate would have, or to the best knowledge of PSCo are reasonably
likely to have, a PSCo Material Adverse Effect.
Section 4.8 Registration Statement and Proxy Statement. None
of the information supplied or to be supplied by or on behalf of PSCo for
inclusion or incorporation by reference in (i) the registration statement
on Form S-4 to be filed with the SEC by the Company in connection with the
issuance of shares of Company Common Stock in the Merger (the
"Registration Statement") will, at the time the Registration Statement
becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading
and (ii) the joint proxy in definitive form, relating to the meetings of
the shareholders of SPS and PSCo to be held in connection with the Mergers
and the prospectus relating to the Company Common Stock to be issued in
the Mergers (the "Joint Proxy Statement") will, at the date mailed to such
shareholders and, as the same may be amended or supplemented, at the times
of such meetings, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement and the Joint Proxy Statement will
comply as to form in all material respects with the provisions of the
Securities Act and the Exchange Act and the rules and regulations
thereunder.
Section 4.9 Tax Matters. "Taxes", as used in this Agreement,
means any federal, state, county, local or foreign taxes, charges, fees,
levies, or other assessments, including all net income, gross income,
sales and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipts, capital stock, production,
business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes and any
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expenses incurred in connection with the determination, settlement or
litigation of any tax liability. "Tax Return", as used in this Agreement,
means a report, return or other information required to be supplied to a
governmental entity with respect to Taxes including, where permitted or
required, combined or consolidated returns for any group of entities that
includes PSCo or any of its subsidiaries on the one hand, or SPS or any of
its subsidiaries on the other hand.
(a) Filing of Timely Tax Returns. Except as disclosed in
Section 4.9(a) of the PSCo Disclosure Schedule, PSCo and each of its
subsidiaries have filed all Tax Returns required to be filed by each of
them under applicable law. All Tax Returns were in all material respects
(and, as to Tax Returns not filed as of the date hereof, will be) true,
complete and correct and filed on a timely basis.
(b) Payment of Taxes. PSCo and each of its subsidiaries
have, within the time and in the manner prescribed by law, paid (and until
the Closing Date will pay within the time and in the manner prescribed by
law) all Taxes that are currently due and payable except for those
contested in good faith and for which adequate reserves have been taken.
(c) Tax Reserves. PSCo and its subsidiaries have
established (and until the Closing Date will maintain) on their books and
records reserves adequate to pay all Taxes and reserves for deferred
income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of
PSCo or any of its subsidiaries except liens for Taxes not yet due.
(e) Withholding Taxes. PSCo and each of its subsidiaries
have complied (and until the Closing Date will comply) in all material
respects with the provisions of the Code relating to the payment and
withholding of Taxes, including, without limitation, the withholding and
reporting requirements under Code sections 1441 through 1464, 3401 through
3606, and 6041 and 6049, as well as similar provisions under any other
laws, and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper governmental
authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Except as
disclosed in Section 4.9(f) of the PSCo Disclosure Schedule, neither PSCo
nor any of its subsidiaries has requested any extension of time within
which to file any Tax Return, which Tax Return has not since been filed.
(g) Waivers of Statute of Limitations. Except as disclosed
in Section 4.9(g) of the PSCo Disclosure Schedule, neither PSCo nor any of
its subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. Except as
disclosed in Section 4.9(h) of the PSCo Disclosure Schedule, the statute
of limitations for the assessment of all Taxes has expired for all
applicable Tax Returns of PSCo and each of its subsidiaries or those Tax
Returns have been examined by the appropriate taxing authorities for all
periods through the date hereof, and no deficiency for any Taxes has been
proposed, asserted or assessed against PSCo or any of its subsidiaries
that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. Except as
disclosed in Section 4.9(i) of the PSCo Disclosure Schedule, no audits or
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other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of PSCo or any of its
subsidiaries.
(j) Powers of Attorney. Except as disclosed in Section
4.9(j) of the PSCo Disclosure Schedule, no power of attorney currently in
force has been granted by PSCo or any of its subsidiaries concerning any
Tax matter.
(k) Tax Rulings. Except as disclosed in Section 4.9(k) of
the PSCo Disclosure Schedule, neither PSCo nor any of its subsidiaries has
received a Tax Ruling (as defined below) or entered into a Closing
Agreement (as defined below) with any taxing authority that would have a
continuing adverse effect after the Closing Date. "Tax Ruling", as used
in this Agreement, shall mean a written ruling of a taxing authority
relating to Taxes. "Closing Agreement", as used in this Agreement, shall
mean a written and legally binding agreement with a taxing authority
relating to Taxes.
(l) Availability of Tax Returns. PSCo and its subsidiaries
have made available to SPS complete and accurate copies, covering all
years ending on or after December 31, 1990, of (i) all Tax Returns, and
any amendments thereto, filed by PSCo or any of its subsidiaries, (ii) all
audit reports received from any taxing authority relating to any Tax
Return filed by PSCo or any of its subsidiaries and (iii) any Closing
Agreements entered into by PSCo or any of its subsidiaries with any taxing
authority.
(m) Tax Sharing Agreements. Except as disclosed in Section
4.9(m) of the PSCo Disclosure Schedule, no agreements relating to the
allocation or sharing of Taxes exist between or among PSCo and any of its
subsidiaries.
(n) Code section 341(f). Neither PSCo nor any of its
subsidiaries has filed (or will file prior to the Closing) a consent
pursuant to Code section 341(f) or has agreed to have
Code section 341(f)(2) apply to any disposition of a subsection (f) asset
(as such term is defined in Code section 341(f)(4)) owned by PSCo or any
of its subsidiaries.
(o) Code section 168. Except as disclosed in Section 4.9(o)
of the PSCo Disclosure Schedule, no property of PSCo or any of its
subsidiaries is property that PSCo or any such subsidiary or any party to
this transaction is or will be required to treat as being owned by another
person pursuant to the provisions of Code section 168(f)(8) (as in effect
prior to its amendment by the Tax Reform Act of 1986) or is tax-exempt use
property within the meaning of Code section 168.
(p) Code section 481 Adjustments. Except as disclosed in
Section 4.9(p) of the PSCo Disclosure Schedule, neither PSCo nor any of
its subsidiaries is required to include in income any adjustment pursuant
to Code section 481(a) by reason of a voluntary change in accounting
method initiated by PSCo or any of its subsidiaries, and, to the best of
the knowledge of PSCo, the Internal Revenue Service (the "IRS") has not
proposed any such adjustment or change in accounting method.
(q) Code sections 6661 and 6662. Except as disclosed in
Section 4.9(q) of the PSCo Disclosure Schedule, all transactions that
could give rise to an understatement of federal income tax (within the
meaning of Code section 6661 for Tax Returns filed on or before December
31, 1989, and within the meaning of Code section 6662 for tax returns
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filed after December 31, 1989) that could reasonably be expected to result
in a PSCo Material Adverse Effect have been adequately disclosed (or, with
respect to Tax Returns filed following the Closing, will be adequately
disclosed) on the Tax Returns of PSCo and its subsidiaries in accordance
with Code section 6661(b)(2)(B) for Tax Returns filed on or prior to
December 31, 1989, and in accordance with Code section 6662(d)(2)(B) for
Tax Returns filed after December 31, 1989.
(r) Code section 280G. Except as disclosed in Section
4.9(r) of the PSCo Disclosure Schedule, neither PSCo nor any of its
subsidiaries is a party to any agreement, contract, or arrangement that
could reasonably be expected to result, on account of the transactions
contemplated hereunder, separately or in the aggregate, in the payment of
any "excess parachute payment" within the meaning of Code section 280G.
(s) NOLS. As of December 31, 1993, PSCo and its
subsidiaries had net operating loss carryovers available to offset future
income as disclosed in Section 4.9(s) of the PSCo Disclosure Schedule.
Section 4.9(s) of the PSCo Disclosure Schedule discloses the amount of and
year of expiration of each company's net operating loss carryovers.
(t) Credit Carryover. As of December 31, 1993, PSCo and its
subsidiaries had tax credit carryovers available to offset future tax
liability as disclosed in Section 4.9(t) of the PSCo Disclosure Schedule.
Section 4.9(t) of the PSCo Disclosure Schedule discloses the amount and
year of expiration of each company's tax credit carryovers.
(u) Code section 338 Elections. Except as disclosed in
Section 4.9(u) of the PSCo Disclosure Schedule, no election under Code
section 338 (or any predecessor provision) has been made by or with
respect to PSCo or any of its subsidiaries or any of their respective
assets or properties.
(v) Acquisition Indebtedness. Except as disclosed in
Section 4.9(v) of the PSCo Disclosure Schedule, no indebtedness of PSCo or
any of its subsidiaries is "corporate acquisition indebtedness" within the
meaning of Code section 279(b).
(w) Intercompany Transactions. Except as disclosed in
Section 4.9(w) of the PSCo Disclosure Schedule, neither PSCo nor any of
its subsidiaries have engaged in any intercompany transactions within the
meaning of Treasury Regulations section 1.1502-13 for which any income or
gain will remain unrecognized as of the close of the last taxable year
prior to the Closing Date.
Section 4.10 Employee Matters; ERISA.
(a) Benefit Plans. Section 4.10(a) of the PSCo Disclosure
Schedule contains a true and complete list of: (i) each employee benefit
plan, program or arrangement covering employees, former employees or
directors of PSCo (or any of its subsidiaries) or any of their dependents
or beneficiaries, or providing benefits to such persons in respect of
services provided to any such entity, including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (whether or
not terminated, if PSCo or any of its subsidiaries could have statutory or
contractual liability with respect thereto on or after the date hereof);
(ii) each management, employment, deferred compensation, severance
(including any payment, right or benefit resulting from a change in
control), bonus or other contract for personal services with or covering
any current officer, key employee or director or any consulting contract
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with any person who prior to entering into such contract was a director or
officer of PSCo or any of its subsidiaries (whether or not terminated, if
PSCo or any of its subsidiaries could have statutory or contractual
liability with respect thereto on or after the date hereof); (iii) each
"employee pension benefit plan" (within the meaning of ERISA section 3(2))
subject to Title IV of ERISA or the minimum funding requirements of Code
section 412 maintained or contributed to by PSCo or any entity required to
be aggregated therewith pursuant to Code section 414(b) or (c) (a "PSCo
ERISA Affiliate") at any time during the seven-year period immediately
preceding the date hereof (collectively, the "PSCo Benefit Plans") and
(iv) with respect to each PSCo Benefit Plan, the source or sources of
benefit payments under the plan (including, where applicable, the identity
of any trust (whether or not a grantor trust), insurance contract,
custodial account, agency agreement, or other arrangement that holds the
assets of, or serves as a funding vehicle or source of benefits for, such
PSCo Benefit Plan).
(b) Contributions. Except as disclosed in Section 4.10(b)
of the PSCo Disclosure Schedule, all material contributions and other
payments required to have been made by PSCo or any of its subsidiaries
pursuant to any PSCo Benefit Plan (or to any person pursuant to the terms
thereof) have been timely made or the amount of such payment or
contribution obligation has been reflected in the PSCo Financial
Statements.
(c) Qualification; Compliance. Except as disclosed in
Section 4.10(c) of the PSCo Disclosure Schedule, each PSCo Benefit Plan
that is intended to be "qualified" within the meaning of Code
section 401(a) has been determined by the IRS to be so qualified, and, to
the best knowledge of PSCo, no event or condition exists or has occurred
that could reasonably be expected to result in the revocation of any such
determination. PSCo and each of its subsidiaries are in compliance with,
and each PSCo Benefit Plan is and has been operated in compliance with,
all applicable laws, rules and regulations governing such plan, including,
without limitation, ERISA and the Code, except for violations that could
not reasonably be expected to have a PSCo Material Adverse Effect. To the
best knowledge of PSCo, no individual or entity has engaged in any
transaction with respect to any PSCo Benefit Plan as a result of which
PSCo or any of its subsidiaries could reasonably expect to be subject to
liability pursuant to ERISA section 409 or section 502, or subject to an
excise tax pursuant to Code section 4975. To the best knowledge of PSCo,
(i) no PSCo Benefit Plan is subject to any ongoing audit, investigation,
or other administrative proceeding of the Internal Revenue Service, the
Department of Labor, or any other federal, state, or local governmental
entity, and (ii) no PSCo Benefit Plan is the subject of any pending
application for administrative relief under any voluntary compliance
program of any governmental entity (including, without limitation, the
IRS's Voluntary Compliance Resolution Program or Walk-in Closing Agreement
Program, or the Department of Labor's Delinquent Filer Voluntary
Compliance Program).
(d) Liabilities. With respect to the PSCo Benefit Plans,
individually and in the aggregate, no termination or partial termination
of any PSCo Benefit Plan or other event has occurred, and, to the best
knowledge of PSCo, there exists no condition or set of circumstances, that
could subject PSCo or any of its subsidiaries to any liability arising
under the Code, ERISA or any other applicable law (including, without
limitation, any liability to or under any such plan or to the Pension
Benefit Guaranty Corporation (the "PBGC"), or under any indemnity
agreement to which PSCo, any of its subsidiaries or any PSCo ERISA
Affiliate is a party, which liability, excluding liability for benefit
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claims and funding obligations payable in the ordinary course and
liability for PBGC insurance premiums payable in the ordinary course,
could reasonably be expected to have a PSCo Material Adverse Effect.
(e) Welfare Plans. Except as disclosed in Section 4.10(e)
of the PSCo Disclosure Schedule, no PSCo Benefit Plan that is a "welfare
plan" (within the meaning of ERISA section 3(1)) provides benefits for any
retired or former employees (other than as required pursuant to ERISA
section 601).
(f) Documents Made Available. PSCo has made available to
SPS a true and correct copy of each collective bargaining agreement to
which PSCo is a party or under which PSCo has obligations and, with
respect to each PSCo Benefit Plan, as applicable (i) the current plan
document (including all amendments adopted since the most recent
restatement) and its most recently prepared summary plan description and
all summaries of material modifications prepared since the most recent
summary plan description, (ii) the most recently prepared annual report
(IRS Form 5500 Series) including financial statements, (iii) each related
trust agreement, insurance contract, service provider or investment
management agreement (including all amendments to each such document),
(iv) the most recent IRS determination letter with respect to the
qualified status under Code section 401(a) of such plan and a copy of any
application for an IRS determination letter filed since the most recent
IRS determination letter was issued, and (v) the most recent actuarial
report or valuation.
(g) Payments Resulting from Mergers. Other than as set
forth in Section 7.11 or disclosed in Section 4.10(g) of the PSCo
Disclosure Schedule, the consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any (i)
payment (whether of severance pay or otherwise) becoming due from the
Company or PSCo or any of its subsidiaries under any applicable PSCo
Benefit Plans to any officer, employee, former employee or director
thereof or to the trustee under any "rabbi trust" or similar arrangement,
or (ii) benefit under any PSCo Benefit Plan being established or becoming
accelerated, vested or payable, except for a payment or benefit that would
have been payable under the same terms and conditions without regard to
the transactions contemplated by this Agreement.
(h) Funded Status of Plans. Except as disclosed in Section
4.10(h) of the PSCo Disclosure Schedule, each PSCo Benefit Plan that is
subject to either or both of the minimum funding requirements of ERISA
section 302 or to Title IV of ERISA has assets that, as of the date
hereof, have a fair market value equal to or exceeding the present value
of the accrued benefit obligations thereunder on a termination basis, as
of the date hereof based on the actuarial methods, tables and assumptions
theretofore utilized by such plan's actuary in preparing such plan's most
recently prepared actuarial valuation report, except to the extent that
applicable law would require the use of different actuarial assumptions if
such plan was to be terminated as of the date hereof. No PSCo Benefit
Plan subject to the minimum funding requirements of ERISA section 302 has
incurred any "accumulated funding deficiency" (within the meaning of ERISA
section 302).
(i) Multiemployer Plans. Except as disclosed in
Section 4.10(i) of the PSCo Disclosure Schedule, no PSCo Benefit Plan is
or was a "multiemployer plan" (within the meaning of ERISA
section 4001(a)(3)), a multiple employer plan described in Code section
413(c), or a "multiple employer welfare arrangement" (within the meaning
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of ERISA section 3(40)); and none of PSCo, any subsidiary thereof or any
PSCo ERISA Affiliate has been obligated to contribute to, or otherwise has
or has had any liability with respect to, any multiemployer plan, multiple
employer plan, or multiple employer welfare arrangement. With respect to
any PSCo Benefit Plan that is listed in Section 4.10(i) of the PSCo
Disclosure Schedule as a multiemployer plan, PSCo and its subsidiaries
have not made or incurred a "complete withdrawal" or a "partial
withdrawal," as such terms are defined in ERISA sections 4203 and 4205,
therefrom at any time during the five calendar year period immediately
preceding the date of this Agreement and the transactions contemplated by
the Agreement will not, in and of themselves, give rise to such a
"complete withdrawal" or "partial withdrawal."
(j) Modification or Termination of Plans. Except as
disclosed in Section 4.10(j) of the PSCo Disclosure Schedule: (i) neither
PSCo nor any subsidiary of PSCo is subject to any legal, contractual,
equitable or other obligation to establish as of any date any employee
benefit plan of any nature, including (without limitation) any pension,
profit sharing, welfare, post-retirement welfare, stock option, stock or
cash award, non-qualified deferred compensation or executive compensation
plan, policy or practice; and (ii) to the best knowledge of PSCo, after
review of all PSCo Benefit Plan documents, the Company, PSCo or one or
more of its subsidiaries may, in any manner, and without the consent of
any employee, beneficiary or dependent, employees' organization or other
person, terminate, modify or amend any PSCo Benefit Plan or any other
employee benefit plan, policy, program or practice (or its participation
in any such PSCo Benefit Plan or other employee benefit plan, policy,
program or practice) at any time sponsored, maintained or contributed to
by PSCo or any of its subsidiaries, effective as of any date before, on or
after the Effective Time except to the extent that any retroactive
amendment would be prohibited by ERISA section 204(g).
(k) Reportable Events; Claims. Except as disclosed in
Section 4.10(k) of the PSCo Disclosure Schedule, (i) no event constituting
a "reportable event" (within the meaning of ERISA section 4043(b)) for
which the 30-day notice requirement has not been waived by the PBGC has
occurred with respect to any PSCo Benefit Plan and (ii) no liability,
claim, action or litigation has been made, commenced or, to the best
knowledge of PSCo, threatened, by or against PSCo or any of its
subsidiaries with respect to any PSCo Benefit Plan (other than for
benefits or PBGC premiums payable in the ordinary course) that could
reasonably be expected to have to a PSCo Material Adverse Effect.
(l) Labor Agreements. To the best knowledge of PSCo, as of
the date hereof, there is no current labor union representation question
involving employees of PSCo or any of its subsidiaries, nor does PSCo or
any of its subsidiaries know of any activity or proceeding of any labor
organization (or representative thereof) or employee group (or
representative thereof) to organize any such employees. Except as
disclosed in the PSCo SEC Reports or as disclosed in Section 4.10(l) of
the PSCo Disclosure Schedule: (i) neither PSCo nor any of its
subsidiaries is a party to any collective bargaining agreement or other
labor agreement with any union or labor organization; (ii) there is no
unfair labor practice charge or grievance arising out of a collective
bargaining agreement or other grievance procedure against PSCo or any of
its subsidiaries pending, or to the best knowledge of PSCo, threatened,
that has, or reasonably may be expected by PSCo to have, a PSCo Material
Adverse Effect; (iii) there is no complaint, lawsuit or proceeding in any
forum by or on behalf of any present or former employee, any applicant for
employment or classes of the foregoing alleging breach of any express or
implied contract of employment, any law or regulation governing employment
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or the termination thereof or other discriminatory, wrongful or tortious
conduct in connection with the employment relationship against PSCo or any
of its subsidiaries pending, or to the best knowledge of PSCo, threatened,
that has, or reasonably may be expected by PSCo to have, a PSCo Material
Adverse Effect; (iv) there is no strike, dispute, slowdown, work stoppage
or lockout pending, or to the best knowledge of PSCo, threatened, against
or involving PSCo or any of its subsidiaries that has or, insofar as
reasonably can be foreseen, could have, a PSCo Material Adverse Effect;
(v) PSCo and each of its subsidiaries are in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, except for non-compliance that, in the aggregate, does not, and
insofar as reasonably can be foreseen, will not, have a PSCo Material
Adverse Effect; and (vi) there is no proceeding, claim, suit, action or
governmental investigation pending or, to the best knowledge of PSCo,
threatened in respect to which any director, officer, employee or agent of
PSCo or any of its subsidiaries is or may be entitled to claim
indemnification from PSCo or any of its subsidiaries pursuant to their
respective articles of incorporation or bylaws or as provided in the
indemnification agreements listed on Section 4.10(l) of the PSCo
Disclosure Schedule.
Section 4.11 Environmental Protection.
(a) Compliance. Except as disclosed in Section 4.11(a) of
the PSCo Disclosure Schedule, or as disclosed in the PSCo SEC Reports,
each of PSCo and each of its subsidiaries is in material compliance with
all applicable Environmental Laws (as hereinafter defined in Section
4.11(g)), except where the failure to be so in material compliance would
not in the aggregate have a PSCo Material Adverse Effect. Except as
disclosed in Section 4.11(a) of the PSCo Disclosure Schedule, neither PSCo
nor any of its subsidiaries has received any written notice from any
person or Governmental Authority that alleges that PSCo or any of its
subsidiaries is not in material compliance with applicable Environmental
Laws, except where the failure to be so in material compliance would not
in the aggregate have a PSCo Material Adverse Effect.
(b) Environmental Permits. Except as disclosed in Section
4.11(b) of the PSCo Disclosure Schedule, or as disclosed in the PSCo SEC
Reports, PSCo and each of its subsidiaries has obtained or has applied for
all material environmental, health and safety permits and authorizations
(collectively, "Environmental Permits") necessary for the construction of
their facilities and the conduct of their operations, and all such
Environmental Permits are in good standing or, where applicable, a renewal
application has been timely filed and is pending agency approval, and PSCo
and its subsidiaries are in material compliance with all terms and
conditions of all such Environmental Permits and are not required to make
any material expenditures in connection with any renewal application
pending agency approval, except where the failure to obtain or be in such
compliance and the requirement to make such expenditures would not have in
the aggregate a PSCo Material Adverse Effect.
(c) Environmental Claims. Except as disclosed in Section
4.11(c) of the PSCo Disclosure Schedule, or as disclosed in the PSCo SEC
Reports, to the best knowledge of PSCo, there is no Environmental Claim
(as hereinafter defined in Section 4.11(g)) pending, or to the best
knowledge of PSCo, threatened (i) against PSCo or any of its subsidiaries
or joint ventures, (ii) against any person or entity whose liability for
any Environmental Claim PSCo or any of its subsidiaries or joint ventures
has or may have retained or assumed either contractually or by operation
of law or (iii) against any real or personal property or operations that
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PSCo or any of its subsidiaries or joint ventures owns, leases or manages,
in whole or in part, that, if adversely determined, would have in the
aggregate a PSCo Material Adverse Effect.
(d) Releases. Except as disclosed in Section 4.11(c) or
4.11(d) of the PSCo Disclosure Schedule, or as disclosed in the PSCo SEC
Reports, to the best knowledge of PSCo, there has been no Release (as
hereinafter defined in Section 4.11(g)) of any Hazardous Material (as
hereinafter defined in Section 4.11(g)) that would be reasonably likely to
form the basis of any Environmental Claim against PSCo or any subsidiary
or joint venture of PSCo, or against any person or entity whose liability
for any Environmental Claim PSCo or any subsidiary or joint venture of
PSCo has or may have retained or assumed either contractually or by
operation of law, except for Releases of Hazardous Materials the liability
for which would not have in the aggregate a PSCo Material Adverse Effect.
(e) Predecessors. Except as disclosed in Section 4.11(e) of
the PSCo Disclosure Schedule, or as disclosed in the PSCo SEC Reports, to
the best knowledge of PSCo, with respect to any predecessor of PSCo or any
subsidiary or joint venture of PSCo, there are no Environmental Claims
pending or threatened, or any Releases of Hazardous Materials that would
be reasonably likely to form the basis of any Environmental Claims that
would have, or that PSCo reasonably believes would have, in the aggregate
a PSCo Material Adverse Effect.
(f) Disclosure. To the best knowledge of PSCo, PSCo has
disclosed to SPS all material facts that PSCo reasonably believes form the
basis of a PSCo Material Adverse Effect arising from (i) the cost of
pollution control equipment currently required or known to be required in
the future, (ii) current investigatory, removal, remediation or response
costs or investigatory, removal, remediation or response costs known to be
required in the future, in each case, both on-site and off-site and (iii)
any other environmental matter affecting PSCo or its subsidiaries that
would have, or that PSCo reasonably believes would have, in the aggregate
a PSCo Material Adverse Effect.
(g) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation by any person or entity (including,
without limitation, any Governmental Authority) alleging potential
liability (including, without limitation, potential liability for
enforcement costs, investigatory costs, cleanup costs, response
costs, removal costs, remedial costs, natural resources damages,
property damages, personal injuries, fines or penalties) arising out
of, based on or resulting from (A) the presence, or Release or
threatened Release of any Hazardous Materials at any location,
whether or not owned, operated, leased or managed by PSCo or any of
its subsidiaries or joint ventures (for purposes of this
Section 4.11 only), or by SPS or any of its subsidiaries or joint
ventures (for purposes of Section 5.11 only), (B) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law or (C) any and all claims by any third party
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence or
Release of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state and local
laws, rules and regulations relating to pollution or protection of
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human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws and regulations
relating to Releases or threatened Releases of Hazardous Materials
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or
petroleum products or petroleum wastes (including crude oil or any
fraction thereof), radioactive materials, friable asbestos or
friable asbestos-containing material, urea formaldehyde foam
insulation, and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls, (B) any
chemicals, materials or substances which are now defined as or
included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic
pollutants", or words of similar import, under any Environmental Law
and (C) any other chemical, material, substance or waste, exposure
to which is now prohibited, limited or regulated under any
Environmental Law in a jurisdiction in which PSCo or any of its
subsidiaries or joint ventures operates (for purposes of this
Section 4.11 only) or in which SPS or any of its subsidiaries or
joint ventures operates (for purposes of Section 5.11 only).
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or
property (indoors or outdoors).
Section 4.12 Regulation as a Utility. PSCo is regulated as a
public utility in the State of Colorado and one of its wholly owned
subsidiaries is regulated as a public utility in the State of Wyoming.
Except as disclosed in Section 4.12 of the PSCo Disclosure Schedule,
neither PSCo nor any subsidiary company or affiliate of PSCo is subject to
regulation as a public utility or public service company (or similar
designation) by any other state in the United States, by the United States
or any agency or instrumentality of the United States or by any foreign
country. As used in this Section 4.12 and in Section 5.12, the terms
"subsidiary company" and "affiliate" shall have the respective meanings
ascribed to them in the 1935 Act. PSCo is a holding company exempt from
all provisions of the 1935 Act except Section 9(a)(2) pursuant to Section
3(a)(2) of the 1935 Act.
Section 4.13 Vote Required. The approval of the PSCo Merger
by two-thirds of all votes entitled to be cast by all holders of PSCo
Common Stock and PSCo Preferred Stock voting together as a single class
(the "PSCo Shareholders' Approvals") are the only votes of the holders of
any class or series of the capital stock of PSCo required to approve this
Agreement, the Merger Agreements, the Mergers and the other transactions
contemplated hereby.
Section 4.14 Accounting Matters. PSCo has not, through the
date hereof, taken or agreed to take any action that would prevent the
Company from accounting for the business combination to be effected by the
Mergers as a pooling-of-interests in accordance with GAAP and applicable
SEC regulations.
Section 4.15 Opinion of Financial Advisor. PSCo has received
the opinion of Barr Devlin & Co. Incorporated, dated the date hereof, to
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the effect that, as of the date hereof, the PSCo Conversion Ratio is fair
from a financial point of view to the holders of PSCo Common Stock.
Section 4.16 Insurance. Except as disclosed in Section 4.16
of the PSCo Disclosure Schedule, each of PSCo and each of its subsidiaries
is, and has been continuously since January 1, 1990, insured in such
amounts and against such risks and losses as are customary for companies
conducting the respective businesses conducted by PSCo and its
subsidiaries during such time period. Except as disclosed in Section 4.16
of the PSCo Disclosure Schedule, neither PSCo nor any of its subsidiaries
has received any notice of cancellation or termination with respect to any
material insurance policy thereof. All material insurance policies of
PSCo and its subsidiaries are valid and enforceable policies.
Section 4.17 Ownership of SPS Common Stock. PSCo does not
"beneficially own" (as such term is defined in Rule 13d-3 under the
Exchange Act) any shares of SPS Common Stock.
Section 4.18 PSCo Rights Agreement. PSCo shall take all
necessary action with respect to all of the outstanding rights to purchase
common stock of PSCo (the "PSCo Rights") issued pursuant to the Rights
Agreement, dated as of February 26, 1991 (the "PSCo Rights Agreement"),
between PSCo and Mellon Bank, N.A., as Rights Agent, so that PSCo, as of
the time immediately prior to the Effective Time, will have no obligations
under the PSCo Rights or the PSCo Rights Agreement, except for the payment
of any redemption price, if required, and so that the holders of the PSCo
Rights will have no rights under the PSCo Rights or the PSCo Rights Agree-
ment except for the payment of any redemption price, if required.
Assuming the accuracy of the representation contained in Section 5.17, the
execution, delivery and performance of this Agreement will not result in a
distribution of, or otherwise, trigger, the PSCo Rights under the PSCo
Rights Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SPS
SPS represents and warrants to PSCo as follows:
Section 5.1 Organization and Qualification. Except as
disclosed in Section 5.1 of the SPS Disclosure Schedule (as defined in
Section 7.6(i)), each of SPS and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation, has all requisite corporate power and
authority, and has been duly authorized by all necessary regulatory
approvals and orders, to own, lease and operate its assets and properties
and to carry on its business as it is now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its assets
and properties makes such qualification necessary other than in such
jurisdictions where the failure to be so qualified and in good standing
will not, when taken together with all other such failures, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or otherwise), prospects or results of operations of
SPS and its subsidiaries taken as a whole or on the consummation of this
Agreement or the SPS Merger Agreement (any such material adverse effect
being hereinafter referred to as a "SPS Material Adverse Effect").
Section 5.2 Subsidiaries. Section 5.2 of the SPS Disclosure
Schedule contains a description as of the date hereof of all subsidiaries
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and joint ventures of SPS, including the name of each such entity, the
state or jurisdiction of its incorporation, a brief description of the
principal line or lines of business conducted by each such entity and
SPS's interest therein. Except as disclosed in Section 5.2 of the SPS
Disclosure Schedule, none of such entities is a "public utility company",
a "holding company", a "subsidiary company" or an "affiliate" of any
public utility company within the meaning of Section 2(a)(5), 2(a)(7),
2(a)(8) or 2(a)(11) of the 1935 Act, respectively. Except as disclosed in
Section 5.2 of the SPS Disclosure Schedule, all of the issued and
outstanding shares of capital stock of each subsidiary of SPS are validly
issued, fully paid, nonassessable and free of preemptive rights and are
owned directly or indirectly by SPS free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any
nature whatsoever, and there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter
into any such agreement or commitment.
Section 5.3 Capitalization. The authorized capital stock of
SPS consists of 100,000,000 shares of SPS Common Stock and 5,000,000
shares of SPS Preferred Stock. As of the close of business on July 31,
1995, (i) 40,917,908 shares of SPS Common Stock and 1,416,800 shares of
SPS Preferred Stock were issued and outstanding. All of the issued and
outstanding shares of the capital stock of SPS are validly issued, fully
paid, nonassessable and free of preemptive rights. Except as disclosed in
Section 5.3 of the SPS Disclosure Schedule and except for the SPS Rights
(as defined in Section 5.18), as of the date hereof, there are no
outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under
any outstanding security, instrument or other agreement, obligating SPS or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock or other voting
securities of SPS or obligating SPS or any of its subsidiaries to grant,
extend or enter into any such agreement or commitment.
Section 5.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. SPS has all requisite power and authority to
enter into this Agreement and the SPS Merger Agreement and, subject to the
SPS Shareholders' Approvals (as defined in Section 5.13) and the SPS
Required Statutory Approvals (as defined in Section 5.4(c), to consummate
the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the SPS Merger Agreement and the
consummation by SPS of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
SPS, subject to obtaining the SPS Shareholders' Approvals. This Agreement
has been, and the SPS Merger Agreement will be, duly and validly executed
and delivered by SPS and, assuming the due authorization, execution and
delivery hereof by PSCo and the Company and of the SPS Merger Agreement by
Merger Sub B, constitutes, or will constitute, the legal, valid and
binding obligation of SPS enforceable against SPS in accordance with its
terms.
(b) Non-Contravention. Except as disclosed in Section
5.4(b) of the SPS Disclosure Schedule the execution and delivery of this
Agreement by SPS do not, and the execution and delivery of the SPS Merger
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Agreement and the consummation of the transactions contemplated hereby and
thereby will not result in any Violation by SPS or any of its subsidiaries
or, to the best knowledge of SPS, any of its joint ventures under any
provisions of (i) the articles of incorporation, bylaws or similar
governing documents of SPS or any of its subsidiaries or joint ventures,
(ii) subject to obtaining the SPS Required Statutory Approvals and the
receipt of the SPS Shareholders' Approvals, any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit or
license of any Governmental Authority applicable to SPS or any of its
subsidiaries or joint ventures or any of their respective properties or
assets, or (iii) subject to obtaining the third-party consents or other
approvals disclosed in Section 5.4(b) of the SPS Disclosure Schedule (the
"SPS Required Consents"), any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which SPS or any of its
subsidiaries or joint ventures is now a party or by which any of them or
any of their respective properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such Violations as
would not have, in the aggregate, a SPS Material Adverse Effect.
(c) Statutory Approvals. Except as disclosed in Section
5.4(c) of the SPS Disclosure Schedule, no declaration, filing or
registration with, or notice to or authorization, consent, finding by or
approval of, any Governmental Authority, is necessary for the execution
and delivery of this Agreement or the SPS Merger Agreement by SPS or the
consummation by SPS of the transactions contemplated hereby or thereby,
the failure to obtain, make or give which would have, in the aggregate, a
SPS Material Adverse Effect (the "SPS Required Statutory Approvals"), it
being understood that references in this Agreement to "obtaining" such SPS
Required Statutory Approvals shall mean making such declarations, filings
or registrations; giving such notice; obtaining such consents or
approvals; and having such waiting periods expire as are necessary to
avoid a violation of law.
(d) Compliance. Except as disclosed in Section 5.4(d) or
5.11 of the SPS Disclosure Schedule or as disclosed in the SPS SEC Reports
(as defined in Section 5.5), neither SPS nor any of its subsidiaries nor,
to the best knowledge of SPS, any of its joint ventures, is in violation
of or under investigation with respect to, or has been given notice or
been charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any
applicable Environmental Laws), of any Governmental Authority, except for
violations that, in the aggregate, do not have, and, to the best knowledge
of SPS, are not reasonably likely to have, a SPS Material Adverse Effect.
Except as disclosed in Section 5.4(d) or 5.11 of the SPS Disclosure
Schedule, SPS, its subsidiaries and, to the best knowledge of SPS, its
joint ventures have all Permits, except those the failure to obtain which
would not, in the aggregate, have a SPS Material Adverse Effect.
Section 5.5 Reports and Financial Statements. The filings
required to be made by SPS and its subsidiaries since January 1, 1990
under the Securities Act, the Exchange Act, applicable New Mexico, Texas,
Oklahoma and Kansas laws and regulations or the Power Act have been filed
with the SEC, the New Mexico Public Utility Commission (the "New Mexico
Commission"), the Public Utility Commission of Texas (the "Texas
Commission"), the Corporation Commission of Oklahoma (the "Oklahoma
Commission"), the Kansas Corporation Commission (the "Kansas Commission"),
or the FERC, as the case may be, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, and complied in all material respects
with all applicable requirements of the appropriate act and the rules and
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regulations thereunder. No filings by SPS or its subsidiaries have been
required under the 1935 Act, the Natural Gas Act or the Atomic Energy Act.
SPS has made available to PSCo a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by
SPS with the SEC since January 1, 1990 and through the date hereof (as
such documents have since the time of their filing been amended, the "SPS
SEC Reports"). The SPS SEC Reports, including without limitation any
financial statements or schedules included therein, at the time filed, and
any forms, reports or other documents filed by SPS with the SEC after the
date hereof, did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial
statements of SPS included in the SPS SEC Reports (collectively, the "SPS
Financial Statements") have been prepared, and will be prepared in
accordance with GAAP (except as may be indicated therein or in the notes
thereto and except with respect to unaudited statements as permitted by
Form 10-Q) and fairly present the consolidated financial position of SPS
as of the respective dates thereof or the consolidated results of
operations and cash flows for the respective periods then ended, as the
case may be, subject, in the case of the unaudited interim financial
statements, to normal, recurring audit adjustments. True, accurate and
complete copies of the articles of incorporation and bylaws of SPS, as in
effect on the date hereof, have been delivered to PSCo.
Section 5.6 Absence of Certain Changes or Events. Except as
disclosed in the SPS SEC Reports filed prior to the date hereof or as
disclosed in Section 5.6 of the SPS Disclosure Schedule, from December 31,
1994 through the date hereof each of SPS and each of its subsidiaries has
conducted its business only in the ordinary course of business consistent
with past practice and no event has occurred which has had, and no fact or
condition exists that would have or, to the best knowledge of SPS, is
reasonably likely to have, a SPS Material Adverse Effect. For purposes of
the Section 5.6, the amount of any fine or penalty imposed or assessed
against SPS after the date of this Agreement may be taken into account in
determining whether a SPS Material Adverse Effect has occurred regardless
of whether or not the event, fact or condition which lead to the
imposition or assessment of the fine or penalty has been disclosed in the
SPS SEC Reports or the SPS Disclosure Schedule.
Section 5.7 Litigation. Except as disclosed in the SPS SEC
Reports filed prior to the date hereof or as disclosed in Section 5.7, 5.9
or 5.11 of the SPS Disclosure Schedule, (i) there are no claims, suits,
actions or proceedings pending or, to the best knowledge of SPS,
threatened, nor are there any investigations or reviews pending or, to the
best knowledge of SPS, threatened against, relating to or affecting SPS or
any of its subsidiaries, (ii) there have not been any developments since
December 31, 1994 with respect to any such disclosed claims, suits,
actions, proceedings, investigations or reviews, and (iii) there are no
judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority
or any arbitrator applicable to SPS or any of its subsidiaries that in the
aggregate would have, or to the best knowledge of SPS are reasonably
likely to have, a SPS Material Adverse Effect.
Section 5.8 Registration Statement and Proxy Statement. None
of the information supplied or to be supplied by or on behalf of SPS for
inclusion or incorporation by reference in (i) the Registration Statement
will, at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
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state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (ii) the Joint Proxy Statement
will, at the date mailed to the shareholders of SPS and PSCo and, as the
same may be amended or supplemented, at the times of the meetings of such
shareholders to be held in connection with the Mergers, contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Registration Statement and
the Joint Proxy Statement will comply as to form in all material respects
with the provisions of the Securities Act and the Exchange Act and the
rules and regulations thereunder.
Section 5.9 Tax Matters.
(a) Filing of Timely Tax Returns. Except as disclosed in
Section 5.9(a) of the SPS Disclosure Schedule, SPS and each of its
subsidiaries have filed all Tax Returns required to be filed by each of
them under applicable law. All Tax Returns were in all material respects
(and, as to Tax Returns not filed as of the date hereof, will be) true,
complete and correct and filed on a timely basis.
(b) Payment of Taxes. SPS and each of its subsidiaries
have, within the time and in the manner prescribed by law, paid (and until
the Closing Date will pay within the time and in the manner prescribed by
law) all Taxes that are currently due and payable except for those
contested in good faith and for which adequate reserves have been taken.
(c) Tax Reserves. SPS and its subsidiaries have established
(and until the Closing Date will maintain) on their books and records
reserves adequate to pay all Taxes and reserves for deferred income taxes
in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of
SPS or any of its subsidiaries except liens for Taxes not yet due.
(e) Withholding Taxes. SPS and each of its subsidiaries
have complied (and until the Closing Date will comply) in all material
respects with the provisions of the Code relating to the payment and
withholding of Taxes, including, without limitation, the withholding and
reporting requirements under Code sections 1441 through 1464, 3401 through
3606, and 6041 and 6049, as well as similar provisions under any other
laws, and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper governmental
authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Except as
disclosed in Section 5.9(f) of the SPS Disclosure Schedule, neither SPS
nor any of its subsidiaries has requested any extension of time within
which to file any Tax Return, which Tax Return has not since been filed.
(g) Waivers of Statute of Limitations. Except as disclosed
in Section 5.9(g) of the SPS Disclosure Schedule, neither SPS nor any of
its subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. Except as
disclosed in Section 5.9(h) of the SPS Disclosure Schedule, the statute of
limitations for the assessment of all Taxes has expired for all applicable
Tax Returns of SPS and each of its subsidiaries or those Tax Returns have
been examined by the appropriate taxing authorities for all periods
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through the date hereof, and no deficiency for any Taxes has been
proposed, asserted or assessed against SPS or any of its subsidiaries that
has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. Except as
disclosed in Section 5.9(i) of the SPS Disclosure Schedule, no audits or
other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of SPS or any of its
subsidiaries.
(j) Powers of Attorney. Except as disclosed in Section
5.9(j) of the SPS Disclosure Schedule, no power of attorney currently in
force has been granted by SPS or any of its subsidiaries concerning any
Tax matter.
(k) Tax Rulings. Except as disclosed in Section 5.9(k) of
the SPS Disclosure Schedule, neither SPS nor any of its subsidiaries has
received a Tax Ruling or entered into a Closing Agreement with any taxing
authority that would have a continuing adverse effect after the Closing
Date.
(l) Availability of Tax Returns. SPS and its subsidiaries
have made available to PSCo complete and accurate copies covering all
years ending on or after December 31, 1990, of (i) all Tax Returns, and
any amendments thereto, filed by SPS or any of its subsidiaries, (ii) all
audit reports received from any taxing authority relating to any Tax
Return filed by SPS or any of its subsidiaries and (iii) any Closing
Agreements entered into by SPS or any of its subsidiaries with any taxing
authority.
(m) Tax Sharing Agreements. Except as disclosed in Section
5.9(m) of the SPS Disclosure Schedule, no agreements relating to the
allocation or sharing of Taxes exist between or among SPS and any of its
subsidiaries.
(n) Code section 341(f). Neither SPS nor any of its
subsidiaries has filed (or will file prior to the Closing) a consent
pursuant to Code section 341(f) or has agreed to have Code
section 341(f)(2) apply to any disposition of a subsection (f) asset (as
such term is defined in Code section 341(f)(4)) owned by SPS or any of its
subsidiaries.
(o) Code section 168. Except as disclosed in Section 5.9(o)
of the SPS Disclosure Schedule, no property of SPS or any of its
subsidiaries is property that SPS or any such subsidiary or any party to
this transaction is or will be required to treat as being owned by another
person pursuant to the provisions of Code section 168(f)(8) (as in effect
prior to its amendment by the Tax Reform Act of 1986) or is tax-exempt use
property within the meaning of Code section 168.
(p) Code section 481 Adjustments. Except as disclosed in
Section 5.9(p) of the SPS Disclosure Schedule, neither SPS nor any of its
subsidiaries is required to include in income any adjustment pursuant to
Code section 481(a) by reason of a voluntary change in accounting method
initiated by SPS or any of its subsidiaries, and to the best of the
knowledge of SPS, the IRS has not proposed any such adjustment or change
in accounting method.
(q) Code sections 6661 and 6662. Except as disclosed in
Section 5.9(q) of the SPS Disclosure Schedule, all transactions that could
give rise to an understatement of federal income tax (within the meaning
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of Code section 6661 for Tax Returns filed on or before December 31, 1989,
and within the meaning of Code section 6662 for tax returns filed after
December 31, 1989) that could reasonably be expected to result in a SPS
Material Adverse Effect have been adequately disclosed (or, with respect
to Tax Returns filed following the Closing will be adequately disclosed)
on the Tax Returns of SPS and its subsidiaries in accordance with Code
section 6661(b)(2)(B) for Tax Returns filed on or prior to December 31,
1989, and in accordance with Code section 6662(d)(2)(B) for Tax Returns
filed after December 31, 1989.
(r) Code section 280G. Except as disclosed in Section
5.9(r) of the SPS Disclosure Schedule, neither SPS nor any of its
subsidiaries is a party to any agreement, contract, or arrangement that
could reasonably be expected to result, on account of the transactions
contemplated hereunder, separately or in the aggregate, in the payment of
any "excess parachute payment" within the meaning of Code section 280G.
(s) NOLS. As of December 31, 1993, SPS and its subsidiaries
had net operating loss carryovers available to offset future income as
disclosed in Section 5.9(s) of the SPS Disclosure Schedule. Section
5.9(s) of the SPS Disclosure Schedule discloses the amount of and year of
expiration of each company's net operating loss carryovers.
(t) Credit Carryover. As of December 31, 1993, SPS and its
subsidiaries had tax credit carryovers available to offset future tax
liability as disclosed in Section 5.9(t) of the SPS Disclosure Schedule.
Section 5.9(t) of the SPS Disclosure Schedule discloses the amount and
year of expiration of each company's tax credit carryovers.
(u) Code section 338 Elections. Except as disclosed in
Section 5.9(u) of the SPS Disclosure Schedule, no election under Code
section 338 (or any predecessor provision) has been made by or with
respect to SPS or any of its subsidiaries or any of their respective
assets or properties.
(v) Acquisition Indebtedness. Except as disclosed in
Section 5.9(v) of the SPS Disclosure Schedule, no indebtedness of SPS or
any of its subsidiaries is "corporate acquisition indebtedness" within the
meaning of Code section 279(b).
(w) Intercompany Transactions. Except as disclosed in
Section 5.9(w) of the SPS Disclosure Schedule, neither SPS nor any of its
subsidiaries have engaged in any intercompany transactions within the
meaning of Treasury Regulations section 1.1502-13 for which any income or
gain will remain unrecognized as of the close of the last taxable year
prior to the Closing Date.
Section 5.10 Employee Matters; ERISA.
(a) Benefit Plans. Section 5.10(a) of the SPS Disclosure
Schedule contains a true and complete list of: (i) each employee benefit
plan, program or arrangement covering employees, former employees or
directors of SPS (or any of its subsidiaries) or any of their dependents
or beneficiaries, or providing benefits to such persons in respect of
services provided to any such entity, including, but not limited to, any
"employee benefit plan" within the meaning of ERISA section 3(3) (whether
or not terminated, if SPS or any of its subsidiaries could have statutory
or contractual liability with respect thereto on or after the date
hereof); (ii) each management, employment, deferred compensation,
severance (including any payment, right or benefit resulting from a change
in control), bonus or other contract for personal services with or
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covering any current officer, key employee or director or any consulting
contract with any person who prior to entering into such contract was a
director or officer of SPS or any of its subsidiaries (whether or not
terminated, if SPS or any of its subsidiaries could have statutory or
contractual liability with respect thereto on or after the date hereof);
(iii) each "employee pension benefit plan" (within the meaning of ERISA
section 3(2)) subject to Title IV of ERISA or the minimum funding
requirements of Code section 412 maintained or contributed to by SPS or
any entity required to be aggregated therewith pursuant to Code
section 414(b) or (c) (a "SPS ERISA Affiliate") at any time during the
seven-year period immediately preceding the date hereof (collectively, the
"SPS Benefit Plans") and (iv) with respect to each SPS Benefit Plan, the
source or sources of benefit payments under the plan (including, where
applicable, the identity of any trust (whether or not a grantor trust),
insurance contract, custodial account, agency agreement, or other
arrangement that holds the assets of, or serves as a funding vehicle or
source of benefits for, such SPS Benefit Plan).
(b) Contributions. Except as disclosed in Section 5.10(b)
of the SPS Disclosure Schedule, all material contributions and other
payments required to have been made by SPS or any of its subsidiaries
pursuant to any SPS Benefit Plan (or to any person pursuant to the terms
thereof) have been timely made or the amount of such payment or
contribution obligation has been reflected in the SPS Financial
Statements.
(c) Qualification; Compliance. Except as disclosed in
Section 5.10(c) of the SPS Disclosure Schedule, each SPS Benefit Plan that
is intended to be "qualified" within the meaning of Code section 401(a)
has been determined by the IRS to be so qualified, and, to the best
knowledge of SPS, no event or condition exists or has occurred that could
reasonably be expected to result in the revocation of any such
determination. SPS and each of its subsidiaries are in compliance with,
and each SPS Benefit Plan is and has been operated in compliance with, all
applicable laws, rules and regulations governing such plan, including,
without limitation, ERISA and the Code, except for violations that could
not reasonably be expected to have a SPS Material Adverse Effect. To the
best knowledge of SPS, no individual or entity has engaged in any
transaction with respect to any SPS Benefit Plan as a result of which SPS
or any of its subsidiaries could reasonably expect to be subject to
liability pursuant to ERISA section 409 or section 502, or subject to an
excise tax pursuant to Code section 4975. To the best knowledge of SPS,
(i) no SPS Benefit Plan is subject to any ongoing audit, investigation, or
other administrative proceeding of the Internal Revenue Service, the
Department of Labor, or any other federal, state, or local governmental
entity, and (ii) no SPS Benefit Plan is the subject of any pending
application for administrative relief under any voluntary compliance
program of any governmental entity (including, without limitation, the
IRS's Voluntary Compliance Resolution Program or Walk-in Closing Agreement
Program, or the Department of Labor's Delinquent Filer Voluntary
Compliance Program).
(d) Liabilities. With respect to the SPS Benefit Plans,
individually and in the aggregate, no termination or partial termination
of any SPS Benefit Plan or other event has occurred, and, to the best
knowledge of SPS, there exists no condition or set of circumstances, that
could subject SPS or any of its subsidiaries to any liability arising
under the Code, ERISA or any other applicable law (including, without
limitation, any liability to or under any such plan or to the PBGC), or
under any indemnity agreement to which SPS, any of its subsidiaries or any
SPS ERISA Affiliate is a party, which liability, excluding liability for
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benefit claims and funding obligations payable in the ordinary course and
liability for PBGC insurance premiums payable in the ordinary course,
could reasonably be expected to have a SPS Material Adverse Effect.
(e) Welfare Plans. Except as disclosed in Section 5.10(e)
of the SPS Disclosure Schedule, no SPS Benefit Plan that is a "welfare
plan" (within the meaning of ERISA section 3(1)) provides benefits for any
retired or former employees (other than as required pursuant to ERISA
section 601).
(f) Documents Made Available. SPS has made available to
PSCo a true and correct copy of each collective bargaining agreement to
which SPS is a party or under which SPS has obligations and, with respect
to each SPS Benefit Plan, as applicable (i) the current plan document
(including all amendments adopted since the most recent restatement) and
its most recently prepared summary plan description and all summaries of
material modifications prepared since the most recent summary plan
description, (ii) the most recently prepared annual report (IRS Form 5500
Series) including financial statements, (iii) each related trust
agreement, insurance contract, service provider or investment management
agreement (including all amendments to each such document), (iv) the most
recent IRS determination letter with respect to the qualified status under
Code section 401(a) of such plan and a copy of any application of an IRS
determination letter filed since the most recent IRS determination letter
was issued, and (v) the most recent actuarial report or valuation.
(g) Payments Resulting from Mergers. Other than as set
forth in Section 7.11 or disclosed in Section 5.10(g) of the SPS
Disclosure Schedule, the consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any (i)
payment (whether of severance pay or otherwise) becoming due from the
Company or SPS or any of its subsidiaries under any applicable SPS Benefit
Plans to any officer, employee, former employee or director thereof or to
the trustee under any "rabbi trust" or similar arrangement, or (ii)
benefit under any SPS Benefit Plan being established or becoming
accelerated, vested or payable, except for a payment or benefit that would
have been payable under the same terms and conditions without regard to
the transactions contemplated by this Agreement.
(h) Funded Status of Plans. Except as disclosed in Section
5.10(h) of the SPS Disclosure Schedule, each SPS Benefit Plan that is
subject to either or both of the minimum funding requirements of ERISA
section 302 or to Title IV of ERISA has assets that, as of the date
hereof, have a fair market value equal to or exceeding the present value
of the accrued benefit obligations thereunder on a termination basis, as
of the date hereof based on the actuarial methods, tables and assumptions
theretofore utilized by such plan's actuary in preparing such plan's most
recently prepared actuarial valuation report, except to the extent that
applicable law would require the use of different actuarial assumptions if
such plan was to be terminated as of the date hereof. No SPS Benefit Plan
subject to the minimum funding requirements of ERISA section 302 has
incurred any "accumulated funding deficiency" (within the meaning of ERISA
section 302).
(i) Multiemployer Plans. Except as disclosed in
Section 5.10(i) of the SPS Disclosure Schedule, no SPS Benefit Plan is or
was a "multiemployer plan" (within the meaning of ERISA
section 4001(a)(3)), a multiple employer plan described in Code
section 413(c), or a "multiple employer welfare arrangement" (within the
meaning of ERISA section 3(40)); and none of SPS, any subsidiary thereof
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or any SPS ERISA Affiliate has been obligated to contribute to, or
otherwise has or has had any liability with respect to, any multiemployer
plan, multiple employer plan, or multiple employer welfare arrangement.
With respect to any SPS Benefit Plan that is listed in Section 5.10(i) of
the SPS Disclosure Schedule as a multiemployer plan, SPS and its
subsidiaries have not made or incurred a "complete withdrawal" or a
"partial withdrawal," as such terms are defined in ERISA sections 4203 and
4205, therefrom at any time during the five calendar year period
immediately preceding the date of this Agreement and the transactions
contemplated by the Agreement will not, in and of themselves, give rise to
such a "complete withdrawal" or "partial withdrawal."
(j) Modification or Termination of Plans. Except as
disclosed in Section 5.10(j) of the SPS Disclosure Schedule: (i) neither
SPS nor any subsidiary of SPS is subject to any legal, contractual,
equitable or other obligation to establish as of any date any employee
benefit plan of any nature, including (without limitation) any pension,
profit sharing, welfare, post-retirement welfare, stock option, stock or
cash award, non-qualified deferred compensation or executive compensation
plan, policy or practice; and (ii) to the best knowledge of SPS after
review of all SPS Benefit Plan documents, the Company, SPS or one or more
of its subsidiaries may, in any manner, and without the consent of any
employee, beneficiary or dependent, employees' organization or other
person, terminate, modify or amend any SPS Benefit Plan or any other
employee benefit plan, policy, program or practice (or its participation
in any such SPS Benefit Plan or other employee benefit plan, policy,
program or practice) at any time sponsored, maintained or contributed to
by SPS or any of its subsidiaries, effective as of any date before, on or
after the Effective Time except to the extent that any retroactive
amendment would be prohibited by ERISA section 204(g).
(k) Reportable Events; Claims. Except as disclosed in
Section 5.10(k) of the SPS Disclosure Schedule, (i) no event constituting
a "reportable event" (within the meaning of ERISA section 4043(b)) for
which the 30-day notice requirement has not been waived by the PBGC has
occurred with respect to any SPS Benefit Plan and (ii) no liability,
claim, action or litigation has been made, commenced or, to the best
knowledge of SPS, threatened, by or against SPS or any of its subsidiaries
with respect to any SPS Benefit Plan (other than for benefits or PBGC
premiums payable in the ordinary course) that could reasonably be expected
to have a SPS Material Adverse Effect.
(l) Labor Agreements. To the best knowledge of SPS, as of
the date hereof, there is no current labor union representation question
involving employees of SPS or any of its subsidiaries, nor does SPS or any
of its subsidiaries know of any activity or proceeding of any labor
organization (or representative thereof) or employee group (or
representative thereof) to organize any such employees. Except as
disclosed in the SPS SEC Reports or as disclosed in Section 5.10(l) of the
SPS Disclosure Schedule: (i) neither SPS nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor agreement with
any union or labor organization; (ii) there is no unfair labor practice
charge or grievance arising out of a collective bargaining agreement or
other grievance procedure against SPS or any of its subsidiaries pending,
or to the best knowledge of SPS, threatened, that has, or reasonably may
be expected by SPS to have, a SPS Material Adverse Effect; (iii) there is
no complaint, lawsuit or proceeding in any forum by or on behalf of any
present or former employee, any applicant for employment or classes of the
foregoing alleging breach of any express or implied contract of
employment, any law or regulation governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in
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connection with the employment relationship against SPS or any of its
subsidiaries pending, or to the best knowledge of SPS, threatened, that
has, or reasonably may be expected by SPS to have, a SPS Material Adverse
Effect; (iv) there is no strike, dispute, slowdown, work stoppage or
lockout pending, or to the best knowledge of SPS, threatened, against or
involving SPS or any of its subsidiaries that has or, insofar as
reasonably can be foreseen, could have, a SPS Material Adverse Effect; (v)
SPS and each of its subsidiaries are in compliance with all applicable
laws respecting employment and employment practices, terms and conditions
of employment, wages, hours of work and occupational safety and health,
except for non-compliance that, in the aggregate, does not, and insofar as
reasonably can be foreseen, will not, have a SPS Material Adverse Effect;
and (vi) there is no proceeding, claim, suit, action or governmental
investigation pending or, to the best knowledge of SPS, threatened in
respect to which any director, officer, employee or agent of SPS or any of
its subsidiaries is or may be entitled to claim indemnification from SPS
or any of its subsidiaries pursuant to their respective articles of
incorporation or bylaws or as provided in the indemnification agreements
listed on Section 5.10(l) of the SPS Disclosure Schedule.
Section 5.11 Environmental Protection.
(a) Compliance. Except as disclosed in Section 5.11(a) of
the SPS Disclosure Schedule or as disclosed in the SPS SEC Reports, each
of SPS and each of its subsidiaries is in material compliance with all
applicable Environmental Laws, except where the failure to be so in
material compliance would not in the aggregate have a SPS Material Adverse
Effect. Except as disclosed in Section 5.11(a) of the SPS Disclosure
Schedule, neither SPS nor any of its subsidiaries has received any written
notice from any person or Governmental Authority that alleges that SPS or
any of its subsidiaries is not in material compliance with applicable
Environmental Laws, except where the failure to be so in material
compliance would not in the aggregate have a SPS Material Adverse Effect.
(b) Environmental Permits. Except as disclosed in Section
5.11(b) of the SPS Disclosure Schedule or as disclosed in the SPS SEC
Reports, each of SPS and each of its subsidiaries has obtained or has
applied for all material Environmental Permits necessary for the
construction of their facilities and the conduct of their operations, and
all such Environmental Permits are in good standing or, where applicable,
a renewal application has been timely filed and is pending agency
approval, and SPS and its subsidiaries are in compliance with all terms
and conditions of all such Environmental Permits and are not required to
make any material expenditures in connection with any renewal application
pending agency approval, except where the failure to obtain or be in such
compliance and the requirement to make such expenditures would not have in
the aggregate a SPS Material Adverse Effect.
(c) Environmental Claims. Except as disclosed in Section
5.11(c) of the SPS Disclosure Schedule or as disclosed in the SPS SEC
Reports, to the best knowledge of SPS, there is no Environmental Claim (as
defined in Section 4.11(g)) pending, or to the best knowledge of SPS,
threatened (i) against SPS or any of its subsidiaries or joint ventures,
(ii) against any person or entity whose liability for any Environmental
Claim SPS or any of its subsidiaries or joint ventures has or may have
retained or assumed either contractually or by operation of law or (iii)
against any real or personal property or operations that SPS or any of its
subsidiaries or joint ventures owns, leases or manages, in whole or in
part, that, if adversely determined, would have in the aggregate a SPS
Material Adverse Effect.
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(d) Releases. Except as disclosed in Section 5.11(c) or
5.11(d) of the SPS Disclosure Schedule or as disclosed in the SPS SEC
Reports, to the best knowledge of SPS, there has been no Release of any
Hazardous Material that would be reasonably likely to form the basis of
any Environmental Claim against SPS or any subsidiary or joint venture of
SPS, or against any person or entity whose liability for any Environmental
Claim SPS or any subsidiary or joint venture of SPS has or may have
retained or assumed either contractually or by operation of law, except
for Releases of Hazardous Materials the liability for which would not have
in the aggregate a SPS Material Adverse Effect.
(e) Predecessors. Except as disclosed in Section 5.11(e) of
the SPS Disclosure Schedule or as disclosed in the SPS SEC Reports, to the
best knowledge of SPS with respect to any predecessor of SPS or any
subsidiary or joint venture of SPS, there are no Environmental Claims
pending or threatened, or any Releases of Hazardous Materials that would
be reasonably likely to form the basis of any Environmental Claims that
would have, or that SPS reasonably believes would have, in the aggregate,
a SPS Material Adverse Effect.
(f) Disclosure. To the best knowledge of SPS, SPS has
disclosed to PSCo all material facts that SPS reasonably believes form the
basis of a SPS Material Adverse Effect arising from (i) the cost of
pollution control equipment currently required or known to be required in
the future, (ii) current investigatory, removal, remediation or response
costs or investigatory, removal, remediation or response costs known to be
required in the future, in each case, both on-site and offsite and (iii)
any other environmental matter affecting SPS or its subsidiaries that
would have, or that SPS reasonably believes would have, in the aggregate a
SPS Material Adverse Effect.
Section 5.12 Regulation as a Utility. SPS is regulated as a
public utility in the States of Texas, New Mexico, Oklahoma and Kansas and
in no other state. Except as disclosed in Section 5.12 of the SPS
Disclosure Schedule, neither SPS nor any subsidiary company or affiliate
of SPS is subject to regulation as a public utility or public service
company (or similar designation) by any other state in the United States,
by the United States or any agency or instrumentality of the United States
or by any foreign country. SPS is not a holding company under the 1935
Act.
Section 5.13 Vote Required. The approval of the SPS Merger by
two-thirds of all votes entitled to be cast by all holders of SPS Common
Stock and two-thirds of all votes entitled to be cast by all holders of
SPS Preferred Stock, each voting as a separate class (the "SPS
Shareholders' Approval"), are the only votes of the holders of any class
or series of the capital stock of SPS required to approve this Agreement,
the Merger Agreement, the Mergers and the other transactions contemplated
hereby.
Section 5.14 Accounting Matters. SPS has not, through the
date hereof, taken or agreed to take any action that would prevent the
Company from accounting for the business combination to be effected by the
Mergers as a pooling-of-interests in accordance with GAAP and applicable
SEC regulations.
Section 5.15 Opinion of Financial Advisor. SPS has received
the opinion of Dillon, Read & Co. Inc. dated the date hereof, to the
effect that, as of the date hereof, the SPS Conversion Ratio and
consideration to be received by the holders of SPS Common Stock are fair
from a financial point of view to the holders of SPS Common Stock.
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Section 5.16 Insurance. Except as disclosed in Section 5.16
of the SPS Disclosure Schedule, each of SPS and each of its subsidiaries
is, and has been continuously since January 1, 1990, insured in such
amounts and against such risks and losses as are customary for companies
conducting the respective businesses conducted by SPS and its subsidiaries
during such time period. Except as disclosed in Section 5.16 of the SPS
Disclosure Schedule, neither SPS nor any of its subsidiaries has received
any notice of cancellation or termination with respect to any material
insurance policy thereof. All material insurance policies of SPS and its
subsidiaries are valid and enforceable policies.
Section 5.17 Ownership of PSCo Common Stock. SPS does not
"beneficially own" (as such term is defined in Rule 13d-3 under the
Exchange Act) any shares of PSCo Common Stock.
Section 5.18 SPS Rights Agreement. SPS shall take all
necessary action with respect to all of the outstanding rights to purchase
common stock of SPS (the "SPS Rights") issued pursuant to the Rights
Agreement dated as of July 23, 1991 between SPS and Ameritrust Company
National Association, as Rights Agent (the "SPS Rights Agreement"), so
that SPS, as of the time immediately prior to the Effective Time, will
have no obligations under the SPS Rights or the SPS Rights Agreement,
except for the payment of any redemption price, if required, and so that
the holders of the SPS Rights will have no rights under the SPS Rights or
the SPS Rights Agreement except for the payment of any redemption price,
if required. Assuming the accuracy of the representation contained in
Section 4.17, the execution, delivery and performance of this Agreement
will not result in a distribution of, or otherwise, trigger, the SPS
Rights under the SPS Rights Agreement.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
PSCo and SPS have each delivered to the other a budget for the
years 1995 through 1999 (respectively, the "PSCo Budget" and the "SPS
Budget"), which PSCo or SPS, as the case may be, may update or otherwise
modify in writing for purposes of this Article VI only with the consent in
writing of SPS or PSCo, as the case may be. After the date hereof and
prior to the Effective Time or earlier termination of this Agreement, each
of PSCo and SPS agrees as to itself and its subsidiaries, except as
expressly contemplated or permitted in this Agreement, or to the extent
the other party shall otherwise consent in writing, as follows:
Section 6.1 Ordinary Course of Business. Each of PSCo and
SPS shall, and each shall cause its respective subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course
consistent with past practice and use all commercially reasonable efforts
to preserve intact their present business organizations and goodwill, pre-
serve the goodwill and relationships with customers, suppliers and others
having business dealings with them and, subject to prudent management of
workforce needs and ongoing or planned programs relating to downsizing,
re-engineering and similar matters, keep available the services of their
present officers and employees, to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect at the Effective
Time.
Section 6.2 Dividends. Neither PSCo nor SPS shall, nor shall
either permit any of its subsidiaries to: (a) declare or pay any
dividends on or make other distributions in respect of any of their
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capital stock other than (i) to such party or its wholly-owned subsid-
iaries, (ii) stated dividends on PSCo Preferred Stock or SPS Preferred
Stock, (iii) regular dividends on PSCo Common Stock with usual record and
payment dates not in excess of an annual rate of $2.04, provided that such
annual rate may be increased by up to $0.16 and (iv) regular dividends on
SPS Common Stock with usual record and payment dates not in excess of an
annual rate of $2.20 per share; (b) split, combine or reclassify any of
their capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in substitution for, shares
of its capital stock; or (c) redeem, repurchase or otherwise acquire any
shares of their capital stock other than (i) redemptions, repurchases and
other acquisitions of shares of capital stock in the ordinary course of
business consistent with past practice including, without limitation, (A)
repurchases, redemptions and other acquisitions in connection with the
administration of employee benefit and dividend reinvestment plans as in
effect on the date hereof in the ordinary course of the operation of such
plans and (B) redemptions, purchases or acquisitions required by the
respective terms of any series of PSCo Preferred Stock or SPS Preferred
Stock and (C) in connection with refunding of PSCo Preferred Stock or SPS
Preferred Stock at a lower cost of funds as permitted pursuant to Section
6.7, (ii) intercompany acquisitions of capital stock and (iii) the
redemption, if required, of the PSCo Rights and the SPS Rights pursuant to
the PSCo Rights Agreement and the SPS Rights Agreement, respectively.
Section 6.3 Issuance of Securities. Except as provided in
the PSCo Budget or the SPS Budget, as the case may be, neither PSCo nor
SPS shall, nor shall either permit any of its subsidiaries to, issue,
deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of their capital stock of any class or any securities
convertible into or exchangeable for, or any rights, warrants or options
to acquire, any such shares or convertible or exchangeable securities,
other than (a) the issuance of common stock or stock appreciation or
similar rights, as the case may be, pursuant to (i) the PSCo Dividend
Reinvestment and Share Purchase Plan, Employee Savings and Stock Ownership
Plan, Omnibus Incentive Plan, Annual Incentive Plan and Long Term
Incentive Plan or (ii) the Dividend Reinvestment and Cash Payment Plan for
Shareholders of SPS, the Dividend Reinvestment and Cash Payment Plan for
Employees of SPS, the SPS 1989 Stock Incentive Plan, the SPS Employee
Investment Plan, the SPS Non-Qualified Salary Deferral Plan and the SPS
Directors' Deferred Compensation Plan, in each case consistent in kind and
amount with past practice and in the ordinary course of business under
such plans substantially in accordance with their present terms, (b) the
issuance by a wholly-owned subsidiary of shares of its capital stock to
its parent and (c) preferred stock to the extent disclosed in Section 6.7
of the PSCo Disclosure Schedule or the SPS Disclosure Schedule, provided
that subject to Section 6.9, the type and amount of annual awards under
the SPS 1989 Stock Incentive Plan may vary from year to year in accordance
with the terms of such plan.
Section 6.4 Charter Documents. Except as disclosed in
Section 6.4 of the PSCo Disclosure Schedule or the SPS Disclosure
Schedule, neither PSCo nor SPS shall amend or propose to amend its
articles of incorporation or by-laws, except as contemplated herein, in
any way adverse to the other party.
Section 6.5 Acquisitions. Except as disclosed in Section 6.5
of the PSCo Disclosure Schedule or the SPS Disclosure Schedule, and except
for acquisitions not exceeding $50,000,000 in the aggregate in the case
of, on the one hand, PSCo and its subsidiaries and, on the other hand, SPS
and its subsidiaries, neither PSCo nor SPS shall, nor shall either permit
any of its subsidiaries to, acquire or agree to acquire, by merging or
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consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organiza-
tion or division thereof, or otherwise acquire or agree to acquire any
assets; provided that Quixx Corporation, a subsidiary of SPS, shall be
permitted to carry on its business of making investments in and developing
cogeneration and energy-related projects within the limitations of funding
Quixx Corporation by SPS imposed by the applicable regulatory authorities
or as approved by the Boards of Directors of Quixx Corporation and SPS.
Section 6.6 No Dispositions. Except as disclosed in Section
6.6 of the PSCo Disclosure Schedule or the SPS Disclosure Schedule, and
other than (a) dispositions not exceeding $5 million in the aggregate, in
the case of, on the one hand, PSCo and its subsidiaries and, on the other
hand, SPS and its subsidiaries, (b) as may be required by law to
consummate the transactions contemplated hereby or (c) in the ordinary
course of business consistent with past practice, neither PSCo nor SPS
shall, nor shall either permit any of its subsidiaries to, sell, lease,
license, encumber or otherwise dispose of, any of its assets that are
material, individually or in the aggregate, to such party and its subsid-
iaries taken as a whole.
Section 6.7 Indebtedness. Except as disclosed in Section 6.7
of the PSCo Disclosure Schedule or the SPS Disclosure Schedule and except
as provided in the PSCo Budget and the SPS Budget, as the case may be,
neither PSCo nor SPS shall, nor shall either permit any of its subsidiar-
ies to, incur or guarantee any indebtedness (including any debt borrowed
or guaranteed or otherwise assumed, including, without limitation, the
issuance of debt securities or warrants or rights to acquire debt) other
than (a) short-term indebtedness in the ordinary course of business
consistent with past practice, (b) long-term indebtedness in connection
with the refinancing of existing indebtedness either at its stated maturi-
ty or at a lower cost of funds, (c) long-term indebtedness in connection
with the refunding of PSCo Preferred Stock or SPS Preferred Stock at a
lower cost of funds, and (d) additional indebtedness aggregating in any
year not more than 110% of the amount provided therefor in the PSCo Budget
with respect to PSCo and its subsidiaries and in the SPS Budget with
respect to SPS and its subsidiaries.
Section 6.8 Capital Expenditures. Except as disclosed in
Section 6.8 of the PSCo Disclosure Schedule or the SPS Disclosure Schedule
or as required by law, neither PSCo nor SPS shall, nor shall either permit
any of its subsidiaries to, make any capital expenditures, other than (a)
capital expenditures incurred in connection with the construction of new
facilities, (b) capital expenditures to repair or replace facilities
destroyed or damaged due to casualty or accident (whether or not covered
by insurance) and (c) additional capital expenditures in any year of not
more than 110% of the amount provided therefor in the PSCo Budget for that
year with respect to PSCo and its subsidiaries and in the SPS Budget for
that year with respect to SPS and its subsidiaries.
Section 6.9 Compensation, Benefits. Except as disclosed in
Section 6.9 of the PSCo Disclosure Schedule or the SPS Disclosure
Schedule, neither PSCo nor SPS shall, nor shall either permit any of its
subsidiaries to, (i) enter into, adopt or amend (except as may be required
by applicable law), or increase the amount or accelerate the payment or
vesting of any benefit or amount payable under, any employee benefit plan
or other contract, agreement, commitment, arrangement, plan or policy
maintained by, contributed to or entered into by such party or any of its
subsidiaries, or increase, or enter into any contract, agreement,
commitment or arrangement to increase in any manner, the compensation or
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fringe benefits, or otherwise to extend, expand or enhance the engagement,
employment or any related rights, of any director, officer or other
employee of such party or any of its subsidiaries, except pursuant to
binding legal commitments and except for normal (including incentive)
increases, extensions, expansions, enhancements, amendments or adoptions
in the ordinary course of business consistent with past practice that, in
the aggregate, do not result in a material increase in benefits or
compensation expense to such party and its subsidiaries taken as a whole
or (ii) enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
contract, agreement or arrangement with any director or officer other than
in the ordinary course of business consistent with past practice.
Section 6.10 1935 Act. None of the parties hereto shall, nor
shall any such party permit any of its subsidiaries to, except as required
or contemplated by this Agreement, engage in any activities that would
cause a change in its status, or that of its subsidiaries, under the 1935
Act, or that would impair the ability of PSCo or SPS, respectively, to
claim an exemption from all provisions of the 1935 Act except Section
9(a)(2) under Section 3(a)(2) pursuant to Rule 2 of the 1935 Act, other
than (i) the application to the SEC under the 1935 Act contemplated by
this Agreement for approval to the extent required of the transactions
contemplated hereby and (ii) the registration of the Company pursuant to
the 1935 Act.
Section 6.11 Accounting. Neither PSCo nor SPS shall, nor
shall either permit any of its subsidiaries to, make any changes in their
accounting methods, except as required by law, rule, regulation or GAAP.
Section 6.12 Pooling. Neither PSCo nor SPS shall, nor shall
either permit any of its subsidiaries to, take any actions that would, or
would be reasonably likely to, prevent the parties from accounting for the
Mergers as a pooling of interests in accordance with GAAP and applicable
SEC regulations.
Section 6.13 Tax-Free Status. Neither PSCo nor SPS shall, nor
shall either permit any of its subsidiaries to, take any actions that
would, or would be reasonably likely to, adversely affect the
qualification of the Mergers as a transaction described in Code
section 351.
Section 6.14 Discharge of Liabilities. Neither PSCo nor SPS
shall pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice (which includes
the payment of final and unappealable judgments and the refinancing of
existing indebtedness for borrowed money either at its stated maturity or
at a lower cost of funds) or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of such
party included in such party's reports filed with the SEC, or incurred in
the ordinary course of business consistent with past practice or as
disclosed in Section 6.7 of the PSCo Disclosure Schedule or the SPS
Disclosure Schedule.
Section 6.15 Cooperation, Notification. Each of PSCo and SPS
shall: (a) confer on a regular and frequent basis with one or more repre-
sentatives of the other to discuss the general status of its ongoing
operations; (b) promptly notify the other of any significant changes in
its business, properties, assets, condition (financial or other),
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prospects or results of operations; (c) advise the other of any change or
event that has had or, insofar as reasonably can be foreseen, is
reasonably likely to result in, a PSCo Material Adverse Effect or a SPS
Material Adverse Effect, as the case may be; and (d) promptly provide the
other with copies of all filings made by it or any of its subsidiaries
with any state or federal court, administrative agency, commission or
other Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
Section 6.16 Rate Matters. Other than currently pending rate
filings, each of PSCo and SPS shall, and shall cause its subsidiaries to,
discuss with the other any changes in its or its subsidiaries' regulated
rates or charges (other than fuel and gas rates or charges), standards of
service or accounting from those in effect on the date hereof and consult
with the other parties prior to making any filing (or any amendment
thereto), or effecting any agreement, commitment, arrangement or consent,
whether written or oral, formal or informal, with respect thereto, and
neither shall make any filing to change its rates on file with the public
utility commission of any state or FERC that would have a material adverse
effect on the benefits associated with the Mergers.
Section 6.17 Third-Party Consents. PSCo shall, and shall
cause its subsidiaries to, use all commercially reasonable efforts to
obtain all PSCo Required Consents. PSCo shall promptly notify SPS of any
failure or anticipated failure to obtain any such consents and, if
requested by SPS, shall provide copies of all PSCo Required Consents
obtained by PSCo to SPS. SPS shall, and shall cause its subsidiaries to,
use all commercially reasonable efforts to obtain all SPS Required
Consents. SPS shall promptly notify PSCo of any failure or anticipated
failure to obtain any such consents and, if requested by PSCo, shall
provide copies of all SPS Required Consents obtained by SPS to PSCo.
Section 6.18 No Breach, Etc. No party shall, nor shall any
party permit any of its subsidiaries to, take any action that would or is
reasonably likely to result in a material breach of any provision of this
Agreement or in any of its representations and warranties set forth in
this Agreement being untrue on and as of the Closing Date.
Section 6.19 Tax-Exempt Status. No party hereto shall, nor
shall any party permit any subsidiary to, take any action that would
likely jeopardize the qualification of the outstanding revenue bonds
issued for the benefit of PSCo (or any subsidiary thereof) or for the
benefit of SPS (or any subsidiary thereof) that qualify on the date hereof
under Code section142(a) as "exempt facility bonds" or as tax-exempt
industrial development bonds under Section 103(b)(4) of the Internal
Revenue Code of 1954, as amended prior to the Tax Reform Act of 1986.
Section 6.20 Transition Management. PSCo and SPS shall create
a special transition management task force (the "Task Force") to be headed
by Wayne H. Brunetti (or an individual designated by him who shall be
reasonably satisfactory to the other Task Force head) and Bill D. Helton
(or an individual designated by him and reasonably satisfactory to the
other Task Force head). The Task Force shall report its findings to the
Board of Directors of each of PSCo and SPS. After the date hereof and
prior to the Effective Time, Wayne H. Brunetti shall frequently attend
meetings of SPS's Board of Directors and Bill D. Helton shall frequently
attend meetings of PSCo's Board of Directors as they deem appropriate in
consultation with each other.
Section 6.21 Insurance. Each of PSCo and SPS shall, and shall
cause its subsidiaries to, maintain with financially responsible insurance
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companies insurance in such amounts and against such risks and losses as
are customary for companies engaged in the utility industry and employing
methods of generating electric power and fuel sources similar to those
methods employed and fuels used by such party or such party's subsidiar-
ies.
Section 6.22 Permits. Each party shall, and shall cause its
subsidiaries to, use reasonable efforts to maintain in effect all existing
Permits (as defined in Section 4.4) pursuant to which such party or such
party's subsidiaries operate.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable notice
and during normal business hours, each party shall, and shall cause its
subsidiaries to, afford to the officers, directors, employees,
accountants, counsel, investment banker, financial advisor and other
representatives of the other (collectively, "Representatives") reasonable
access, during normal business hours throughout the period prior to the
Effective Time, to all of its properties, books, contracts, commitments
and records (including, but not limited to, Tax Returns) and, during such
period, each party shall, and shall cause its subsidiaries to, furnish
promptly to the other (i) a copy of each reasonably available report,
schedule and other document filed or received by it or any of its
subsidiaries pursuant to the requirements of federal or state securities
laws or filed with the SEC, the FERC, the NRC, the Department of Justice,
the Federal Trade Commission, the Colorado Commission, the Wyoming
Commission, the New Mexico Commission, the Texas Commission, the Oklahoma
Commission, the Kansas Commission or any other federal or state regulatory
agency or commission, and (ii) all information concerning themselves,
their subsidiaries, directors, officers and shareholders and such matters
as may be reasonably requested by the other party in connection with any
filings, applications or approvals required or contemplated by this
Agreement. All documents and information furnished pursuant to this
Section 7.1 shall be subject to the Confidentiality Agreement. The party
requesting copies of any documents from any other party hereto shall be
responsible for all out-of-pocket expenses incurred by the party to whom
such request is made in complying with such request, including any cost of
reproducing and delivering any required information.
Section 7.2 Joint Proxy Statement and Registration Statement.
(a) Preparation and Filing. As promptly as reasonably
practicable after the date hereof, the parties shall prepare and file with
the SEC the Registration Statement and the Joint Proxy Statement (together
the "Joint Proxy/Registration Statement"). The parties shall take such
actions as may be reasonably required to cause the Registration Statement
to be declared effective under the Securities Act as promptly as
practicable after such filing. The parties shall also take such action as
may be reasonably required to cause the shares of Company Common Stock
issuable in connection with the Mergers to be registered or to obtain an
exemption from registration under applicable state "blue sky" or
securities laws; provided, however, that none of the Company, SPS or PSCo
shall be required to register or qualify as a foreign corporation or to
take any other action that would subject it to general service of process
in any jurisdiction in which the Company will not, following the Mergers,
be so subject. Each of the parties shall furnish all information
concerning itself that is required or customary for inclusion in the Joint
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Proxy/Registration Statement. No representation, covenant or agreement
contained in this Agreement is made by any party hereto with respect to
information supplied by any other party hereto for inclusion in the Joint
Proxy/Registration Statement. The Joint Proxy/Registration Statement
shall comply as to form in all material respects with the Securities Act
and the rules and regulations thereunder. The parties shall take such
action as may be reasonably required to cause the shares of Company Common
Stock to be issued in the Mergers to be approved for listing on the NYSE
and any other stock exchanges agreed to by the parties, each upon official
notice of issuance.
(b) Letter of PSCo's Accountants. Following receipt by
Arthur Andersen LLP, PSCo's independent auditors, of an appropriate
request from SPS pursuant to SAS No. 72, PSCo shall use best efforts to
cause to be delivered to the Company and SPS a letter of Arthur Andersen
LLP, dated a date within two business days before the effective date of
the Registration Statement, and addressed to the Company and SPS, in form
and substance reasonably satisfactory to the Company and SPS and customary
in scope and substance for "cold comfort" letters delivered by independent
public accountants in connection with registration statements and proxy
statements similar to the Joint Proxy/Registration Statement.
(c) Letter of SPS's Accountants. Following receipt by
Deloitte & Touche, LLP, SPS's independent auditors, of an appropriate
request from PSCo pursuant to SAS No. 72, SPS shall use best efforts to
cause to be delivered to the Company and PSCo a letter of Deloitte &
Touche, LLP, dated a date within two business days before the effective
date of the Registration Statement, and addressed to the Company and PSCo,
in form and substance satisfactory to the Company and PSCo and customary
in scope and substance for "cold comfort" letters delivered by independent
public accountants in connection with registration statements and proxy
statements similar to the Joint Proxy/Registration Statement.
(d) Fairness Opinions. It shall be a condition to the
mailing of the Joint Proxy Statement to the shareholders of SPS and PSCo
that (i) PSCo shall have received an opinion from Barr Devlin & Co.
Incorporated, dated the date of the Joint Proxy Statement, to the effect
that, as of the date thereof, the PSCo Conversion Ratio is fair to the
holders of PSCo Common Stock, and (ii) SPS shall have received an opinion
from Dillon, Read & Co. Inc., dated the date of the Joint Proxy Statement,
to the effect that, as of the date thereof, the SPS Conversion Ratio is
fair to the holders of SPS Common Stock.
Section 7.3 Regulatory Matters.
(a) HSR Filings. Each party hereto shall file or cause to
be filed with the Federal Trade Commission and the Department of Justice
any notifications required to be filed by their respective "ultimate
parent" companies under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and the rules and regulations
promulgated thereunder with respect to the transactions contemplated
hereby. Such parties will use all commercially reasonable efforts to make
such filings promptly and shall respond promptly to any requests for
additional information made by either of such agencies.
(b) Other Regulatory Approvals. Each party hereto shall
cooperate and use its best efforts to promptly prepare and file all
necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to use all commercially
reasonable efforts to obtain all necessary permits, consents, approvals
and authorizations of all Governmental Authorities and all other persons
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necessary or advisable to consummate the transactions contemplated by this
Agreement and the Merger Agreements, including, without limitation, the
PSCo Required Statutory Approvals and the SPS Required Statutory
Approvals. SPS shall have the right to review and approve in advance all
characterizations of the information relating to SPS, on the one hand, and
PSCo shall have the right to review and approve in advance all
characterizations of the information relating to PSCo, on the other hand,
in either case, which appear in any filing made in connection with the
transactions contemplated by this Agreement, the Merger Agreements or the
Mergers. PSCo and SPS shall each consult with the other with respect to
the obtaining of all such necessary or advisable permits, consents,
approvals and authorizations of Governmental Authorities.
Section 7.4 Shareholder Approvals.
(a) Approval of SPS Shareholders. SPS shall, as promptly as
reasonably practicable after the date hereof (i) take all steps reasonably
necessary to call, give notice of, convene and hold a special meeting of
its shareholders (the "SPS Special Meeting") for the purpose of securing
the SPS Shareholders' Approvals, (ii) distribute to its shareholders the
Joint Proxy Statement in accordance with applicable federal and state law
and with its articles of incorporation and bylaws, (iii) recommend to its
shareholders the approval of the SPS Merger, this Agreement, the SPS
Merger Agreement and the transactions contemplated hereby and thereby
(provided that nothing contained in this Section 7.4 shall require the
Board of Directors of SPS to take any action or refrain from taking any
action that such Board determines in good faith and with the advice of
counsel as set forth in a written, reasoned opinion would result in a
breach of its fiduciary duties under applicable law), and (iv) cooperate
and consult with PSCo with respect to each of the foregoing matters.
(b) Approval of PSCo Shareholders. PSCo shall, as promptly
as reasonably practicable after the date hereof (i) take all steps
reasonably necessary to call, give notice of, convene and hold a special
meeting of its shareholders (the "PSCo Special Meeting") for the purpose
of securing the PSCo Shareholders' Approvals, (ii) distribute to its
shareholders the Joint Proxy Statement in accordance with applicable
federal and state law and its articles of incorporation and bylaws, (iii)
recommend to its shareholders the approval of the PSCo Merger, this
Agreement, the PSCo Merger Agreement and the transactions contemplated
hereby and thereby (provided that nothing contained in this Section 7.4
shall require the Board of Directors of PSCo to take any action or refrain
from taking any action that such Board determines in good faith and with
the advice of counsel as set forth in a written, reasoned opinion would
result in a breach of its fiduciary duties under applicable law), and (iv)
cooperate and consult with SPS with respect to each of the foregoing
matters.
(c) Meeting Date. The PSCo Special Meeting and the SPS
Special Meeting shall be held on the same day unless otherwise agreed by
PSCo and SPS.
(d) Fairness Opinions Not Withdrawn. It shall be a condi-
tion to the obligation of PSCo to hold the PSCo Special Meeting that the
opinion of Barr Devlin & Co. Incorporated referred to in Section 7.2(d)
shall not have been withdrawn, and it shall be a condition to the
obligation of SPS to hold the SPS Special Meeting that the opinion of
Dillon, Read & Co. Inc. referred to in Section 7.2(d) shall not have been
withdrawn.
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Section 7.5 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if any, not provided by
an existing right of indemnification or other agreement or policy, from
and after the Effective Time, the Company shall, to the fullest extent not
prohibited by applicable law, indemnify, defend and hold harmless the
present and former directors, officers and management employees of the
parties hereto and their respective subsidiaries (each an "Indemnified
Party" and, collectively, the "Indemnified Parties") against (i) all
losses, expenses (including reasonable attorneys' fees and expenses),
claims, damages, costs, liabilities, judgments or (subject to the proviso
of the next succeeding sentence) amounts that are paid in settlement of or
in connection with any claim, action, suit, proceeding or investigation
based in whole or in part on or arising in whole or in part out of the
fact that such person is or was a director, officer or management employee
of such party or any subsidiary thereof, whether pertaining to any matter
existing or occurring at or prior to or after the Effective Time and
whether asserted or claimed prior to, at or after the Effective Time and
(ii) all liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement, the Merger Agreements or
the transactions contemplated hereby or thereby. In the event of any such
loss, expense, claim, damage, cost, liability, judgment or settlement
(whether or not arising before the Effective Time), (x) the Company shall
pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company, promptly after statements therefor are received, and otherwise
advance to the Indemnified Parties upon request reimbursement of
documented expenses reasonably incurred, in either case to the extent not
prohibited by the laws of the State of Delaware, as applicable, (y) the
Company shall cooperate in the defense of any such matter and (z) any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards under applicable law or as set
forth in the Company's certificate of incorporation or bylaws shall be
made by independent counsel mutually acceptable to the Company and the
Indemnified Party; provided, however, that the Company shall not be liable
for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed). The Indemnified Parties
as a group may retain only one law firm (other than local counsel) with
respect to each related matter except to the extent there is, in the sole
opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between
positions of any two or more Indemnified Parties, in which case each
Indemnified Party with a conflicting position on a significant issue shall
be entitled to separate counsel. In the event any Indemnified Party is
required to bring any action to enforce rights or to collect moneys due
under this Agreement and is successful in such action, the Company shall
reimburse such Indemnified Party for all of its expenses in bringing and
pursuing such action. Each Indemnified Party shall be entitled to the
advancement of expenses to the full extent contemplated in this Section
7.5(a) in connection with any such action.
(b) Insurance. For a period of six (6) years after the
Effective Time, the Company shall cause to be maintained in effect the
policies of directors' and officers' liability insurance maintained by
PSCo and SPS; provided that the Company may substitute therefor policies
of at least the same coverage containing terms that are no less
advantageous with respect to matters occurring at or prior to the
Effective Time to the extent such liability insurance can be maintained
annually at a cost to the Company not greater than 200 percent of the
current annual premiums for the policies currently maintained by PSCo and
SPS for their directors' and officers' liability insurance; provided
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further, that if such insurance cannot be so maintained or obtained at
such cost, the Company shall maintain or obtain as much of such insurance
for each of PSCo and SPS as can be so maintained or obtained at a cost
equal to 200 percent of the respective current annual premiums of each of
PSCo and SPS for their directors' and officers' liability insurance and
other indemnity agreements.
(c) Successors. In the event the Company or any of its
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all
of its properties and assets to any person, then and in either such case,
proper provision shall be made so that the successors and assigns of the
Company shall assume the obligations set forth in this Section 7.5.
(d) Survival of Indemnification. To the fullest extent not
prohibited by law, from and after the Effective Time, all rights to
indemnification now existing in favor of the employees, agents, directors
or officers of PSCo, SPS and their respective subsidiaries with respect to
their activities as such prior to or at the Effective Time, as provided in
their respective articles of incorporation or bylaws or indemnification
agreements in effect on the date of such activities or otherwise in effect
on the date hereof, shall survive the Mergers and shall continue in full
force and effect for a period of not less than six years from the
Effective Time.
Section 7.6 Disclosure Schedules. On or before the date of
this Agreement, (i) SPS has delivered to PSCo a schedule (the "SPS
Disclosure Schedule") accompanied by a certificate signed by the chief
financial officer of SPS stating that the Disclosure Schedule is being
delivered pursuant to this Section 7.6(i) and (ii) PSCo has delivered to
SPS a schedule (the "PSCo Disclosure Schedule") accompanied by a
certificate signed by the chief financial officer of PSCo stating that the
PSCo Disclosure Schedule is being delivered pursuant to this
Section 7.6(ii). The SPS Disclosure Schedule and the PSCo Disclosure
Schedule are collectively referred to herein as the "Disclosure
Schedules". The Disclosure Schedules constitute an integral part of this
Agreement and modify the respective representations, warranties, covenants
or agreements of the parties hereto contained herein to the extent that
such representations, warranties, covenants or agreements expressly refer
to the Disclosure Schedules. Any and all statements, representations,
warranties or disclosures set forth in the Disclosure Schedules shall be
deemed to have been made on and as of the date of this Agreement.
Section 7.7 Public Announcements. PSCo and SPS shall
cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this
Agreement, the Merger Agreements or any of the transactions contemplated
hereby or thereby and, subject to each party's disclosure obligations
imposed by law or any applicable national securities exchange, shall not
issue any public announcement or statement prior to consultation with the
other party.
Section 7.8 Rule 145 Affiliates. SPS shall identify in a
letter to PSCo, and PSCo shall identify in a letter to SPS, all persons
who are, at the Closing Date, "affiliates" of SPS and PSCo, respectively,
as such term is used in Rule 145 under the Securities Act. SPS and PSCo
shall use their respective best efforts to cause their respective
affiliates to deliver to the Company on or prior to the Closing Date a
written agreement substantially in the form attached as Exhibit C (each,
an "Affiliate Agreement").
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Section 7.9 Employee Agreements and Workforce Matters.
(a) Certain Employee Agreements. Subject to Section 7.10
and Section 7.15, the Company and its subsidiaries shall honor, without
modification, all contracts, agreements, collective bargaining agreements
and commitments of the parties that apply to any current or former
employees or current or former directors of the parties hereto; provided,
however, that this undertaking is not intended to prevent the Company from
enforcing such contracts, agreements, collective bargaining agreements and
commitments in accordance with their terms or from exercising any right to
amend, modify, suspend, revoke or terminate any such contract, agreement,
collective bargaining agreement or commitment.
(b) Workforce Matters. Subject to applicable collective
bargaining agreements, for a period of two (2) years following the
Effective Time, any reductions in workforce in respect of employees of the
Company shall be made on a fair and equitable basis, in light of the
circumstances and the objectives to be achieved without regard to whether
employment was with PSCo or its subsidiaries or SPS or its subsidiaries,
and any employees whose employment is terminated or jobs are eliminated by
the Company or any of its subsidiaries during such period shall be
entitled to participate on a fair and equitable basis in the job
opportunity and employment placement programs offered by the Company or
any of its subsidiaries. Any workforce reductions carried out following
the Effective Time by the Company and its subsidiaries shall be done in
accordance with all applicable collective bargaining agreements, and all
laws and regulations governing the employment relationship thereof
including, without limitation, the Worker Adjustment and Retraining
Notification Act and regulations promulgated thereunder, and any
comparable state or local law. However, no provision contained in this
Section 7.9 shall be deemed to constitute an employment contract between
the Company and any individual, or a waiver of the Company's right to
discharge any employee at any time, with or without cause.
Section 7.10 Employee Benefit Plans.
Each of the SPS Benefit Plans and PSCo Benefit Plans (other
than plans specifically provided for in Section 7.11), in effect on the
date hereof (or as amended in accordance with or as permitted by this
Agreement) shall be maintained in effect with respect to the employees or
former employees of SPS and any of its subsidiaries and of PSCo and any of
its subsidiaries, respectively, who are covered by such plans immediately
prior to the Closing Date until the Company determines otherwise on or
after the Effective Time; provided, however, that nothing herein
contained, other than the provisions of Section 6.9, shall limit any
reserved right contained in any such SPS Benefit Plan or PSCo Benefit Plan
to amend, modify, suspend, revoke or terminate any such plan. Without
limiting the foregoing, each participant in any SPS Benefit Plan or PSCo
Benefit Plan shall receive credit for purposes of eligibility to
participate, vesting and eligibility to receive benefits under any benefit
plan of the Company or any of its subsidiaries or affiliates for service
credited for the corresponding purpose under any such benefit plan;
provided, however, that such crediting of service shall not operate to
duplicate any benefit to any such participant or the funding for any such
benefit. However, no provision contained in this Section 7.10 shall be
deemed to constitute an employment contract between the Company and any
individual, or a waiver of the Company's right to discharge any employee
at any time, with or without cause.
Section 7.11 Incentive, Stock and Other Plans. With respect
to each of (i) the PSCo Employee Savings and Stock Ownership Plan, Omnibus
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Incentive Plan, Annual Incentive Plan and Long Term Incentive Plan and
(ii) the SPS 1989 Stock Incentive Plan, the SPS Employee Investment Plan,
the SPS Non-Qualified Salary Deferral Plan and the SPS Directors' Deferred
Compensation Plan and each other employee benefit plan, program or
arrangement under which the delivery of SPS Common Stock, PSCo Common
Stock or Company Common Stock, as the case may be, is required to be used
for purposes of the payment of benefits, grant of awards or exercise of
options (each a "Stock Plan"), (i) PSCo and SPS shall take such action as
may be necessary so that, after the Effective Time, such Stock Plan shall
provide for the issuance only of Company Common Stock and (ii) the Company
shall (x) take all corporate action necessary or appropriate to obtain
shareholder approval with respect to such Stock Plan to the extent such
approval is required for purposes of the Code or other applicable law, or,
to the extent the Company deems it desirable, to enable such Stock Plan to
comply with Rule 16b-3 promulgated under the Exchange Act, (y) reserve for
issuance under such Stock Plan or otherwise provide a sufficient number of
shares of Company Common Stock for delivery upon payment of benefits,
grants of awards or exercise of options under such Stock Plan and (z) as
soon as practicable after the Effective Time, file one or more
registration statements under the Securities Act with respect to the
shares of Company Common Stock subject to such Stock Plan to the extent
such filing is required under applicable law and use its best efforts to
maintain the effectiveness of such registration statement(s) (and the
current status of the prospectuses contained therein or related thereto)
so long as such benefits, grants or awards remain payable or such options
remain outstanding, as the case may be. With respect to those individuals
who subsequent to the Mergers will be subject to the reporting
requirements under section 16(a) of the Exchange Act, the Company shall
administer the Stock Plans, where applicable, in a manner that complies
with Rule 16b-3 under the Exchange Act. Each of PSCo and SPS shall obtain
any shareholder approvals that may be necessary for the deduction of any
compensation payable under any Stock Plan or other compensation
arrangement.
Section 7.12 No Solicitations. No party hereto shall, and
each such party shall cause its subsidiaries not to, permit any of its
Representatives to, and shall use its best efforts to cause such persons
not to, directly or indirectly, initiate, solicit or encourage, or take
any action to facilitate the making of any offer or proposal that
constitutes or is reasonably likely to lead to any Takeover Proposal (as
defined below), or, in the event of any unsolicited Takeover Proposal,
engage in negotiations or provide any confidential information or data to
any person relating to any Takeover Proposal. SPS and PSCo shall notify
the other orally and in writing of any such inquiries, offers or proposals
(including, without limitation, the terms and conditions of any such
proposal and the identity of the person making it) within 24 hours of the
receipt thereof and shall give the other five days' advance notice of any
agreement to be entered into with or any information to be supplied to any
person making such inquiry, offer or proposal. Each party hereto shall
immediately cease and cause to be terminated all existing discussions and
negotiations, if any, with any other persons conducted heretofore with
respect to any Takeover Proposal. Notwithstanding anything in this
Section 7.12 to the contrary, in the event of an unsolicited Takeover
Proposal, unless the PSCo Shareholders' Approvals and the SPS
Shareholders' Approvals have all been obtained, PSCo or SPS may, to the
extent that the Board of Directors of such party is advised in a written,
reasoned opinion of outside counsel that a failure to do so would result
in a breach of its fiduciary duties under applicable law, participate in
discussions or negotiations with, furnish information to, and afford
access to the properties, books and records of such party and its
subsidiaries to any person in connection with a possible Takeover Proposal
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with respect to such party by such person. As used in this Section 7.12,
"Takeover Proposal" shall mean any tender or exchange offer, proposal for
a merger, consolidation or other business combination involving any party
or any of its material subsidiaries, or any proposal or offer to acquire
in any manner a substantial equity interest in, or a substantial portion
of the assets of, any party or any of its material subsidiaries, other
than pursuant to the transactions contemplated by this Agreement and the
Merger Agreements.
Section 7.13 Company Board of Directors.
(a) PSCo's and SPS's respective Boards of Directors will
take such action as may be necessary to cause the number of directors
comprising the full Board of Directors of the Company at the Effective
Time to be 14 persons, eight of whom shall be designated by PSCo prior to
the Effective Time and six of whom shall be designated by SPS prior to the
Effective Time. The initial designation of such directors among the three
classes of the Board of Directors of the Company shall be agreed to by
PSCo and SPS, the PSCo Designees and the SPS Designees (each as defined in
Section 10.7) to be divided as equally as possible among such classes;
provided, however, that if, prior to the Effective Time and until the date
that is four and one-half years from the Effective Time, any of the PSCo
Designees or SPS Designees shall decline or be unable to serve, the party
which designated such person or the remaining PSCo Designees or SPS
Designees, respectively, shall designate or nominate for any election by
the stockholders another person to serve in that person's place and the
Company shall use its best efforts to the fullest extent permitted by law
to cause the election of such nominated person as a director of the
Company by the stockholders. The Board of Directors of the Company will
have at least four (4) committees consisting of an audit committee, a
compensation committee, a finance committee, a nominating and civic
responsibility committee and such other committees as the Board of
Directors of the Company may determine is appropriate under the
circumstances. Two of the above-named committees will be chaired by
directors nominated by PSCo and two of the above-named committees will be
chaired by directors nominated by SPS. In addition to the chairman, the
membership of each committee shall consist of four members, two of whom
shall be directors nominated by PSCo and two of whom shall be nominated by
SPS.
(b) During the period from the Effective Time until four and
one-half years after the Effective Time, (i) the provisions of Section
7.13(a), Section 7.13(b)(i), Section 7.15 and Section 7.16 shall not be
modified unless and until the terms of such modification are approved by,
and no committees other than the four committees listed in Section 7.13(a)
shall be created except by, the affirmative vote of two-thirds (66 2/3%)
of the members of the Board of Directors of the Company (i.e., 10 of the
14 members of the Board of Directors of the Company), and (ii) the
provisions of Section 7.13(b)(ii) and Section 7.14 shall not be modified
unless and until the terms of such modification are approved by at least
10 of the members of the Board of Directors of the Company.
Section 7.14 Company Directors and Officers. At the Effective
Time, pursuant to the terms hereof and of the employment contracts
referred to in Section 7.15: (a) Mr. Helton shall hold the position of
Chairman of the Board of Directors and Chief Executive Officer of the
Company until the later of (i) June 30, 1999 or (ii) 30 months from the
Effective Time (the "Initial Period"), and shall continue to hold the
position of Chairman of the Board of Directors of the Company until May
31, 2001, and (b) Mr. Brunetti shall serve as President, Chief Operating
Officer and Vice Chairman of the Board of Directors of the Company until
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the end of the Initial Period, at which time he shall be entitled to hold
the position of Chief Executive Officer of the Company. In addition,
beginning June 1, 2001, Mr. Brunetti shall serve as Chairman of the Board
of Directors of the Company until his successor is elected or appointed
and shall have qualified in accordance with the General Corporation Law of
Delaware, the Certificate of Incorporation and the By-Laws of the Company.
If either of such persons is unable or unwilling to hold such offices for
the periods set forth above, his successor shall be selected by the
affirmative vote of 10 of the members of the Board of Directors of the
Company.
Section 7.15 Employment Contracts. The Company shall, as of
or prior to the Effective Time, enter into employment contracts with Mr.
Helton and Mr. Brunetti in the forms set forth in Exhibit D and Exhibit E,
respectively.
Section 7.16 Corporate Offices. Following the Effective Time,
the Company shall maintain its corporate offices in Denver, Colorado and
significant operating offices in Amarillo, Texas.
Section 7.17 Expenses. Subject to Section 7.1 and Section
9.3, all costs and expenses incurred in connection with this Agreement and
the Merger Agreements and the transactions contemplated hereby and thereby
shall be paid by the party incurring such expenses, except that those
expenses incurred in connection with printing the Joint Proxy/Registration
Statement, as well as the filing fee relating thereto, shall be shared
equally by PSCo, on the one hand, and SPS, on the other hand.
Section 7.18 Further Assurances.
(a) Each of SPS and PSCo shall, and shall cause its
subsidiaries to, execute such further documents and instruments and take
such further actions as may reasonably be requested by the other in order
to consummate the Mergers and other transactions contemplated by this
Agreement and the Merger Agreements, and to use its best efforts to take
or cause to be taken all actions, and to do or cause to be done all
things, necessary, proper or advisable under applicable laws and regula-
tions to consummate and make effective the Mergers and the other
transactions contemplated hereby (subject to the votes of its shareholders
described in Sections 4.13 and 5.13, respectively), including fully
cooperating with the other in obtaining the SPS Required Statutory Approv-
als, the PSCo Required Statutory Approvals and all other approvals and
authorizations of any Governmental Authorities necessary or advisable to
consummate the transactions contemplated hereby.
(b) SPS and PSCo shall be responsible for the taking of any
action necessary or advisable to obtain the SPS Required Statutory Approv-
als and to obtain the PSCo Required Statutory Approvals, respectively.
SPS and PSCo agree to cooperate in obtaining the necessary approvals from
the NRC, the FERC and the SEC under the 1935 Act, the Securities Act and
the Exchange Act and from the applicable state authorities under state
"blue sky" or securities laws. SPS and PSCo shall each provide the other
with copies of any filings made with any Governmental Authorities in
connection with the foregoing.
(c) It may be preferable to effectuate a business combina-
tion between PSCo and SPS by means of an alternative structure in light of
the conditions set forth in Sections 8.1(e), 8.2(f) and 8.3(f).
Accordingly, if the only conditions to the parties' obligations to
consummate the Mergers that are not satisfied or waived are receipt of any
one or more of the PSCo Required Consents, PSCo Statutory Approvals, SPS
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Required Consents and SPS Statutory Approvals, and the adoption of an
alternative structure (that otherwise substantially preserves for PSCo and
SPS the economic benefits of the Mergers) would result in such conditions
being satisfied or waived, then the parties shall use their respective
best efforts to effect a business combination among themselves by means of
a mutually agreed upon structure other than the Mergers that so preserves
such benefits; provided that prior to closing any such restructured
transaction, all material third party and Governmental Authority decla-
rations, filings, registrations, notices, authorizations, consents or
approvals necessary for the effectuation of such alternative business
combination shall have been obtained and all other conditions to the
parties' obligations to consummate the Mergers, as applied to such
alternative business combination, shall have been satisfied or waived.
Section 7.19 Registration Rights. Upon the receipt of a
written notice within a period of three years after the Closing Date from
an affiliate or affiliates of the Company requesting the Company to
register, under the Securities Act, Company Common Stock received by such
affiliate in the Mergers, the Company shall use its reasonable best
efforts to cause the offering of all shares designated in such a request
(the "Shares") to be registered, one time at the Company's expense and all
other times at the expense of such affiliate, under the Securities Act and
any state securities or Blue-Sky laws necessary to effect a resale of such
Shares; provided that (i) no fewer than 20,000 Shares are to be registered
pursuant to such a request; (ii) such shares are not immediately saleable
in the open market at the time in the opinion of counsel for the holder
pursuant to an exemption under the Securities Act without limitation as to
the number of shares which may be sold, the price at which the shares may
be sold or the ability of the purchaser of such shares to immediately
resell them in the open market; and (iii) the Board of Directors has not
determined, in its reasonable good faith judgment, that such registration
and sale would materially interfere with any financing, acquisition,
corporate reorganization or other material transaction involving the
Company then under consideration.
Section 7.20 Charter and By-Law Amendments. Prior to the
Closing: (a) PSCo and SPS shall agree upon amendments to be effected to
the Certificate of Incorporation of the Company, including to change the
name of the Company to a name agreed upon by PSCo and SPS (the "Company
Charter Amendments"), and the by-laws of the Company, and (b) the Company
shall take all actions necessary so that the Company Charter Amendments
and such amendments to the Company by-laws become effective no later than
the Effective Time.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger to Which it is Party. The respective obligations of each party
to effect the Merger to which it is party shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions,
except, to the extent permitted by applicable law, that such conditions
may be waived in writing pursuant to Section 9.5:
(a) Shareholder Approvals. The SPS Shareholders' Approvals
and the PSCo Shareholders' Approval shall have been obtained.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state
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court preventing consummation of either or both of the Mergers shall have
been issued and continuing in effect, and the Mergers and the other
transactions contemplated hereby shall not have been prohibited under any
applicable federal or state law or regulation.
(c) Registration Statement. The Registration Statement
shall have become effective in accordance with the provisions of the
Securities Act, and no stop order suspending such effectiveness shall have
been issued and remain in effect.
(d) Listing of Shares. The shares of Company Common Stock
issuable in the Mergers pursuant to Article II shall have been approved
for listing on the NYSE upon official notice of issuance.
(e) Pooling. Each of PSCo and SPS shall have received a
letter of its independent public accountants, dated the Closing Date, in
form and substance reasonably satisfactory to SPS and PSCo, respectively,
stating that the Mergers will qualify as a pooling-of-interests
transaction under GAAP and applicable SEC regulations.
(f) Statutory Approvals. The PSCo Required Statutory
Approvals, the SPS Required Statutory Approvals and the finding of the
Texas Commission that the transactions contemplated by the Agreement are
in the public interest shall have been obtained at or prior to the
Effective Time, such approvals shall have become Final Orders (as
hereinafter defined), and no Final Order shall impose terms or conditions
that would have, or would be reasonably likely to have, a material adverse
effect on the business, operations, properties, assets, condition
(financial or otherwise), prospects or results of operations of PSCo or a
material adverse effect on the business, operations, properties, assets,
condition (financial or otherwise), prospects or results of operations of
SPS. A "Final Order" means action by the relevant regulatory authority
that has not been reversed, stayed, enjoined, set aside, annulled or
suspended, with respect to which any waiting period prescribed by law
before the transactions contemplated hereby may be consummated has
expired, and as to which all conditions to the consummation of such
transactions prescribed by law, regulation or order have been satisfied,
and as to which all opportunities for rehearing are exhausted (whether or
not any appeal thereof is pending).
(g) The number of shares of PSCo Common Stock and PSCo
Preferred Stock held by Dissenting Holders shall not constitute in the
aggregate more than 5% of the number of issued and outstanding shares of
PSCo Common Stock and PSCo Preferred Stock taken together as a single
class for this purpose. The number of shares of SPS Common Stock and SPS
Preferred Stock held by Dissenting Holders shall not in the aggregate
constitute more than 5% of the number of issued and outstanding shares of
SPS Common Stock and SPS Preferred Stock taken together as a single class
for this purpose.
Section 8.2 Conditions to Obligation of SPS to Effect the SPS
Merger. The obligation of SPS to effect the SPS Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by SPS in writing pursuant
to Section 9.5:
(a) Performance of Obligations of PSCo. PSCo shall have
performed in all material respects its agreements and covenants contained
in or contemplated by this Agreement required to be performed by it at or
prior to the Effective Time.
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(b) Representations and Warranties. The representations and
warranties of PSCo set forth in this Agreement shall be true and correct
in all material respects as of the date hereof and as of the Closing Date
as if made on and as of the Closing Date, except as otherwise contemplated
by this Agreement.
(c) Closing Certificates. SPS shall have received a
certificate signed by the Chief Executive Officer and Chief Financial
Officer of PSCo, dated the Closing Date, to the effect that, to the best
of each such officer's knowledge, the conditions set forth in Section
8.2(a) and Section 8.2(b) have been satisfied.
(d) PSCo Material Adverse Effect. No PSCo Material Adverse
Effect shall have occurred and there shall exist no fact or circumstance
that would have, or would be reasonably likely to have, a PSCo Material
Adverse Effect.
(e) Tax Opinion. SPS shall have received an opinion of
counsel, in form and substance satisfactory to SPS, dated the Closing
Date, which opinion may be based on appropriate representations of PSCo,
SPS and the Company that are in form and substance reasonably satisfactory
to such counsel, to the effect that the Mergers, taken together, will be
treated as a non-taxable exchange described in Code section 351.
(f) PSCo Required Consents. The material PSCo Required
Consents shall have been obtained.
(g) Affiliate Certificates. The Company shall have received
a certificate dated the Closing Date from each person who is an affiliate
of PSCo to the effect that: (i) such person has no present plan or
intention to transfer, sell or otherwise dispose of any Company Common
Stock such person may receive as a result of the PSCo Merger; (ii) until
such time as financial results covering at least thirty days of post-
closing combined operations of SPS, PSCo and the Company have been
published, such person shall not sell such Company Common Stock in any
transaction, private or public, or in any other way reduce such person's
risk relative to any Company Common Stock that such person receives as a
result of the PSCo Merger, except to the extent permitted pursuant to SAB
No. 76; (iii) any future disposition by such person of any Company Common
Stock such person receives as the result of the PSCo Merger will be
accomplished in accordance with Rule 145(d) under the Securities Act or as
provided in Section 7.19; and (iv) such person agrees that appropriate
legends shall be placed upon the certificates evidencing ownership of the
Company Common Stock that such person receives as a result of the PSCo
Merger.
Section 8.3 Conditions to Obligation of PSCo to Effect the
PSCo Merger. The obligation of PSCo to effect the PSCo Merger shall be
further subject to the satisfaction, on or prior to the Closing Date, of
the following conditions, except as may be waived by PSCo in writing
pursuant to Section 9.5:
(a) Performance of Obligations of SPS. SPS shall have
performed in all material respects its agreements and covenants contained
in or contemplated by this Agreement required to be performed by it at or
prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of SPS set forth in this Agreement shall be true and correct in
all material respects as of the date hereof and as of the Closing Date as
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if made on and as of the Closing Date, except as otherwise contemplated by
this Agreement.
(c) Closing Certificates. PSCo shall have received a
certificate signed by the Chief Executive Officer and Chief Financial
Officer of SPS, dated the Closing Date, to the effect that, to the best of
each such officer's knowledge, the conditions set forth in Section 8.3(a)
and Section 8.3(b) have been satisfied.
(d) SPS Material Adverse Effect. No SPS Material Adverse
Effect shall have occurred and there shall exist no fact or circumstance
that would have, or would be reasonably likely to have, a SPS Material
Adverse Effect.
(e) Tax Opinion. PSCo shall have received an opinion of
counsel, in form and substance satisfactory to PSCo, dated the Closing
Date, which opinion may be based on appropriate representations of PSCo,
SPS and the Company that are in form and substance reasonably satisfactory
to such counsel, to the effect that the Mergers, taken together, will be
treated as a non-taxable exchange described in Code section 351.
(f) SPS Required Consents. The material SPS Required
Consents shall have been obtained.
(g) Affiliate Certificates. The Company shall have received
a certificate dated the Closing Date from each person who is an affiliate
of SPS to the effect that: (i) such person has no present plan or
intention to transfer, sell or otherwise dispose of any Company Common
Stock such person may receive as a result of the SPS Merger; (ii) until
such time as financial results covering at least thirty days of post-
closing combined operations of SPS, PSCo and Sub have been published, such
person shall not sell such Company Common Stock in any transaction,
private or public, or in any other way reduce such person's risk relative
to any Company Common Stock that such person receives as a result of the
SPS Merger, except to the extent permitted pursuant to SAB No. 76; (iii)
any future disposition by such person of any Company Common Stock such
person receives as the result of the SPS Merger will be accomplished in
accordance with Rule 145(d) under the Securities Act or as provided in
Section 7.19; and (iv) such person agrees that appropriate legends shall
be placed upon the certificates evidencing ownership of the Company Common
Stock that such person receives as a result of the SPS Merger.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement and the Merger
Agreements may be terminated at any time prior to the Closing Date,
whether before or after approval by the shareholders of the respective
parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of
PSCo and SPS;
(b) by PSCo or SPS, by written notice to the other, if the
Effective Time shall not have occurred on or before December 31, 1996;
provided, however, that such date shall automatically be extended to June
30, 1997 if, on December 31, 1996: (i) the condition set forth in Section
8.1(f) has not been satisfied or waived; (ii) the other conditions to the
consummation of the transactions contemplated hereby are then capable of
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being satisfied; and (iii) any approvals required by Section 8.1(f) that
have not yet been obtained are being pursued with diligence; provided
further, that the right to terminate this Agreement under this
Section 9.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the
termination date;
(c) by PSCo or SPS, by written notice to the other party, if
the PSCo Shareholders' Approvals shall not have been obtained at a duly
held PSCo Special Meeting, including any adjournments thereof, or the SPS
Shareholders' Approvals shall not have been obtained at a duly held SPS
Special Meeting, including any adjournments thereof;
(d) by PSCo or SPS, if any state or federal law, order, rule
or regulation is adopted or issued, that has the effect, as supported by
the written, reasoned opinion of outside counsel for such party, of
prohibiting either or both of the Mergers or causing a PSCo Material
Adverse Effect or SPS Material Adverse Effect, or by any party hereto, if
any court of competent jurisdiction in the United States or any State
shall have issued an order, judgment or decree permanently restraining,
enjoining or otherwise prohibiting either or both of the Mergers or
causing a PSCo Material Adverse Effect or SPS Material Adverse Effect, and
such order, judgment or decree shall have become final and nonappealable;
(e) by SPS, upon two days' prior notice to PSCo, if, as a
result of a tender offer by a party other than PSCo or any of its
affiliates or any written offer or proposal with respect to a merger, sale
of a material portion of its assets or other business combination (each, a
"Business Combination") by a party other than PSCo or any of its
affiliates, the Board of Directors of SPS determines in good faith that
the fiduciary obligations of such directors under applicable law require
that such tender offer or other written offer or proposal be accepted;
provided, however, that (i) the Board of Directors of SPS shall have been
advised in a written, reasoned opinion by outside counsel that,
notwithstanding a binding commitment to consummate an agreement of the
nature of this Agreement entered into in the proper exercise of their
applicable fiduciary duties, and notwithstanding all concessions that may
be offered by PSCo in negotiations entered into pursuant to clause (ii)
below, such fiduciary duties would also require the directors to
reconsider such commitment as a result of such tender offer or such
written offer or proposal and (ii) prior to any such termination, SPS
shall, and shall cause its respective financial and legal advisors to,
negotiate with PSCo to make such adjustments in the terms and conditions
of this Agreement as would enable SPS to proceed with the transactions
contemplated herein; provided further, that PSCo and SPS acknowledge and
affirm that, notwithstanding anything in this Section 9.1(e) to the
contrary, PSCo and SPS intend this Agreement to be an exclusive agreement
and, accordingly, nothing in this Agreement is intended to constitute a
solicitation of an offer or proposal for a Business Combination, it being
acknowledged and agreed that any such offer or proposal would interfere
with the strategic advantages and benefits that PSCo and SPS expect to
derive from the Mergers and other transactions contemplated hereby;
(f) by PSCo, upon two days' prior notice to SPS, if, as a
result of a tender offer by a party other than SPS or any of its
affiliates or any written offer or proposal with respect to a Business
Combination by a party other than SPS or any of its affiliates, the Board
of Directors of PSCo determines in good faith that the fiduciary
obligations of such directors under applicable law require that such
tender offer or other written offer or proposal be accepted; provided,
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however, that (i) the Board of Directors of PSCo shall have been advised
in a written, reasoned opinion by outside counsel that, notwithstanding a
binding commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of their applicable
fiduciary duties, and notwithstanding all concessions that may be offered
by SPS in negotiations entered into pursuant to clause (ii) below, such
fiduciary duties would also require the directors to reconsider such
commitment as a result of such tender offer or such written offer or
proposal and (ii) prior to any such termination, PSCo shall, and shall
cause its respective financial and legal advisors to, negotiate with SPS
to make such adjustments in the terms and conditions of this Agreement as
would enable PSCo to proceed with the transactions contemplated herein;
provided further, that PSCo and SPS acknowledge and affirm that,
notwithstanding anything in this Section 9.1(f) to the contrary, PSCo and
SPS intend this Agreement to be an exclusive agreement and, accordingly,
nothing in this Agreement is intended to constitute a solicitation of an
offer or proposal for a Business Combination, it being acknowledged and
agreed that any such offer or proposal would interfere with the strategic
advantages and benefits that PSCo and SPS expect to derive from the
Mergers and other transactions contemplated hereby;
(g) by SPS, by written notice to PSCo, if (i) there exist
breaches of the representations and warranties of PSCo made herein as of
the date hereof which breaches, individually or in the aggregate, would or
would be reasonably likely to result in a PSCo Material Adverse Effect,
and such breaches shall not have been remedied within twenty (20) days
after receipt by PSCo of notice in writing from SPS, specifying the nature
of such breaches and requesting that they be remedied, (ii) PSCo (and/or
its appropriate subsidiaries) shall not have performed and complied with
its agreements and covenants contained in Section 6.2 (Dividends),
Section 6.3 (Issuance of Securities) and Section 6.7 (Indebtedness) or
shall have failed to perform and comply with, in all material respects,
its other agreements and covenants hereunder and such failure to perform
or comply with shall not have been remedied within twenty (20) days after
receipt by PSCo of a notice in writing from SPS, specifying the nature of
such failure and requesting that it be remedied; or (iii) the Board of
Directors of PSCo or any committee thereof (A) shall withdraw or modify in
any manner adverse to SPS its approval or recommendation of this Agreement
or the PSCo Merger, (B) shall fail to reaffirm such approval or
recommendation upon SPS's request, (C) shall approve or recommend any
acquisition of PSCo or a material portion of PSCo's assets or any tender
offer for shares of capital stock of PSCo, in each case, by a party other
than SPS or any of its affiliates or (D) shall resolve to take any of the
actions specified in clause (A), (B) or (C).
(h) by PSCo, by written notice to SPS, if (i) there exist
breaches of the representations and warranties of SPS made herein as of
the date hereof which breaches, individually or in the aggregate, would or
would be reasonably likely to result in a SPS Material Adverse Effect, and
such breaches shall not have been remedied within twenty (20) days after
receipt by PSCo of notice in writing from PSCo, specifying the nature of
such breaches and requesting that they be remedied, (ii) PSCo (and/or its
appropriate subsidiaries) shall not have performed and complied with its
agreements and covenants contained in Section 6.2 (Dividends), Section 6.3
(Issuance of Securities) and Section 6.7 (Indebtedness) or shall have
failed to perform and comply with, in all material respects, its other
agreements and covenants hereunder and such failure to perform or comply
with shall not have been remedied within twenty (20) days after receipt by
SPS of a notice in writing from PSCo, specifying the nature of such
failure and requesting that it be remedied; or (iii) the Board of
Directors of SPS or any committee thereof (A) shall withdraw or modify in
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any manner adverse to PSCo its approval or recommendation of this
Agreement or the SPS Merger, (B) shall fail to reaffirm such approval or
recommendation upon PSCo's request, (C) shall approve or recommend any
acquisition of SPS or a material portion of SPS's assets or any tender
offer for shares of capital stock of SPS, in each case, by a party other
than PSCo or any of its affiliates or (D) shall resolve to take any of the
actions specified in clause (A), (B) or (C).
Section 9.2 Effect of Termination. In the event of
termination of this Agreement by either PSCo or SPS pursuant to Section
9.1, there shall be no liability on the part of either PSCo or SPS or
their respective officers or directors hereunder, except that Section 7.17
and Section 9.3 and the agreement contained in the second to the last
sentence of Section 7.1 shall survive any such termination.
Section 9.3 Termination Fee; Expenses.
(a) Expenses Payable upon Breach. If this Agreement and the
Merger Agreements are terminated pursuant to one (but not both) of Section
9.1(g)(i), (ii) or (iii) or Section 9.1(h)(i), (ii) or (iii), then (i) the
breaching party or the withdrawing or modifying party (the "Nonterminating
Party") shall promptly (but not later than five business days after
receipt of notice of the amount due from the other party) pay to the
terminating party an amount equal to all documented out-of-pocket expenses
and fees incurred by such terminating party (including, without
limitation, fees and expenses payable to all legal, accounting, financial,
public relations and other professional advisors arising out of, in
connection with or related to the Mergers or the transactions contemplated
by this Agreement) not to exceed $10 million in the aggregate ("Out-of-
Pocket Expenses") in the form provided in Section 9.3(e); provided,
however, that, if this Agreement is terminated by a party as a result of a
willful breach or failure to perform or comply with agreements and
covenants by the Nonterminating Party (including without limitation the
actions set forth in Section 9.1(g)(iii) and 9.1(h)(iii)), the
Nonterminating Party shall promptly (but not later than five business days
after receipt of notice of the amount due from the other party) pay to
such terminating party an additional $35 million in the form provided in
Section 9.3(e).
(b) Expenses Payable upon Acceptance of a Proposal. If this
Agreement and the Merger Agreements are terminated pursuant to one of
Section 9.1(e) or Section 9.1(f) but not the other on the basis of a good
faith determination made as provided in such Section 9.1(e) or Section
9.1(f) that the fiduciary obligations of the directors of the terminating
party under applicable law require acceptance of a tender offer or other
written offer or proposal with respect to a Business Combination and such
terminating party (or an affiliate thererof) enters into an agreement
(whether or not such agreement is embodied in a definitive manner) to
consummate a Business Combination with the third party that made such
proposal or with a subsidiary or affiliate thereof within one year of such
termination, then the terminating party shall promptly (but not later than
five business days after receipt of notice of the amount due from the
other party), but prior to entering into such agreement with the third
party, pay to the other party an amount equal to Out-of-Pocket Expenses
plus $35 million in the form provided in Section 9.3(e).
(c) Termination Fee In Certain Other Events. If: (i) this
Agreement and the Merger Agreements are terminated (x) pursuant to Section
9.1(g)(i), (ii) or (iii), Section 9.1(h)(i), (ii) or (iii), Section 9.1(b)
or Section 9.1(d), (y) following a failure of the shareholders of SPS or
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PSCo to grant the necessary approvals described in Section 4.13 and
Section 5.13, as the case may be (a "Shareholder Disapproval"), or (z) as
a result of a material breach of Section 7.4; (ii) at the time of such
termination (or, in the case of any termination following a Shareholder
Disapproval, prior to the shareholder meeting at which such Shareholder
Disapproval occurred), there shall have been a third-party tender offer
for shares of, or a third-party offer or proposal with respect to a
Business Combination involving, SPS or PSCo (as the case may be, the
"Target Party") or the affiliates thereof which, at the time of such
termination (or of the meeting of the Target Party's shareholders, as the
case may be) shall not have been (A) rejected by the Target Party and its
Board of Directors and (B) withdrawn by the third party, then promptly
(but not later than five business days after receipt of notice of the
amount due from the other party) after the termination of this Agreement
(1) if PSCo is the Target Party, PSCo shall pay to SPS a termination fee
equal to $35 million plus Out-of-Pocket Expenses in the form provided in
Section 9.3(e) and (2) if SPS is the Target Party, SPS shall pay to PSCo a
termination fee equal to $35 million plus Out-of-Pocket Expenses in the
form provided in Section 9.3(e); provided, however, that no such amounts
shall be payable if and to the extent the party to make such payment shall
have paid such amounts pursuant to Section 9.3(a).
(d) Additional Termination Fee. If Section 9.3 (a), (b) or
(c) is applicable and if any Business Combination involving the Target
Party (or any affiliate thereof) is accepted within one year of the
termination of this Agreement and is consummated within two and one-half
years from the date of the acceptance of such Business Combination by the
Target Party (or such affiliate), if PSCo is the Target Party, PSCo shall
pay to SPS and if SPS is the Target Party, SPS shall pay to PSCo, an
additional $25 million in the form provided in Section 9.3(e).
(e) All payments made pursuant to Section 9.3, other than
payments for Out-of-Pocket Expenses shall be payable in shares of PSCo
Common Stock or SPS Common Stock, as the case may be, the aggregate fair
market value (as defined below) of which shall equal the amount due;
provided, however, that if such stock cannot, in the opinion of the
payor's counsel, be legally and validly issued within six months from the
date of the receipt of notice of the amount due for the payee, such
payments shall be made in cash. If such opinion is issued by the payor's
counsel, the payor shall use its best efforts to ensure that the stock is
issued to the payee. In the event, that notwithstanding the fact that an
opinion was obtained from the payor's counsel, the stock of the payor has
not been issued to the payee during the six month period provided for
above, all amounts owed pursuant to Section 9.3 shall become immediately
due and payable in cash. For the purposes of Section 9.3, the fair market
value of the PSCo Common Stock or the SPS Common Stock, as the case may
be, shall be the average closing price during the twenty trading day
period prior to the date of the written notice from the payee.
(f) The holder of any stock issued pursuant to Section 9.3
shall have the right, during the three year period from the date of
issuance, to require the issuer to effect the registration of such stock
under the Securities Act and the issuer shall use its reasonable best
efforts to effect such registration; provided that (i) only one such
registration shall be at the issuer's expense, (ii) such shares are not
immediately saleable in the open market at the time in the opinion of
counsel for the holder pursuant to an exemption under the Securities Act
without limitation as to the number of shares which may be sold, the price
at which the shares may be sold or the ability of the purchaser of such
shares to immediately resell them in the open market, (iii) the Board of
Directors has not determined, in its good faith judgment, that such
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registration and sale would materially interfere with any financing,
acquisition, corporate reorganization or other material transaction
involving the issuer then under consideration, and (iv) the issuer shall
have the right to delay for up to 120 days any request for registration
hereunder if the issuer intends to proceed with a registration to be sold
by the issuer. In the event of a delay in the sales of the shares
pursuant to clause (iii) or (iv) of this Section 9.3(f), the period in
which the holder shall have a right to require registration shall be
extended by the amount of the delay.
(g) Expenses. The parties agree that the agreements
contained in this Section 9.3 are an integral part of the transactions
contemplated by this Agreement and the Merger Agreements and constitute
liquidated damages and not a penalty. If one party fails to promptly pay
to the other any fees due hereunder, such defaulting party shall pay the
costs and expenses (including legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action,
taken to collect payment, together with interest on the amount of any
unpaid fee at the publicly announced prime rate of Bank of America
National Trust and Savings Association in effect from time to time from
the date such fee was required to be paid.
(h) Limitation of Fees. Notwithstanding anything herein to
the contrary, the aggregate amount payable by PSCo and its affiliates
pursuant to Section 9.3(a), Section 9.3(b), Section 9.3(c) and Section
9.3(d) shall not exceed $60 million (excluding Out-of-Pocket Expenses) and
the aggregate amount payable by SPS and its affiliates pursuant to Section
9.3(a), Section 9.3(b), Section 9.3(c) and Section 9.3(d) shall not exceed
$60 million (excluding Out-of-Pocket Expenses).
Section 9.4 Amendment. This Agreement and the Merger
Agreements may be amended by the parties hereto or thereto pursuant to
action of the respective Boards of Directors of each of PSCo and SPS, at
any time before or after approval hereof by the shareholders of PSCo and
SPS and prior to the Effective Time, but after such approvals, no such
amendment shall (a) alter or change the amount or kind of shares, rights
or any of the proceedings of the exchange and/or conversion under Article
II, (b) alter or change any of the terms and conditions of this Agreement
if any of the alterations or changes, alone or in the aggregate, would
materially and adversely affect the rights of holders of PSCo Common Stock
or SPS Common Stock or (c) alter or change any term of the certificate of
incorporation of the Company, except for alterations or changes that could
otherwise be adopted by the Board of Directors of the Company, without the
further approval of such shareholders, as applicable. Neither this
Agreement nor either of the Merger Agreements may be amended except by an
instrument in writing signed on behalf of each of the parties hereto or
thereto.
Section 9.5 Waiver. At any time prior to the Effective Time,
the parties hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any
of the agreements or conditions contained herein. Any agreement to any
such extension or waiver shall be valid only if set forth in an instrument
in writing signed by a duly authorized officer of each party.
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ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties,
Covenants and Agreements. All representations, warranties, covenants and
agreements in this Agreement shall not survive the Mergers, except the
covenants and agreements contained in this Section 10.1 and in Article II
(Treatment of Shares), the second to the last sentence of Section 7.1
(Access to Information), Section 7.5 (Directors' and Officers'
Indemnification), Section 7.9 (Employee Agreements and Workforce Matters),
Section 7.10 (Employee Benefit Plans), Section 7.11 (Incentive, Stock and
Other Plans), Section 7.13 (Company Board of Directors), Section 7.14
(Company Officers), Section 7.15 (Employment Contracts), Section 7.16
(Corporate Offices), Section 7.17 (Expenses) and Section 10.7 (Parties in
Interest), each of which shall survive in accordance with its terms.
Section 10.2 Brokers. PSCo represents and warrants that,
except for Barr Devlin Associates, its investment banking firm, no broker,
finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Mergers or the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of PSCo. SPS represents and warrants that, except for Dillon, Read
& Co. Inc., its investment banking firm, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission
in connection with the Mergers or the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of SPS.
Section 10.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) if delivered
personally, or (b) if sent by overnight courier service (receipt confirmed
in writing), or (c) if delivered by facsimile transmission (with receipt
confirmed), or (d) five days after being mailed by registered or certified
mall (return receipt requested) to the parties, in each case to the
following addresses (or at such other address for a party as shall be
specified by like notice):
(i) If to SPS, to:
Southwestern Public Service Company
Tyler at Sixth
Amarillo, Texas 79101
Attention: Bill D. Helton
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Gary W. Wolf, Esq.
(ii) If to PSCo, to:
Public Service Company of Colorado
1227 Seventeenth Street
Denver, Colorado 80202
Attention: D. D. Hock
with a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
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125 West 55th Street
New York, New York 10019
Attention: Douglas W. Hawes, Esq.
Steven H. Davis, Esq.
Section 10.4 Miscellaneous. This Agreement (including the
documents and instruments referred to herein): (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to
the subject matter hereof other than the Confidentiality Agreement; and
(b) shall not be assigned by operation of law or otherwise. This
Agreement shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts executed in and to be
fully performed in such State, without giving effect to its conflicts of
laws statutes, rules or principles. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect. The parties hereto shall negotiate in
good faith to replace any provision of this Agreement so held invalid or
unenforceable with a valid provision that is as similar as possible in
substance to the invalid or unenforceable provision.
Section 10.5 Interpretation. When reference is made in this
Agreement to Articles, Sections or Exhibits, such reference shall be to an
Article, Section or Exhibit of this Agreement, as the case may be, unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"include", "includes", or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Whenever "or" is used in this Agreement it shall be construed in the
nonexclusive sense.
Section 10.6 Counterparts; Effect. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same agreement.
Section 10.7 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and,
except for rights of Indemnified Parties as set forth in Section 7.5
(Directors' and Officers' Indemnification), nothing in this Agreement,
express or implied, is intended to confer upon any person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Notwithstanding the foregoing and any other provision of this Agreement,
and in addition to any other required action of the Board of Directors of
the Company, (a) a majority of the SPS Designees (or their successors)
serving on the Board of Directors of the Company who are designated by SPS
pursuant to Section 7.13 (Company Board of Directors) shall be entitled
during the four and one-half year period commencing at the Effective Time
(the "Applicable Period") to enforce the provisions of Section 7.9
(Employee Agreements and Workforce Matters), Section 7.10 (Employee
Benefit Plans), Section 7.11 (Incentive, Stock and Other Plans), and
Section 7.15 (Employment Contracts) on behalf of the SPS officers,
directors and employees, as the case may be, and (b) a majority of the
PSCo Designees (or their successors) serving on the Board of Directors of
the Company who are designated by PSCo pursuant to Section 7.13 (Company
Board of Directors) shall be entitled during the Applicable Period to
enforce the provisions of Section 7.9 (Employee Agreements and Workforce
Matters), Section 7.10 (Employee Benefit Plans), Section 7.11 (Incentive,
Stock and Other Plans) and Section 7.15 (Employment Contracts) on behalf
of the PSCo officers, directors and employees, as the case may be. Such
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directors' rights and remedies under the preceding sentence are cumulative
and are in addition to any other rights and remedies they may have at law
or in equity, but in no event shall this Section 10.7 be deemed to impose
any additional duties on any such directors. The Company shall pay, at
the time they are incurred, or shall advance upon reasonable request, all
reasonable costs, fees and expenses of such directors incurred in
connection with the assertion of any rights or remedies on behalf of any
of the persons set forth above pursuant to this Section 10.7. For
purposes of this Section 10.7 and Section 7.13 (Company Board of
Directors), a "SPS Designee" or "PSCo Designee", as the case may be, shall
at any time mean a person who at such time is a member of the Board of
Directors of the Company who either (i) was designated a member of the
Board of Directors of the Company by SPS or by PSCo, as the case may be,
pursuant to Section 7.13(a) or (ii) was designated (before his or her
initial election as a member of the Board of Directors of the Company) as
a "SPS Designee" or a "PSCo Designee" by a majority of the then SPS
Designees or PSCo Designees, as the case may be.
Section 10.8 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that
the parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms
and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
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IN WITNESS WHEREOF, PSCo, SPS and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first above written.
PUBLIC SERVICE COMPANY OF COLORADO
/s/ D. D. Hock
By____________________________________________
Name: D. D. Hock
Title: Chairman and Chief Executive Officer
SOUTHWESTERN PUBLIC SERVICE COMPANY
/s/ Bill D. Helton
By____________________________________________
Name: Bill D. Helton
Title: Chairman and Chief Executive Officer
M-P NEW CO.
/s/ Doyle R. Bunch, II
By ____________________________________________
Name: Doyle R. Bunch, II
Title: Chairman and Secretary
/s/ Richard C. Kelly
And By ________________________________________
Name: Richard C. Kelly
Title: President and Treasurer
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EXHIBIT A
PLAN OF MERGER
PLAN OF MERGER (the "Plan of Merger"), dated as of _________,
199_, by and among Public Service Company of Colorado, a Colorado
corporation, ("PSCO"), [M-P New Co.], a Delaware corporation (the
"Company") and PSCO Merger, Inc., a Colorado corporation and wholly owned
subsidiary of the Company ("Merger Sub A"). The parties to this Plan of
Merger are hereinafter sometimes collectively referred to as the
"Constituent Corporations".
WHEREAS, Merger Sub A is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado. As
of the date hereof the outstanding capital stock of Merger Sub A consisted
solely of [ ] shares of common stock, par value $[ ] per
share ("Merger Sub A Common Stock");
WHEREAS, PSCO is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado. As
of the date hereof the authorized capital stock of PSCO consisted solely
of 140,000,000 shares of common stock, par value $5 per share (the "PSCO
Common Stock"), of which [ ] shares were outstanding on
___________, __, 199_, 4,000,000 shares of Cumulative Preferred Stock, par
value $25 per share (the "PSCO $25 Preferred Stock"), of which [
] shares were outstanding on _________ __, 199_, and 3,000,000 shares of
Cumulative Preferred Stock, par value $100 per share (the "PSCO $100
Preferred Stock" and, together with the PSCO $25 Preferred Stock, the
"PSCO Preferred Stock"), of which [ ] shares were outstanding
on _________ __, 199_; and
WHEREAS, PSCO, [Plain], a New Mexico corporation, and the
Company have entered into an Agreement and Plan of Reorganization dated as
of August __, 1995, setting forth representations, warranties, covenants,
conditions and other terms in connection with the merger of equals and
other transactions contemplated thereby and hereby (the "Reorganization
Agreement").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, the parties hereto agree
as follows:
ARTICLE I.
THE MERGER
Section 1.1 The Merger. In accordance with the provisions
of this Plan of Merger and the Colorado Business Corporation Act (the
"CBCA"), at the Effective Time (as defined in Section 1.2 hereof), Merger
Sub A shall be merged with and into PSCO (the "Merger") and the separate
corporate existence of Merger Sub A shall cease. PSCO shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation") and shall continue its corporate existence
under the laws of the State of Colorado. The name of the Surviving
Corporation shall continue to be "Public Service Company of Colorado".
The Merger shall have the effects set forth in the CBCA. In furtherance
of and not in limitation of the foregoing, at the Effective Time, the
Surviving Corporation shall have all the rights, privileges, immunities
and powers and shall be subject to all the duties and liabilities of a
corporation organized under the CBCA; the Surviving Corporation shall then
and thereafter possess all the rights, privileges, immunities, and
<PAGE>
franchises, of a public as well as of a private nature, of each of Merger
Sub A and PSCO; and all property, real, personal, and mixed, and all debts
due on whatever account and all other choses in action, and every other
interest belonging to or due to each of Merger Sub A and PSCO so merged
shall be taken and deemed to be transferred to and vested in the Surviving
Corporation without further act or deed; the Surviving Corporation shall
then be liable for all the liabilities and obligations of each of Merger
Sub A and PSCO so merged. In addition, any reference to either of the
merging corporations in any contract, instrument or document, whether
executed or taking effect before or after the Effective Time, shall be
considered a reference to the Surviving Corporation if not inconsistent
with the other provisions of the contract, instrument or document.
Section 1.2 Effective Time; Conditions. The Merger shall
be effective (the "Effective Time") upon delivery of a copy of the
Articles of Merger with the Secretary of State for the State of Colorado
pursuant to Section 7-111-105 of the CBCA. If the Reorganization
Agreement and this Plan of Merger are duly approved by the shareholders of
each of the Constituent Corporations, the other conditions precedent set
forth in Article VIII of the Reorganization Agreement are satisfied or
(where permissible) waived, and this Plan of Merger is not terminated
under Section 3.1 hereof, articles of merger complying with Section 7-111-
105 of the CBCA shall be delivered to the Secretary of State of the State
of Colorado in accordance with Section 7-111-105 of the CBCA.
Section 1.3 Articles of Incorporation and By-Laws. The
Articles of Incorporation (the "Articles") and By-laws of PSCO following
the Effective Time shall be such Articles and By-Laws of PSCO as are in
effect immediately prior to the Effective Time.
Section 1.4 Directors and Officers. (a) The following
persons shall be the initial directors of the Surviving Corporation until
their respective successors are duly elected and qualified:
[LIST NAMES]
(b) The following persons shall, form and after the
Effective Time, be the officers of the Surviving Corporation, to serve in
accordance with the By-laws thereof, until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Articles of Incorporation and By-Laws:
[LIST NAMES]
ARTICLE II.
CONVERSION OF SHARES
Section 2.1 Conversion of Shares. At the Effective Time,
by virtue of the Merger and without any action on the part of PSCO, Merger
Sub A or the holder of any securities of PSCO or Merger Sub A:
(a) PSCO Common Stock. Each share of PSCO Common Stock
which shall be outstanding immediately before the Effective Time (other
than shares with respect to which the holder thereof has properly
perfected dissenters rights) shall be converted into [ ]
share[s] of common stock, par value $[ ] per share, of the Company,
and PSCO shall thereafter be a wholly owned subsidiary of the Company.
<PAGE>
(b) PSCO Preferred Stock. Each share of PSCO $25 Preferred
Stock and each share of PSCO $100 Preferred Stock which shall be
outstanding immediately before the Effective Time (other than shares with
respect to which the holder thereof has properly perfected dissenters
rights) shall remain outstanding as a share of preferred stock of the
Surviving Corporation.
(c) Merger Sub A Common Stock. Each share of Merger Sub A
Common Stock which shall be outstanding immediately before the Effective
time shall be converted into one share of the Surviving Corporation (the
"Surviving Corporation Common Stock"). Each certificate which immediately
before the Effective Time represented outstanding shares of Merger Sub A
Common Stock shall, on and after the Effective Time, be deemed for all
purposes to represent the number of shares of Surviving Corporation Common
Stock into which the shares of Merger Sub A Common Stock represented by
such certificate shall have been converted pursuant to this Section
2.1(c).
Section 2.2 Exchange of PSCO Common Stock Certificates.
(a) Deposit with Exchange Agent. As soon as practicable
after the Effective Time, the Company shall deposit with a bank, trust
company or other agent ("Exchange Agent") certificates representing shares
of Company Common Stock required to effect the conversion of PSCO Common
Stock into Company Common Stock referred to in Section 2.1(a).
(b) Exchange Procedures. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of
a certificate or certificates which immediately prior to the Effective
Time represented issued and outstanding shares of PSCO Common Stock
("Certificates") that were converted ("Converted Shares") into the right
to receive shares of Company Common Stock ("Company Shares"), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon actual
deliver of the Certificates to the Exchange Agent) and (ii) instructions
for use in effecting the exchange of Certificates for certificates
representing Company Shares. Upon delivery of a Certificate to the
Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as the Exchange Agent shall require,
the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole Company Shares
and the amount of cash in lieu of fractional share interests which such
holder has the right to receive pursuant to the provisions of this Article
II. In the event of a transfer of ownership of Converted Shares which is
not registered in the transfer records of PSCO, a certificate to a
transferee if the Certificate representing such Converted Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence satisfactory to the
Exchange Agent that any applicable stock transfer taxes have been paid.
Until delivered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such delivery the certificate representing Company
Shares and cash in lieu of any fractional shares of Company Common Stock
as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time
with respect to Company Shares with a record date after the Effective Time
shall be paid to the holder of any undelivered Certificate with respect to
the Company Shares represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
2.2(d), until the holder of record of such Certificate (or a transferee as
described in Section 2.2(b)) shall have delivered such Certificate as
<PAGE>
contemplated in Section 2.2(b). Subject to the effect of unclaimed
property, escheat and other applicable laws, following delivery of any
such Certificate, there shall be paid to the record holder (or transferee)
of the certificates representing whole Company Shares issued in exchange
therefor, without interest, (i) at the time of such delivery, the amount
of any cash payable in lieu of a fractional share of Company Common Stock
to which such holder (or transferee) is entitled pursuant to Section
2.2(d) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
Company Shares and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to delivery and payment date subsequent to delivery payable
with respect to such whole Company Shares, as the case may be.
(d) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Company Common Stock shall be issued
upon the delivery for exchange of Certificates, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
shareholder of the Company.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (x) the number of
full shares of Company Common Stock delivered to the Exchange Agent by the
Company pursuant to Section 2.2(a) of the Reorganization Agreement over
(y) the aggregate number of full shares of Company Common Stock to be
distributed to holders of PSCO Common Stock and Plain Common Stock(as
defined in the Reorganization Agreement) pursuant to Section 2.2(b) of the
Reorganization Agreement (such excess being herein called the "Excess
Shares"). As soon after the Effective Time as practicable, the Exchange
Agent, as agent for the holders of the Excess Shares at then prevailing
prices on the New York Stock Exchange ("NYSE"), all in the manner provided
in Section 2.2(d)(iii).
(iii) The sale of the Excess shares by the Exchange
Agent shall be executed on they NYSE through one or more member firms of
the NYSE and shall be executed in round lots to the extent practicable.
Until the proceeds of such sale or sales have been distributed to the
holders of PSCO Common Stock and Plain Common Stock, the Exchange Agent
shall, until remitted pursuant to Section 2.2(f), hold such proceeds in
trust for the holders of PSCO Common Stock and Plain Common Stock ("Common
Shares Trust"). The Company shall pay all commissions, transfer taxes and
other out-of-pocket transaction costs, including the expenses and
compensation, of the Exchange Agent incurred in connection with such sale
of the Excess Shares. The Exchange Agent shall determine the portion of
the proceeds comprising the Common Shares Trust to which each holder of
PSCO Common Stock shall be entitled, if any, by multiplying the amount of
the aggregate proceeds comprising the Common Shares Trust by a fraction
the numerator of which is the amount of the fractional share interest to
which such holder of PSCO Common Stock is entitled and the denominator of
which is the aggregate amount of fractional share interests to which all
holders of PSCO Common Stock and Plain Common Stock are entitled.
(iv) As soon as practicable after the sale of Excess
Shares pursuant to clause (iii) above and the determination of the amount
of cash, if any, to be paid to holders of PSCO Common Stock in lieu of any
fractional share interests, the Exchange Agent shall distribute such
amounts to holders of PSCO Common Stock who have theretofore delivered
Certificates for PSCO Common Stock for exchange pursuant to this Article
II.
(e) Closing of Transfer Books. From and after the Effective
Time, the stock transfer books of PSCO with respect to shares of PSCO
Common Stock, issued and outstanding prior to the Effective Time shall be
<PAGE>
closed and no transfer of any shares shall thereafter be made. If, after
the Effective Time, Certificates are presented to the Company, they shall
be cancelled and exchanged for certificates representing the appropriate
number of whole Company Shares and cash in lieu of fractional shares of
Company Common Stock as provided in this Section 2.2.
(f) Termination of Exchange Agent. Any certificates
representing Company Shares deposited with the Exchange Agent pursuant to
Section 2.2(a) and not exchanged within one year after the Effective Time
pursuant to this Section 2.2 shall be returned by the Exchange Agent to
the Company, which shall thereafter act as Exchange Agent. All funds held
by the Exchange Agent for payment to the holders of undelivered
Certificates and unclaimed at the end of one year from the Effective Time
shall be remitted to the Company, after which time any holder of
undelivered Certificates shall look as a general creditor only to the
Company for payment of such funds to which such holder may be due, subject
to applicable law. The Company shall not be liable to any person for such
shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III.
TERMINATION AND AMENDMENT
Section 3.1 Termination. Notwithstanding the approval and
adoption of this Plan of Merger by the shareholders of PSCO, the Company
and Merger Sub A, this Plan of Merger shall terminate forthwith in the
event that the Reorganization Agreement shall be terminated as therein
provided and may be terminated as otherwise provided in the Reorganization
Agreement. In the event of the termination of this Plan of Merger as
provided above, this Plan of Merger shall forthwith become void and there
shall be no liability on the part of any of the parties hereto except as
otherwise provided in the Reorganization Agreement.
Section 3.2 Amendment. This Plan of Merger shall not be
amended except in accordance with the provisions of Section 9.4 of the
Reorganization Agreement.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Governing Law. This Plan of Merger shall be
governed by the laws of the State of Colorado.
Section 4.2 Counterparts. This Plan of Merger may be
executed in two or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same agreement.
Section 4.3 Authorized Officers. The chairman of the
board, president, vice president, secretary and assistant secretary of
each of the merging corporations are each authorized by it in its name to
execute and deliver or cause to be executed and delivered any articles of
merger, agreements, certificates, appointments, or other instruments, and
to do anything else that he or they deem to be necessary or desirable in
connection with the Merger.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan
of Merger to be signed by their respective officers thereunto duly
authorized as of the date first written above.
PUBLIC SERVICE COMPANY OF COLORADO
By: _____________________________________
PSCO MERGER, INC.
By: ____________________________________
[M-P NEW CO.]
By: ____________________________________
<PAGE>
EXHIBIT B
PLAN OF MERGER
PLAN OF MERGER (the "Plan of Merger"), dated as of
__________ __, 199_, by and among Southwestern Public Service
Company, a New Mexico corporation, ("SPS"), M-P New Co., a
Delaware corporation (the "Company") and SPS Merger, Inc., a
New Mexico corporation and wholly owned subsidiary of the
Company ("Merger Sub B"). The parties to this Plan of Merger
are hereinafter sometimes collectively referred to as the
"Constituent Corporations".
WHEREAS, Merger Sub B is a corporation duly
organized, validly existing and in good standing under the
laws of the State of New Mexico. As of the date hereof the
outstanding capital stock of Merger Sub B consisted solely of
[ ] shares of common stock, par value $[ ] per
share ("Merger Sub B Common Stock");
WHEREAS, Southwestern Public Service Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of New Mexico. As of the
date hereof the authorized capital stock of SPS consisted
solely of 100,000,000 shares of common stock, par value $1 per
share (the "SPS Common Stock"), of which [ ]
shares were outstanding on __________, __, 199_, 3,000,000
shares of Cumulative Preferred Stock, par value $25 per share
(the "SPS $25 Preferred Stock"), of which [ ] shares
were outstanding on __________ __, 199_, and 2,000,000 shares
of Cumulative Preferred Stock, par value $100 per share (the
"SPS $100 Preferred Stock" and, together with the SPS $25
Preferred Stock, the "SPS Preferred Stock"), of which [
] shares were outstanding on ___________ __, 199_; and
WHEREAS, SPS, Mountain, a Colorado corporation, and
the Company have entered into an Agreement and Plan of
Reorganization dated as of August __, 1995, setting forth
representations, warranties, covenants, conditions and other
terms in connection with the merger of equals and other
transactions contemplated thereby and hereby (the
"Reorganization Agreement").
NOW, THEREFORE, in consideration of the foregoing
and the mutual covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section 1.1 The Merger. In accordance with the
provisions of this Plan of Merger and the New Mexico Business
Corporation Act (the "NMBCA"), at the Effective Time (as
defined in Section 1.2 hereof), Merger Sub B shall be merged
with and into SPS (the "Merger") and the separate corporate
existence of Merger Sub B shall cease. SPS shall be the
surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue
its corporate existence under the laws of the State of New
Mexico. The name of the Surviving Corporation shall continue
<PAGE>
to be "Southwestern Public Service Company". The Merger shall
have the effects set forth in the NMBCA. In furtherance of
and not in limitation of the foregoing, at the Effective Time,
the Surviving Corporation shall have all the rights,
privileges, immunities and powers and shall be subject to all
the duties and liabilities of a corporation organized under
the NMBCA; the Surviving Corporation shall then and thereafter
possess all the rights, privileges, immunities, and
franchises, of a public as well as of a private nature, of
each of Merger Sub B and SPS; and all property, real,
personal, and mixed, and all debts due on whatever account and
all other choses in action, and every other interest belonging
to or due to each of Merger Sub B and SPS so merged shall be
taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; the
Surviving Corporation shall then be liable for all the
liabilities and obligations of each of Merger Sub B and SPS so
merged. In addition, any reference to either of the merging
corporations in any contract, instrument or document, whether
executed or taking effect before or after the Effective Time,
shall be considered a reference to the Surviving Corporation
if not inconsistent with the other provisions of the contract,
instrument or document.
Section 1.2 Effective Time; Conditions. The
Merger shall be effective (the "Effective Time") upon delivery
of a copy of the Articles of Merger with the Secretary of
State for the State of New Mexico pursuant to Section 53-14-4
of the NMBCA. If the Reorganization Agreement and this Plan
of Merger are duly approved by the shareholders of each of the
Constituent Corporations, the other conditions precedent set
forth in Article VIII of the Reorganization Agreement are
satisfied or (where permissible) waived, and this Plan of
Merger is not terminated under Section 3.1 hereof, articles of
merger complying with Section 53-14-4 of the NMBCA shall be
delivered to the Secretary of State of the State of New Mexico
in accordance with Section 53-14-4 of the NMBCA.
Section 1.3 Articles of Incorporation and By-Laws.
The Articles of Incorporation (the "Articles") and By-laws of
SPS following the Effective Time shall be such Articles and
By-Laws of SPS as are in effect immediately prior to the
Effective Time.
Section 1.4 Directors and Officers. (a) The
following persons shall be the initial directors of the
Surviving Corporation until their respective successors are
duly elected and qualified:
[LIST NAMES]
(b) The following persons shall, form and after the
Effective Time, be the officers of the Surviving Corporation,
to serve in accordance with the By-laws thereof, until their
respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Articles of
Incorporation and By-Laws:
[LIST NAMES]
<PAGE>
ARTICLE II.
CONVERSION OF SHARES
Section 2.1 Conversion of Shares. At the
Effective Time, by virtue of the Merger and without any action
on the part of SPS, Merger Sub B or the holder of any
securities of SPS nor Merger Sub B:
(a) SPS Common Stock. Each share of SPS Common
Stock which shall be outstanding immediately before the
Effective Time (other than shares with respect to which the
holder thereof has properly perfected dissenters rights) shall
be converted into [ ] share[s] of common stock, par
value $[ ] per share, of the Company, and SPS shall
thereafter be a wholly owned subsidiary of the Company.
(b) SPS Preferred Stock. Each share of SPS $25
Preferred Stock and each share of SPS $100 Preferred Stock
which shall be outstanding immediately before the Effective
Time (other than shares with respect to which the holder
thereof has properly perfected dissenters rights) shall remain
outstanding as a share of preferred stock of the Surviving
Corporation.
(c) Merger Sub B Common Stock. Each share of
Merger Sub B Common Stock which shall be outstanding
immediately before the Effective time shall be converted into
one share of the Surviving Corporation (the "Surviving
Corporation Common Stock"). Each certificate which
immediately before the Effective Time represented outstanding
shares of Merger Sub B Common Stock shall, on and after the
Effective Time, be deemed for all purposes to represent the
number of shares of Surviving Corporation Common Stock into
which the shares of Merger Sub B Common Stock represented by
such certificate shall have been converted pursuant to this
Section 2.1(c).
Section 2.2 Exchange of SPS Common Stock
Certificates.
(a) Deposit with Exchange Agent. As soon as
practicable after the Effective Time, the Company shall
deposit with a bank, trust company or other agent ("Exchange
Agent") certificates representing shares of Company Common
Stock required to effect the conversion of SPS Common Stock
into Company Common Stock referred to in Section 2.1(a).
(b) Exchange Procedures. As soon as practicable
after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented issued and
outstanding shares of SPS Common Stock ("Certificates") that
were converted ("Converted Shares") into the right to receive
shares of Company Common Stock ("Company Shares"), (i) a
letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates
shall pass, only upon actual deliver of the Certificates to
the Exchange Agent) and (ii) instructions for use in effecting
the exchange of Certificates for certificates representing
Company Shares. Upon delivery of a Certificate to the
Exchange Agent for exchange, together with a duly executed
<PAGE>
letter of transmittal and such other documents as the Exchange
Agent shall require, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate
representing that number of whole Company Shares and the
amount of cash in lieu of fractional share interests which
such holder has the right to receive pursuant to the
provisions of this Article II. In the event of a transfer of
ownership of Converted Shares which is not registered in the
transfer records of SPS, a certificate to a transferee if the
Certificate representing such Converted Shares is presented to
the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence satisfactory
to the Exchange Agent that any applicable stock transfer taxes
have been paid. Until delivered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to
receive upon such delivery the certificate representing
Company Shares and cash in lieu of any fractional shares of
Company Common Stock as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions declared or made
after the Effective Time with respect to Company Shares with a
record date after the Effective Time shall be paid to the
holder of any undelivered Certificate with respect to the
Company Shares represented thereby, and no cash payment in
lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(d), until the holder of record of such
Certificate (or a transferee as described in Section 2.2(b))
shall have delivered such Certificate as contemplated in
Section 2.2(b). Subject to the effect of unclaimed property,
escheat and other applicable laws, following delivery of any
such Certificate, there shall be paid to the record holder (or
transferee) of the certificates representing whole Company
Shares issued in exchange therefor, without interest, (i) at
the time of such delivery, the amount of any cash payable in
lieu of a fractional share of Company Common Stock to which
such holder (or transferee) is entitled pursuant to Section
2.2(d) and the amount of dividends or other distributions with
a record date after the Effective Time theretofore paid with
respect to such whole Company Shares and (ii) at the
appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but
prior to delivery and payment date subsequent to delivery
payable with respect to such whole Company Shares, as the case
may be.
(d) No Fractional Shares. (i) No certificates or
scrip representing fractional shares of Company Common Stock
shall be issued upon the delivery for exchange of
Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a
shareholder of the Company.
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent shall determine the excess
of (x) the number of full shares of Company Common Stock
delivered to the Exchange Agent by the Company pursuant to
Section 2.2(a) of the Reorganization Agreement over (y) the
aggregate number of full shares of Company Common Stock to be
distributed to holders of SPS Common Stock and Mountain Common
Stock(as defined in the Reorganization Agreement) pursuant to
Section 2.2(b) of the Reorganization Agreement (such excess
<PAGE>
being herein called the "Excess Shares"). As soon after the
Effective Time as practicable, the Exchange Agent, as agent
for the holders of the Excess Shares at then prevailing prices
on the New York Stock Exchange ("NYSE"), all in the manner
provided in Section 2.2(d)(iii).
(iii) The sale of the Excess shares by the
Exchange Agent shall be executed on they NYSE through one or
more member firms of the NYSE and shall be executed in round
lots to the extent practicable. Until the proceeds of such
sale or sales have been distributed to the holders of SPS
Common Stock and Mountain Common Stock, the Exchange Agent
shall, until remitted pursuant to Section 2.2(f), hold such
proceeds in trust for the holders of SPS Common Stock and
Mountain Common Stock ("Common Shares Trust"). The Company
shall pay all commissions, transfer taxes and other out-of-
pocket transaction costs, including the expenses and
compensation, of the Exchange Agent incurred in connection
with such sale of the Excess Shares. The Exchange Agent shall
determine the portion of the proceeds comprising the Common
Shares Trust to which each holder of SPS Common Stock shall be
entitled, if any, by multiplying the amount of the aggregate
proceeds comprising the Common Shares Trust by a fraction the
numerator of which is the amount of the fractional share
interest to which such holder of SPS Common Stock is entitled
and the denominator of which is the aggregate amount of
fractional share interests to which all holders of SPS Common
Stock and Mountain Common Stock are entitled.
(iv) As soon as practicable after the sale of
Excess Shares pursuant to clause (iii) above and the
determination of the amount of cash, if any, to be paid to
holders of SPS Common Stock in lieu of any fractional share
interests, the Exchange Agent shall distribute such amounts to
holders of SPS Common Stock who have theretofore delivered
Certificates for SPS Common Stock for exchange pursuant to
this Article II.
(e) Closing of Transfer Books. From and after the
Effective Time, the stock transfer books of SPS with respect
to shares of SPS Common Stock, issued and outstanding prior to
the Effective Time shall be closed and no transfer of any
shares shall thereafter be made. If, after the Effective
Time, Certificates are presented to the Company, they shall be
cancelled and exchanged for certificates representing the
appropriate number of whole Company Shares and cash in lieu of
fractional shares of Company Common Stock as provided in this
Section 2.2.
(f) Termination of Exchange Agent. Any
certificates representing Company Shares deposited with the
Exchange Agent pursuant to Section 2.2(a) and not exchanged
within one year after the Effective Time pursuant to this
Section 2.2 shall be returned by the Exchange Agent to the
Company, which shall thereafter act as Exchange Agent. All
funds held by the Exchange Agent for payment to the holders of
undelivered Certificates and unclaimed at the end of one year
from the Effective Time shall be remitted to the Company,
after which time any holder of undelivered Certificates shall
look as a general creditor only to the Company for payment of
such funds to which such holder may be due, subject to
applicable law. The Company shall not be liable to any person
for such shares or funds delivered to a public official
<PAGE>
pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE III.
TERMINATION AND AMENDMENT
Section 3.1 Termination. Notwithstanding the
approval and adoption of this Plan of Merger by the
shareholders of SPS, the Company and Merger Sub B, this Plan
of Merger shall terminate forthwith in the event that the
Reorganization Agreement shall be terminated as therein
provided and may be terminated as otherwise provided in the
Reorganization Agreement. In the event of the termination of
this Plan of Merger as provided above, this Plan of Merger
shall forthwith become void and there shall be no liability on
the part of any of the parties hereto except as otherwise
provided in the Reorganization Agreement.
Section 3.2 Amendment. This Plan of Merger shall
not be amended except in accordance with the provisions of
Section 9.4 of the Reorganization Agreement.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Governing Law. This Plan of Merger
shall be governed by the laws of the State of New Mexico.
Section 4.2 Counterparts. This Plan of Merger may
be executed in two or more counterparts, each of which shall
be deemed to be an original, but all of which shall constitute
one and the same agreement.
Section 4.3 Authorized Officers. The chairman of
the board, president, vice president, secretary and assistant
secretary of each of the merging corporations are each
authorized by it in its name to execute and deliver or cause
to be executed and delivered any articles of merger,
agreements, certificates, appointments, or other instruments,
and to do anything else that he or they deem to be necessary
or desirable in connection with the Merger.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Plan of Merger to be signed by their respective officers
thereunto duly authorized as of the date first written above.
SOUTHWESTERN PUBLIC SERVICE COMPANY
By: _______________________________
SPS MERGER, INC.
By: ______________________________
M-P NEW CO.
By: ______________________________
<PAGE>
EXHIBIT C
Form of Affiliate Agreement
Gentlemen:
The undersigned is a holder of shares of Common Stock, par value
$_____ per share ("Common Stock"), of ____________________, a __________
corporation] (the "Company") and is entitled to receive in connection with
the merger (the "Merger") of the Company with a subsidiary of M-P New Co.,
a Delaware corporation ("Newco"), securities of Newco (the "Securities").
The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of Newco within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Act"),
and/or as such term is used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Securities and Exchange
Commission (the "Commission"), although nothing contained herein shall be
construed as an admission of such status.
If in fact the undersigned were an affiliate of Newco under the Act,
the undersigned's ability to sell, assign or transfer any Securities
received by the undersigned in exchange for any shares of the Company
pursuant to the Merger may be restricted unless such transaction is
registered under the Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited
and the undersigned has obtained advice of counsel as to the nature and
conditions of such exemptions, including instruction with respect to the
applicability to the sale of such Securities of Rules 144 and 145(d)
promulgated under the Act.
The undersigned hereby represents to and covenants to Newco that it
will not sell, assign or transfer any Securities received by the
undersigned in exchange for shares of the Common Stock pursuant to the
Merger except (i) pursuant to an effective registration statement under
the Act (including, without limitation, a registration pursuant to any
registration rights granted to that certain Agreement and Plan of
Reorganization dated as of August 22, 1995 by and among the Company, Newco
and [PSCo or SPS, as the case may be] (the "Reorganization Agreement")),
(ii) by a transaction in conformity with the volume and other limitations
of Rule 145 or Rule 144, to the extent applicable, or any other applicable
rules promulgated by the Commission or (iii) in a transaction which, in
the opinion of independent counsel reasonably satisfactory to the Company,
or as described in a "no-action" or interpretive letter from the Staff of
the Commission, is not required to be registered under the Act.
In the event of a sale of Securities pursuant to Rule 145, the
undersigned will supply the Company with evidence of compliance with such
Rule, in the form of customary seller's and broker's Rule 145
representation letters or as Newco may otherwise reasonably request. The
undersigned understands that Newco may instruct its transfer agent to
withhold the transfer of any Securities disposed of by the undersigned in
a manner inconsistent with this letter.
The undersigned acknowledges and agrees that appropriate legends
will be placed on certificates representing Securities received by the
undersigned in the Merger or held by a transferee thereof, which legends
will be removed (i) by delivery of substitute certificates upon receipt of
an opinion in form and substance reasonably satisfactory to Newco to the
effect that such legends are no longer required for the purposes of the
Act and the rules and regulations of the Commission promulgated thereunder
<PAGE>
or (ii) in the event of a sale of the Securities which has been registered
under the Act.
The undersigned further represents to, and covenants with Newco and
the Company that the undersigned will not, during the 30 days prior to the
effective time of the Merger sell, transfer or otherwise dispose of, or
reduce any risk relative to, any securities of the Company, [PSCo or SPS,
as the case may be] or Newco, and the undersigned will not sell, transfer
or otherwise dispose of, or reduce any risk relative to, the Securities
received by the undersigned in the Merger or any other shares of the
capital stock of Newco until after such time as results covering at least
30 days of operations of Newco (including the combined operations of the
Company and [PSCo or SPS, as the case may be]) or Newco have been
published by Newco in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to
the Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes such results of operations.
The undersigned acknowledges that it has carefully reviewed this
letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Securities.
Nothing contained herein shall be deemed to limit any registration rights
granted to the undersigned pursuant to the Reorganization Agreement.
Very truly yours,
_________________________
[Name]
Dated:
As an inducement to the above individual to deliver this letter,
Newco agrees that for so long as and to the extent necessary to permit
such individual to sell the Securities pursuant to Rule 145 and, to the
extent applicable, Rule 144 under the Act, Newco shall use all reasonable
efforts to file, on a timely basis, all reports and data required to be
filed by it with the Commission pursuant to Section 13 of the Securities
and Exchange Act of 1934.
Very truly yours,
[NEWCO]
By:______________________
Name:
Title:
<PAGE>
EXHIBIT D
EMPLOYMENT AGREEMENT
BILL D. HELTON
<PAGE>
TABLE OF CONTENTS
PAGE
Employment Period . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Position and Duties . . . . . . . . . . . . . . . . . . . . . . . . . 1
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Termination of Employment . . . . . . . . . . . . . . . . . . . . . . 4
Obligations of the Company upon Termination . . . . . . . . . . . . . 7
Non-Exclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . 9
Full Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Non-Competition Provision and Confidential Information . . . . . . . 9
Certain Additional Payments by the Company . . . . . . . . . . . . . 10
Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and between M-P New Co., a Delaware corporation
(the "Company"), and Bill D. Helton (the "Executive"), dated as of the __
day of _________, 199__.
WITNESSETH THAT
WHEREAS, Public Service Company of Colorado, a Colorado corporation
("PSC") and Southwestern Public Service Company, a New Mexico corporation
("SPS") have entered into an Agreement and Plan of Reorganization dated as
of August 22, 1995 (the "Reorganization Agreement"), whereby wholly owned
subsidiaries of Company will merge into PSC and SPS; and
WHEREAS, PSC and SPS wish to provide for the orderly succession of
management of the Company following the Effective Time (as defined in the
Reorganization Agreement the "Effective Time"); and
WHEREAS, PSC and SPS further wish to provide for the employment by
the Company of the Executive, and the Executive wishes to serve the
Company, in the capacities and on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, it is hereby agreed as follows:
1. Employment Period. The Company shall employ the Executive,
and the Executive shall serve the Company, on the terms and conditions set
forth in this Agreement, for an initial period (the "Initial Period") and
a further period (the "Secondary Period") (the Initial Period and the
Secondary Period are hereinafter referred to in the aggregate as the
"Employment Period"). The Initial Period shall begin at the Effective
Time (as defined in the Reorganization Agreement the "Effective Time") and
end on the later of (i) June 30, 1999, or (ii) two and one-half (2 1/2)
years from the Effective Time. The Secondary Period shall begin on the
first day after the end of the Initial Period and end on May 31, 2001.
2. Position and Duties.
(a) During the Initial Period, the Executive shall serve as
Chief Executive Officer of the Company and Chairman of the Board of
Directors of the Company (the "Board"). During the Secondary Period, the
Executive shall serve as Chairman of the Board. The Executive shall serve
in each such case as an employee of the Company and with such duties and
responsibilities as are customarily assigned to such positions, and such
other duties and responsibilities not inconsistent therewith as may from
time to time be assigned to him by the Board. The Executive shall be a
member of the Board on the first day of the Employment Period, and the
Board shall propose the Executive for re-election to the Board throughout
the Employment Period.
(b) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive shall devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the
Executive under this Agreement, use the Executive's reasonable best
efforts to carry out such responsibilities faithfully and efficiently. It
shall not be considered a violation of the foregoing for the Executive to
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serve on corporate, industry, civic or charitable boards or committees, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
(c) The Executive's services shall be performed primarily at
the Company's headquarters in Denver, Colorado.
3. Compensation.
(a) Base Salary. The Executive's compensation during the
Employment Period shall be determined by the Board upon the recommendation
of the Compensation Committee of the Board, subject to the next sentence
and Section 3(b). During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary") of not less than his
annual base salary from SPS as in effect immediately before the Effective
Time. During the Initial Period, Executive shall be compensated by the
Company and its subsidiaries at a level that is higher than the
compensation from the Company and its subsidiaries received by any other
executive officer of the Company. The Annual Base Salary shall be payable
in accordance with the Company's regular payroll practice for its senior
executives, as in effect from time to time. During the Employment Period,
the Annual Base Salary shall be reviewed at least annually. Any increase
in the Annual Base Salary shall not limit or reduce any other obligation
of the Company under this Agreement.
(b) Incentive Compensation. During the Employment Period,
the Executive shall participate in short-term incentive compensation plans
and long-term incentive compensation plans (the latter to consist of plans
offering stock options, restricted stock and other long-term incentive
compensation) providing him with the opportunity to earn, on a year-by-
year basis, short-term and long-term incentive compensation (the
"Incentive Compensation") at least equal to the greater of (i) the amounts
that he had the opportunity to earn under the comparable plans of SPS as
in effect immediately before the Effective Time, or (ii) the amounts that
the next highest executive officer of the Company has the opportunity to
earn under the plans of the Company and its subsidiaries for that year.
(c) Other Benefits.
(i) Supplemental Executive Retirement Plan. During the
Employment Period, the Executive shall participate in a supplemental
executive retirement plan ("SERP") such that the aggregate value of the
retirement benefits that he and his spouse will receive at the end of the
Employment Period under all defined benefit plans of the Company and its
affiliates (whether qualified or not) will be not less than the aggregate
value of the benefits he and his spouse would have received (and with the
same forms of benefit payments) had he continued, through the end of the
Employment Period, to accrue the supplemental retirement benefits provided
by the terms of the Supplemental Retirement Income Plan of SPS as in
effect immediately before the Effective Time. The Company shall maintain
and fund one or more grantor trusts (the "Trusts"), or such other funding
mechanism as may be satisfactory to the Executive, which shall comply with
the following sentence and which shall at all times be adequate to provide
for the payment of all benefits under the SERP to the Executive, as well
as any elective deferrals by the Executive under any non-qualified plan
(with such adequacy being determined by an independent consulting firm
acceptable to the Executive, whose fees shall be paid by the Company).
The assets of the Trusts (if any) shall be subject to the claims of the
Company's creditors, and the Trusts (if any) shall in all other respects
be designed to prevent the Executive and his spouse from being taxed on
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the assets or income thereof, except as and when such assets or income are
paid to them.
(ii) During the Employment Period, the Company
shall provide the Executive with life insurance coverage providing a death
benefit to such beneficiary or beneficiaries as the Executive may
designate of not less than two times his Annual Base Salary.
(iii) In addition, and without limiting the
generality of the foregoing, during the Employment Period and thereafter:
(A) the Executive shall be entitled to participate in all applicable
incentive, savings and retirement plans, practices, policies and programs
of the Company and its subsidiaries to the same extent as other senior
executives of the Company; and (B) the Executive and/or the Executive's
family, as the case may be, shall be eligible for participation in, and
shall receive all benefits under, all applicable welfare benefit plans,
practices, policies and programs provided by the Company and its
subsidiaries, other than severance plans, practices, policies and programs
but including, without limitation, medical, prescription, dental,
disability, sick leave, employee life insurance, group life insurance,
accidental death and travel accident insurance plans and programs, to the
same extent as other senior executives of the Company.
(d) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to receive fringe benefits on the same terms
and conditions as the greater of (i) the fringe benefits received by, or
available to, him from SPS immediately before the Effective Time,
including but not limited to, relocation assistance under SPS's Relocation
Assistance Policy, or (ii) the fringe benefits provided by the Company or
its subsidiaries which are available to the next highest executive officer
of the Company for the year.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment
Period. The Company shall be entitled to terminate the Executive's
employment because of the Executive's Disability during the Employment
Period. "Disability" means that (i) the Executive has been unable, for a
period of 180 consecutive business days, to perform the Executive's duties
under this Agreement, as a result of physical or mental illness or injury,
and (i) a physician selected by the Company or its insurers, and
acceptable to the Executive or the Executive's legal representative, has
determined that the Executive's incapacity is total and permanent. A
termination of the Executive's employment by the Company for Disability
shall be communicated to the Executive by written notice, and shall be
effective on the 30th day after receipt of such notice by the Executive
(the "Disability Effective Date"), unless the Executive returns to full-
time performance of the Executive's duties before the Disability Effective
Date.
(b) By the Company.
(i) The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause.
"Cause" means:
A. the willful and continued failure of the
Executive substantially to perform the Executive's duties under this
Agreement (other than as a result of physical or mental illness or
injury), after the Board of the Company delivers to the Executive a
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written demand for substantial performance that specifically identifies
the manner in which the Board believes that the Executive has not
substantially performed the Executive's duties; or
B. illegal conduct or gross misconduct by the
Executive, in either case that is willful and results in material and
demonstrable damage to the business or reputation of the Company.
No act or failure to act on the part of the Executive shall be
considered "willful" unless it is done, or omitted to be done, by the
Executive in bad faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company. Any act or
failure to act that is based upon authority given pursuant to a resolution
duly adopted by the Board, or the advice of counsel for the Company, shall
be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
(ii) A termination of the Executive's employment for
Cause shall be effected in accordance with the following procedures. The
Company shall give the Executive written notice ("Notice of Termination
for Cause") of its intention to terminate the Executive's employment for
Cause, setting forth in reasonable detail the specific conduct of the
Executive that it considers to constitute Cause and the specific
provision(s) of this Agreement on which it relies, and stating the date,
time and place of the Special Board Meeting for Cause. The "Special Board
Meeting for Cause" means a meeting of the Board called and held
specifically for the purpose of considering the Executive's termination
for Cause, that takes place not less than ten and not more than twenty
business days after the Executive receives the Notice of Termination for
Cause. The Executive shall be given an opportunity, together with
counsel, to be heard at the Special Board Meeting for Cause. The
Executive's termination for Cause shall be effective when and if a
resolution is duly adopted at the Special Board Meeting for Cause by
affirmative vote of at least the greater of (A) two-thirds (2/3) of the
entire membership of the Board (excluding the Executive who shall not vote
on this matter) or (B) ten (10) members of the Board, stating that in the
good faith opinion of the Board, the Executive is guilty of the conduct
described in the Notice of Termination for Cause, and that conduct
constitutes Cause under this Agreement.
(iii) A termination of the Executive's employment
without Cause shall be effective in accordance with the following
procedures. The Company shall give the Executive written notice ("Notice
of Termination without Cause") of its intention to terminate the
Executive's employment without Cause, stating the date, time and place of
the Special Board Meeting without Cause. The "Special Board Meeting
without Cause" means a meeting of the Board called and held specifically
for the purpose of considering the Executive's termination without Cause,
that takes place not less than ten and not more than twenty business days
after the Executive receives the Notice of Termination without Cause. The
Executive shall be given an opportunity, together with counsel, to be
heard at the Special Board Meeting without Cause. The Executive's
termination without Cause shall be effective when and if a resolution is
duly adopted at the Special Board Meeting without Cause by affirmative
vote of at least the greater of (A) two-thirds (2/3) of the entire
membership of the Board (excluding the Executive who shall not vote on
this matter) or (B) ten (10) members of the Board, stating that the
Executive is terminated without Cause.
(c) Good Reason.
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(i) The Executive may terminate employment for
Good Reason or without Good Reason. "Good Reason" means:
A. the assignment to the Executive of any duties
inconsistent in any respect with paragraph (a) of Section 2 of his
Agreement, or any other action by the Company that results in a diminution
in the Executive's position, authority, duties or responsibilities, other
than an isolated, insubstantial and inadvertent action that is not taken
in bad faith and is remedied by the Company promptly after receipt of
notice thereof from the Executive;
B. any failure by the Company to comply with any
provision of Section 3 of this Agreement, other than an isolated,
insubstantial and inadvertent failure that is not taken in bad faith and
is remedied by the Company promptly after receipt of notice thereof from
the Executive;
C. the assignment or reassignment by the Company
of the Executive without the Executive's consent to another place of
employment more than 50 miles from the Company's headquarters indicated in
Section 2(d);
D. any purported termination of the Executive's
employment by the Company for a reason or in a manner not expressly
permitted by this Agreement;
E. any failure by the Company to comply with
paragraph (c) of Section 11 of this Agreement; or
F. any other substantial breach of this Agreement
by the Company that either is not taken in good faith or is not remedied
by the Company promptly after receipt of notice thereof from the
Executive.
The Company and the Executive, upon mutual written agreement, may waive
any of the foregoing provisions which would otherwise constitute Good
Reason.
(ii) A termination of employment by the Executive
for Good Reason shall be effectuated by giving the Company written notice
("Notice of Termination for Good Reason") of the termination, setting
forth in reasonable detail the specific conduct of the Company that
constitutes Good Reason and the specific provision(s) of this Agreement on
which the Executive relies. A termination of employment by the Executive
for Good Reason shall be effective on the fifth business day following the
date when the Notice of Termination for Good Reason is given, unless the
notice sets forth a later date (which date shall in no event be later than
30 days after the notice is given). For purposes of this Section 4(c),
any good faith determination of "Good Reason" made by the Executive shall
be conclusive.
(iii) A termination of the Executive's employment by
the Executive without Good Reason shall be effected by giving the Company
written notice of the termination.
(d) No Waiver. The failure to set forth any fact or
circumstance in a Notice of Termination for Cause, a Notice of Termination
without Cause or a Notice of Termination for Good Reason shall not
constitute a waiver of the right to assert, and shall not preclude the
party giving notice from asserting, such fact or circumstance in an
attempt to enforce any right under or provision of this Agreement.
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(e) Date of Termination. The "Date of Termination" means
the date of the Executive's death, the Disability Effective Date, the date
on which the termination of the Executive's employment by the Company for
Cause or without Cause or by the Executive for Good Reason is effective,
or the date on which the Executive gives the Company notice of a
termination of employment without Good Reason, as the case may be.
5. Obligations of the Company upon Termination.
(a) By the Company other than for cause or disability; by
the Executive for Good Reason. If, during the Employment Period, the
Company terminates the Executive's employment, other than for Cause or
Disability, or the Executive terminates employment for Good Reason, the
Company shall continue to provide the Executive with the compensation and
benefits set forth in paragraphs (a), (b) and (c) of Section 3 as if he
had remained employed by the Company pursuant to this Agreement through
the end of the Employment Period and then retired (at which time he will
be treated as eligible for all retiree welfare benefits and other benefits
provided to retired senior executives, as set forth in Section 3(c)(ii)
and (iii)); PROVIDED, that the Incentive Compensation for such period
shall be based upon the target Incentive Compensation for the year in
which the Date of Termination occurs; PROVIDED, further, that in lieu of
stock options, restricted stock and other stock-based awards, the
Executive shall be paid cash equal to the fair market value as of the Date
of Termination (without regard to any restrictions and based upon a
valuation model generally utilized for purposes of valuing comparable
stock based compensation awards) of the stock options, restricted stock
and other stock-based awards that would otherwise have been granted with
such cash being paid within 90 days after the Date of Termination;
PROVIDED, further, that to the extent any benefits described in paragraph
(c) of Section 3 cannot be provided pursuant to the plan or program
maintained by the Company for its executives, the Company shall provide
such benefits outside such plan or program at no additional cost
(including without limitation tax cost) to the Executive and his family;
and PROVIDED, finally, that during any period when the Executive is
eligible to receive benefits of the type described in clause (B) of
paragraph (c)(iii) of Section 3 under another employer-provided plan, the
benefits provided by the Company under paragraph (a) of Section 5 may be
made secondary to those provided under another plan. In addition to the
foregoing, any restricted stock outstanding on the Date of Termination
shall be fully vested as of the Date of Termination and all options
outstanding on the Date of Termination shall be fully vested and
exercisable and shall remain in effect and exercisable through the end of
their respective terms, without regard to the termination of the
Executive's employment. The payments and benefits provided pursuant to
this paragraph (a) of Section 5 are intended as liquidated damages for a
termination of the Executive's employment by the Company other than for
Cause or Disability or for the actions of the Company leading to a
termination of the Executive's employment by the Executive for Good
Reason, and shall be the sole and exclusive remedy therefor.
(b) Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall pay to the Executive or, in the case
of the Executive's death, to the Executive's designated beneficiaries (or,
if there is no such beneficiary, to the Executive's estate or legal
representative) in a lump sum in cash within 30 days after the Date of
Termination, the sum of the following amounts (the "Accrued Obligations"):
(1) any portion of the Executive's Annual Base Salary through the Date of
Termination that has not yet been paid; (2) an amount representing the
target Incentive Compensation for the year that includes the Date of
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Termination, computed by assuming that the amount of all such target
Incentive Compensation would be equal to the amount of such target
Incentive Compensation that the Executive would have been eligible to earn
for such period, and multiplying that amount by a fraction, the numerator
of which is the number of days in such period through the Date of
Termination, and the denominator of which is the total number of days in
the relevant period (3) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon) that
has not yet been paid; and (4) any accrued but unpaid Incentive
Compensation and vacation pay; and the Company shall have no further
obligations under this Agreement, except as specified in Section 6 below.
If the Executive's employment is terminated by reason of Disability, he
shall be entitled to receive the maximum disability payments which can be
provided under the disability plans described in Section 3(c)(ii),
reduced, however, by actual disability benefits received under such plans.
(c) By the Company for Cause; by the Executive other than for
Good Reason. If the Executive's employment is terminated by the Company
for Cause during the Employment Period, the Company shall pay the
Executive the Annual Base Salary through the Date of Termination and the
amount of any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon), in each case to the extent
not yet paid, and the Company shall have no further obligations under this
Agreement, except as specified in Section 6 below. If the Executive
voluntarily terminates employment during the Employment Period, other than
for Good Reason, the Company shall pay the Accrued Obligations to the
Executive in a lump sum in cash within 30 days of the Date of Termination,
and the Company shall have no further obligations under this Agreement,
except as specified in Section 6 below.
6. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies for which the Executive may qualify, nor, subject to
paragraph (f) of Section 12, shall anything in this Agreement limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Vested
benefits and other amounts that the Executive is otherwise entitled to
receive under the SERP or any other plan, policy, practice or program of,
or any contract or agreement with, the Company or any of its affiliated
companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice, program,
contract or agreement, as the case may be, except as explicitly modified
by this Agreement.
7. Full Settlement. The Company's obligation to make the
payments provided for in, and otherwise to perform its obligations under,
this Agreement shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as specifically provided in
paragraph (a) of Section 5 with respect to benefits described in clause
(B) of paragraph (c)(iii) of Section 3, such amounts shall not be reduced,
regardless of whether the Executive obtains other employment.
8. Non-Competition Provision and Confidential Information.
(a) Without prior written consent of the Company, for the
greater of (i) the twenty-four (24) month period following the Date of
Termination, or (ii) the remaining term of this Agreement, the Executive
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shall not, as a shareholder, officer, director, partner, consultant, or
otherwise, engage directly or indirectly in any business or enterprise
which is "in competition" with the Company or its successors or assigns;
provided, however, that the Executive's ownership of less than five
percent of the issued and outstanding voting securities of a publicly-
traded company shall not be deemed to constitute such competition. A
business or enterprise is deemed to be "in competition" if it is engaged
in the business of generation, purchase, transmission, distribution, or
sale of electricity, or in the purchase, transmission, distribution, sale
or transportation of natural gas within the States of Colorado, New
Mexico, Texas, Wyoming, Kansas or Oklahoma.
(b) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies and
their respective businesses that the Executive obtains during the
Executive's employment by the Company or any of its affiliated companies
and that is not public knowledge (other than as a result of the
Executive's violation of this Section 8) ("Confidential Information"). The
Executive shall not communicate, divulge or disseminate Confidential
Information at any time during or after the Executive's employment with
the Company, except with the prior written consent of the Company or as
otherwise required by law or legal process. In no event shall any asserted
violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of paragraph (c) of this
Section 9, all determinations required to be made under this Section 9,
including whether and when a Gross-Up Payment is required and the amount
of such Gross-up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by a nationally recognized certified
public accounting firm designated by the Executive (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination.
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Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment") consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
paragraph (c) of this Section 9 and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business days
after the Executive is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior to
the expiration of the 30-day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
PROVIDED, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this paragraph (c) of Section 9,
the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; PROVIDED, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
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advance or with respect to any imputed income with respect to such
advance; and PROVIDED, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph (c) of this Section 9, the
Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company's complying with the
requirements of paragraph (c) of this Section 9) promptly pay to the
Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If after the receipt by
the Executive of an amount advanced by the Company pursuant to paragraph
(c) of this Section 9, a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
10. Attorneys' Fees. The Company agrees to pay, as incurred, to
the fullest extent permitted by law, all legal fees and expenses that the
Executive may reasonably incur as a result of any contest (regardless of
the outcome) by the Company, the Executive or others of the validity or
enforceability of or liability under, or otherwise involving, any
provision of this Agreement, together with interest on any delayed payment
at the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code.
11. Successors.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly
to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would have been required to perform it if
no such succession had taken place. As used in this Agreement, "Company"
shall mean both the Company as defined above and any such successor that
assumes and agrees to perform this Agreement, by operation of law or
otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado, without reference to
principles of conflict of laws. The captions of this Agreement are not
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part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Mr. Bill D. Helton
7801 Tarrytown Avenue
Amarillo, TX 79121
If to the Company:
M-P New Co.
1225 17th Street
Denver, CO 80202
Attention: General Counsel
or to such other address as either party furnishes to the other in writing
in accordance with this paragraph (b) of Section 12. Notices and
communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of
such provision, together with all other provisions of this Agreement,
shall remain valid and enforceable and continue in full force and effect
to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement,
the Company may withhold from amounts payable under this Agreement all
federal, state, local and foreign taxes that are required to be withheld
by applicable laws or regulations.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of, or to assert any right under,
this Agreement (including, without limitation, the right of the Executive
to terminate employment for Good Reason pursuant to paragraph (c) of
Section 4 of this Agreement) shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this
Agreement.
(f) The Executive and the Company acknowledge that this
Agreement supersedes and terminates any other severance and employment
agreements between the Executive and the Company, SPS or the Company's
affiliates.
(g) The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable
process except as required by law. Any attempt by the Executive to
anticipate, alienate assign, sell, transfer, pledge, encumber or charge
the same shall be void. Payments hereunder shall not be considered assets
of the Executive in the event of insolvency or bankruptcy.
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(h) This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization of its Board of Directors, the
Company has caused this Agreement to be executed in its name on its
behalf, all as of the day and year first above written.
_______________________________
Bill D. Helton
COMPANY
By:______________________________
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EXHIBIT E
EMPLOYMENT AGREEMENT
WAYNE H. BRUNETTI
<PAGE>
TABLE OF CONTENTS
PAGE
Employment Period . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Position and Duties . . . . . . . . . . . . . . . . . . . . . . . . . 1
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Termination of Employment . . . . . . . . . . . . . . . . . . . . . . 4
Obligations of the Company upon Termination . . . . . . . . . . . . . 7
Non-Exclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . 9
Full Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Non-Competition Provision and Confidential Information . . . . . . . 9
Certain Additional Payments by the Company . . . . . . . . . . . . . 10
Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and between M-P New Co., a Delaware corporation
(the "Company"), and Wayne H. Brunetti (the "Executive"), dated as of the
__ day of __________, 199__.
WITNESSETH THAT
WHEREAS, Public Service Company of Colorado, a Colorado corporation
("PSC") and Southwestern Public Service Company, a New Mexico corporation
("SPS") have entered into an Agreement and Plan of Reorganization dated as
of August 22, 1995 (the "Reorganization Agreement"), whereby wholly owned
subsidiaries of Company will merge into PSC and SPS; and
WHEREAS, PSC and SPS wish to provide for the orderly succession of
management of the Company following the Effective Time (as defined in the
Reorganization Agreement); and
WHEREAS, PSC and SPS further wish to provide for the employment by
the Company of the Executive, and the Executive wishes to serve the
Company, in the capacities and on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, it is hereby agreed as follows:
1. Employment Period. The Company shall employ the Executive,
and the Executive shall serve the Company, on the terms and conditions set
forth in this Agreement, for an initial period (the "Initial Period") and
a further period (the "Secondary Period") (the Initial Period and the
Secondary Period are hereinafter referred to in the aggregate as the
"Employment Period"). The Initial Period shall begin at the Effective
Time (as defined in the Reorganization Agreement the "Effective Time") and
end on the later of (i) June 30, 1999, or (ii) two and one-half (2 1/2)
years from the Effective Time. The Secondary Period shall begin on the
first day after the end of the Initial Period and end on May 31, 2001.
2. Position and Duties.
(a) During the Initial Period, the Executive shall serve as
President and Chief Operating Officer of the Company, and as Vice-Chairman
of the Board of the Company (the "Board"). During the Secondary Period,
the Executive shall serve as President of the Company, Chief Executive
Officer of the Company and Vice-Chairman of the Board. The Executive
shall serve in each case as an employee of the Company and with such
duties and responsibilities as are customarily assigned to such positions,
and such other duties and responsibilities not inconsistent therewith as
may from time to time be assigned to him by the Board. The Executive
shall be a member of the Board on the first day of the Employment Period,
and the Board shall propose the Executive for re-election to the Board
throughout the Employment Period.
(b) During the Initial Period as is customary, the Executive
shall report to the Chief Executive Officer and during the Secondary
Period, as is customary the Executive shall report to the Board.
(c) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive shall devote reasonable attention and time during normal
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business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the
Executive under this Agreement, use the Executive's reasonable best
efforts to carry out such responsibilities faithfully and efficiently. It
shall not be considered a violation of the foregoing for the Executive to
serve on corporate, industry, civic or charitable boards or committees, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
(d) The Executive's services shall be performed primarily at
the Company's headquarters in Denver, Colorado.
3. Compensation.
(a) Base Salary. The Executive's compensation during the
Employment Period shall be determined by the Board upon the recommendation
of the Compensation Committee of the Board, subject to the next sentence
and Section 3(b). During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary") of not less than his
annual base salary from PSC as in effect immediately before the Effective
Time. During the Initial Period, Executive shall be compensated by the
Company and its subsidiaries at a level that is higher than the
compensation from the Company and its subsidiaries received by any other
executive officer of the Company except the Chief Executive Officer and
Chairman of the Board. The Annual Base Salary shall be payable in
accordance with the Company's regular payroll practice for its senior
executives, as in effect from time to time. During the Employment Period,
the Annual Base Salary shall be reviewed at least annually. Any increase
in the Annual Base Salary shall not limit or reduce any other obligation
of the Company under this Agreement.
(b) Incentive Compensation. During the Employment Period,
the Executive shall participate in short-term incentive compensation plans
and long-term incentive compensation plans (the latter to consist of plans
offering stock options, restricted stock and other long-term incentive
compensation) providing him with the opportunity to earn, on a year-by-
year basis, short-term and long-term incentive compensation (the
"Incentive Compensation") at least equal to the greater of (i) the amounts
that he had the opportunity to earn under the comparable plans of PSC as
in effect immediately before the Effective Time, or (ii) the amounts that
the next highest executive officer of the Company has the opportunity to
earn under plans of the Company and its subsidiaries for that year.
(c) Other Benefits.
(i) Supplemental Executive Retirement Plan. During the
Employment Period, the Executive shall participate in a supplemental
executive retirement plan ("SERP") such that the aggregate value of the
retirement benefits that he and his spouse will receive at the end of the
Employment Period under all defined benefit plans of the Company and its
affiliates (whether qualified or not) will be not less than the aggregate
value of the benefits he and his spouse would have received (and with the
same forms of benefit payments) had he continued, through the end of the
Employment Period, to accrue the supplemental retirement benefits provided
by the terms of his employment agreement with PSC as in effect immediately
before the Effective Time. The Company shall maintain and fund one or
more grantor trusts (the "Trusts"), or such other funding mechanism as may
be satisfactory to the Executive, which shall comply with the following
sentence and which shall at all times be adequate to provide for the
payment of all benefits under the SERP to the Executive, as well as any
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elective deferrals by the Executive under any non-qualified plan (with
such adequacy being determined by an independent consulting firm
acceptable to the Executive, whose fees shall be paid by the Company).
The assets of the Trusts (if any) shall be subject to the claims of the
Company's creditors, and the Trusts (if any) shall in all other respects
be designed to prevent the Executive and his spouse from being taxed on
the assets or income thereof, except as and when such assets or income are
paid to them.
(ii) During the Employment Period, the Company
shall provide the Executive with life insurance coverage providing a death
benefit to such beneficiary or beneficiaries as the Executive may
designate of not less than two times his Annual Base Salary.
(iii) In addition, and without limiting the
generality of the foregoing, during the Employment Period and thereafter:
(A) the Executive shall be entitled to participate in all applicable
incentive, savings and retirement plans, practices, policies and programs
of the Company and its subsidiaries to the same extent as other senior
executives of the Company; and (B) the Executive and/or the Executive's
family, as the case may be, shall be eligible for participation in, and
shall receive all benefits under, all applicable welfare benefit plans,
practices, policies and programs provided by the Company and its
subsidiaries, other than severance plans, practices, policies and programs
but including, without limitation, medical, prescription, dental,
disability, sick leave, employee life insurance, group life insurance,
accidental death and travel accident insurance plans and programs, to the
same extent as other senior executives of the Company.
(d) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to receive fringe benefits on the same terms
and conditions as the greater of (i) the fringe benefits received by, or
available to, him from PSC immediately before the Effective Time, or (ii)
the fringe benefits provided by the Company or its subsidiaries which are
available to the next highest executive officer of the Company for the
year.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment
Period. The Company shall be entitled to terminate the Executive's
employment because of the Executive's Disability during the Employment
Period. "Disability" means that (i) the Executive has been unable, for a
period of 180 consecutive business days, to perform the Executive's duties
under this Agreement, as a result of physical or mental illness or injury,
and (i) a physician selected by the Company or its insurers, and
acceptable to the Executive or the Executive's legal representative, has
determined that the Executive's incapacity is total and permanent. A
termination of the Executive's employment by the Company for Disability
shall be communicated to the Executive by written notice, and shall be
effective on the 30th day after receipt of such notice by the Executive
(the "Disability Effective Date"), unless the Executive returns to full-
time performance of the Executive's duties before the Disability Effective
Date.
(b) By the Company.
(i) The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause.
"Cause" means:
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A. the willful and continued failure of the
Executive substantially to perform the Executive's duties under this
Agreement (other than as a result of physical or mental illness or
injury), after the Board of the Company delivers to the Executive a
written demand for substantial performance that specifically identifies
the manner in which the Board believes that the Executive has not
substantially performed the Executive's duties; or
B. illegal conduct or gross misconduct by the
Executive, in either case that is willful and results in material and
demonstrable damage to the business or reputation of the Company.
No act or failure to act on the part of the Executive shall be
considered "willful" unless it is done, or omitted to be done, by the
Executive in bad faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company. Any act or
failure to act that is based upon authority given pursuant to a resolution
duly adopted by the Board, or the advice of counsel for the Company, shall
be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
(ii) A termination of the Executive's employment for
Cause shall be effected in accordance with the following procedures. The
Company shall give the Executive written notice ("Notice of Termination
for Cause") of its intention to terminate the Executive's employment for
Cause, setting forth in reasonable detail the specific conduct of the
Executive that it considers to constitute Cause and the specific
provision(s) of this Agreement on which it relies, and stating the date,
time and place of the Special Board Meeting for Cause. The "Special Board
Meeting for Cause" means a meeting of the Board called and held
specifically for the purpose of considering the Executive's termination
for Cause, that takes place not less than ten and not more than twenty
business days after the Executive receives the Notice of Termination for
Cause. The Executive shall be given an opportunity, together with
counsel, to be heard at the Special Board Meeting for Cause. The
Executive's termination for Cause shall be effective when and if a
resolution is duly adopted at the Special Board Meeting for Cause by
affirmative vote of at least the greater of (A) two-thirds (2/3) of the
entire membership of the Board (excluding the Executive who shall not vote
on this matter) or (B) ten (10) members of the Board, stating that in the
good faith opinion of the Board, the Executive is guilty of the conduct
described in the Notice of Termination for Cause, and that conduct
constitutes Cause under this Agreement.
(iii) A termination of the Executive's employment
without Cause shall be effective in accordance with the following
procedures. The Company shall give the Executive written notice ("Notice
of Termination without Cause") of its intention to terminate the
Executive's employment without Cause, stating the date, time and place of
the Special Board Meeting without Cause. The "Special Board Meeting
without Cause" means a meeting of the Board called and held specifically
for the purpose of considering the Executive's termination without Cause,
that takes place not less than ten and not more than twenty business days
after the Executive receives the Notice of Termination without Cause. The
Executive shall be given an opportunity, together with counsel, to be
heard at the Special Board Meeting without Cause. The Executive's
termination without Cause shall be effective when and if a resolution is
duly adopted at the Special Board Meeting without Cause by affirmative
vote of the greater of (A) at least two-thirds (2/3) of the entire
membership of the Board (excluding the Executive who shall not vote on
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this matter) or (B) ten members of the Board stating that the Executive is
terminated without Cause.
(c) Good Reason.
(i) The Executive may terminate employment for
Good Reason or without Good Reason. "Good Reason" means:
A. the assignment to the Executive of any duties
inconsistent in any respect with paragraph (a) of Section 2 of his
Agreement, or any other action by the Company that results in a diminution
in the Executive's position, authority, duties or responsibilities, other
than an isolated, insubstantial and inadvertent action that is not taken
in bad faith and is remedied by the Company promptly after receipt of
notice thereof from the Executive;
B. any failure by the Company to comply with any
provision of Section 3 of this Agreement, other than an isolated,
insubstantial and inadvertent failure that is not taken in bad faith and
is remedied by the Company promptly after receipt of notice thereof from
the Executive;
C. the assignment or reassignment by the Company
of the Executive without the Executive's consent to another place of
employment more than 50 miles from the Company's headquarters indicated in
Section 2(d);
D. any purported termination of the Executive's
employment by the Company for a reason or in a manner not expressly
permitted by this Agreement;
E. any failure by the Company to comply with
paragraph (c) of Section 11 of this Agreement; or
F. any other substantial breach of this Agreement
by the Company that either is not taken in good faith or is not remedied
by the Company promptly after receipt of notice thereof from the
Executive.
The Company and the Executive, upon mutual written agreement, may waive
any of the foregoing provisions which would otherwise constitute Good
Reason.
(ii) A termination of employment by the Executive
for Good Reason shall be effectuated by giving the Company written notice
("Notice of Termination for Good Reason") of the termination, setting
forth in reasonable detail the specific conduct of the Company that
constitutes Good Reason and the specific provision(s) of this Agreement on
which the Executive relies. A termination of employment by the Executive
for Good Reason shall be effective on the fifth business day following the
date when the Notice of Termination for Good Reason is given, unless the
notice sets forth a later date (which date shall in no event be later than
30 days after the notice is given). For purposes of this Section 4(c),
any good faith determination of "Good Reason" made by the Executive shall
be conclusive.
(iii) A termination of the Executive's employment by
the Executive without Good Reason shall be effected by giving the Company
written notice of the termination.
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(d) No Waiver. The failure to set forth any fact or
circumstance in a Notice of Termination for Cause, a Notice of Termination
without Cause or a Notice of Termination for Good Reason shall not
constitute a waiver of the right to assert, and shall not preclude the
party giving notice from asserting, such fact or circumstance in an
attempt to enforce any right under or provision of this Agreement.
(e) Date of Termination. The "Date of Termination" means
the date of the Executive's death, the Disability Effective Date, the date
on which the termination of the Executive's employment by the Company for
Cause or without Cause or by the Executive for Good Reason is effective,
or the date on which the Executive gives the Company notice of a
termination of employment without Good Reason, as the case may be.
5. Obligations of the Company upon Termination.
(a) By the Company other than for cause or disability; by
the Executive for Good Reason. If, during the Employment Period, the
Company terminates the Executive's employment, other than for Cause or
Disability, or the Executive terminates employment for Good Reason, the
Company shall continue to provide the Executive with the compensation and
benefits set forth in paragraphs (a), (b) and (c) of Section 3 as if he
had remained employed by the Company pursuant to this Agreement through
the end of the Employment Period and then retired (at which time he will
be treated as eligible for all retiree welfare benefits and other benefits
provided to retired senior executives, as set forth in Section 3(c)(ii)
and (iii)); PROVIDED, that the Incentive Compensation for such period
shall be based upon the target Incentive Compensation for the year in
which the Date of Termination occurs; PROVIDED, further, that in lieu of
stock options, restricted stock and other stock-based awards, the
Executive shall be paid cash equal to the fair market value as of the Date
of Termination (without regard to any restrictions and based upon a
valuation model generally utilized for purposes of valuing comparable
stock based compensation awards) of the stock options, restricted stock
and other stock-based awards that would otherwise have been granted with
such cash being paid within 90 days after the Date of Termination;
PROVIDED, further, that to the extent any benefits described in paragraph
(c) of Section 3 cannot be provided pursuant to the plan or program
maintained by the Company for its executives, the Company shall provide
such benefits outside such plan or program at no additional cost
(including without limitation tax cost) to the Executive and his family;
and PROVIDED, finally, that during any period when the Executive is
eligible to receive benefits of the type described in clause (B) of
paragraph (c)(iii) of Section 3 under another employer-provided plan, the
benefits provided by the Company under paragraph (a) of Section 5 may be
made secondary to those provided under another plan. In addition to the
foregoing, any restricted stock outstanding on the Date of Termination
shall be fully vested as of the Date of Termination and all options
outstanding on the Date of Termination shall be fully vested and
exercisable and shall remain in effect and exercisable through the end of
their respective terms, without regard to the termination of the
Executive's employment. The payments and benefits provided pursuant to
this paragraph (a) of Section 5 are intended as liquidated damages for a
termination of the Executive's employment by the Company other than for
Cause or Disability or for the actions of the Company leading to a
termination of the Executive's employment by the Executive for Good
Reason, and shall be the sole and exclusive remedy therefor.
(b) Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall pay to the Executive or, in the case
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of the Executive's death, to the Executive's designated beneficiaries (or,
if there is no such beneficiary, to the Executive's estate or legal
representative) in a lump sum in cash within 30 days after the Date of
Termination, the sum of the following amounts (the "Accrued Obligations"):
(1) any portion of the Executive's Annual Base Salary through the Date of
Termination that has not yet been paid; (2) an amount representing the
target Incentive Compensation for the year that includes the Date of
Termination, computed by assuming that the amount of all such target
Incentive Compensation would be equal to the amount of such target
Incentive Compensation that the Executive would have been eligible to earn
for such period, and multiplying that amount by a fraction, the numerator
of which is the number of days in such period through the Date of
Termination, and the denominator of which is the total number of days in
the relevant period (3) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon) that
has not yet been paid; and (4) any accrued but unpaid Incentive
Compensation and vacation pay; and the Company shall have no further
obligations under this Agreement, except as specified in Section 6 below.
If the Executive's employment is terminated by reason of Disability, he
shall be entitled to receive the maximum disability payments which can be
provided under the disability plans described in Section 3(c)(ii),
reduced, however, by actual disability benefits received under such plans.
(c) By the Company for Cause; by the Executive other than for
Good Reason. If the Executive's employment is terminated by the Company
for Cause during the Employment Period, the Company shall pay the
Executive the Annual Base Salary through the Date of Termination and the
amount of any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon), in each case to the extent
not yet paid, and the Company shall have no further obligations under this
Agreement, except as specified in Section 6 below. If the Executive
voluntarily terminates employment during the Employment Period, other than
for Good Reason, the Company shall pay the Accrued Obligations to the
Executive in a lump sum in cash within 30 days of the Date of Termination,
and the Company shall have no further obligations under this Agreement,
except as specified in Section 6 below.
6. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies for which the Executive may qualify, nor, subject to
paragraph (f) of Section 12, shall anything in this Agreement limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Vested
benefits and other amounts that the Executive is otherwise entitled to
receive under the SERP or any other plan, policy, practice or program of,
or any contract or agreement with, the Company or any of its affiliated
companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice, program,
contract or agreement, as the case may be, except as explicitly modified
by this Agreement.
7. Full Settlement. The Company's obligation to make the
payments provided for in, and otherwise to perform its obligations
under, this Agreement shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action that the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and, except as specifically provided in
paragraph (a) of Section 5 with respect to benefits described in clause
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(B) of paragraph (c)(iii) of Section 3, such amounts shall not be reduced,
regardless of whether the Executive obtains other employment.
8. Non-Competition Provision and Confidential Information.
(a) Without prior written consent of the Company, for the
greater of (i) the twenty-four (24) month period following the Date of
Termination, or (ii) the remaining term of this Agreement, the Executive
shall not, as a shareholder, officer, director, partner, consultant, or
otherwise, engage directly or indirectly in any business or enterprise
which is "in competition" with the Company or its successors or assigns;
provided, however, that the Executive's ownership of less than five
percent of the issued and outstanding voting securities of a publicly-
traded company shall not be deemed to constitute such competition. A
business or enterprise is deemed to be "in competition" if it is engaged
in the business of generation, purchase, transmission, distribution, or
sale of electricity, or in the purchase, transmission, distribution, sale
or transportation of natural gas within the States of Colorado, New
Mexico, Texas, Wyoming, Kansas or Oklahoma.
(b) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies and
their respective businesses that the Executive obtains during the
Executive's employment by the Company or any of its affiliated companies
and that is not public knowledge (other than as a result of the
Executive's violation of this Section 8) ("Confidential Information"). The
Executive shall not communicate, divulge or disseminate Confidential
Information at any time during or after the Executive's employment with
the Company, except with the prior written consent of the Company or as
otherwise required by law or legal process. In no event shall any asserted
violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of paragraph (c) of this
Section 9, all determinations required to be made under this Section 9,
including whether and when a Gross-Up Payment is required and the amount
of such Gross-up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by a nationally recognized certified
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public accounting firm designated by the Executive (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment") consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
paragraph (c) of this Section 9 and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business days
after the Executive is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior to
the expiration of the 30-day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
PROVIDED, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this paragraph (c) of Section 9,
the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
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prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; PROVIDED, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such
advance; and PROVIDED, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph (c) of this Section 9, the
Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company's complying with the
requirements of paragraph (c) of this Section 9) promptly pay to the
Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If after the receipt by
the Executive of an amount advanced by the Company pursuant to paragraph
(c) of this Section 9, a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
10. Attorneys' Fees. The Company agrees to pay, as incurred, to
the fullest extent permitted by law, all legal fees and expenses that the
Executive may reasonably incur as a result of any contest (regardless of
the outcome) by the Company, the Executive or others of the validity or
enforceability of or liability under, or otherwise involving, any
provision of this Agreement, together with interest on any delayed payment
at the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code.
11. Successors.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly
to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would have been required to perform it if
no such succession had taken place. As used in this Agreement, "Company"
shall mean both the Company as defined above and any such successor that
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assumes and agrees to perform this Agreement, by operation of law or
otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Wayne H. Brunetti
295 High Street
Denver, CO 80209
If to the Company:
M-P New Co.
1225 17th Street
Denver, CO 80202
Attention: General Counsel
or to such other address as either party furnishes to the other in writing
in accordance with this paragraph (b) of Section 12. Notices and
communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of
such provision, together with all other provisions of this Agreement,
shall remain valid and enforceable and continue in full force and effect
to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement,
the Company may withhold from amounts payable under this Agreement all
federal, state, local and foreign taxes that are required to be withheld
by applicable laws or regulations.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of, or to assert any right under,
this Agreement (including, without limitation, the right of the Executive
to terminate employment for Good Reason pursuant to paragraph (c) of
Section 4 of this Agreement) shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this
Agreement.
(f) The Executive and the Company acknowledge that this
Agreement supersedes and terminates any other severance and employment
agreements between the Executive and the Company, PSC or the Company's
affiliates.
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(g) The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable
process except as required by law. Any attempt by the Executive to
anticipate, alienate assign, sell, transfer, pledge, encumber or charge
the same shall be void. Payments hereunder shall not be considered assets
of the Executive in the event of insolvency or bankruptcy.
(h) This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization of its Board of Directors, the
Company has caused this Agreement to be executed in its name on its
behalf, all as of the day and year first above written.
_______________________________
Wayne H. Brunetti
COMPANY
By:______________________________
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Joint News Release
Public Service Co. of Colorado Southwestern Public Service Company
1225 17th St. P.O. Box 1261
Denver, Colorado 80202 Amarillo, Texas 79710
(303) 294-8900 (806) 378-2121
For Release 6:30 MDT; 7:30 CDT -- August 23, 1995
PSCo and SPS to Combine in Merger of Equals
Utilities Join to Compete in Evolving Energy Industry
DENVER, COLO. AND AMARILLO, TEXAS -- Southwestern Public
Service Company (NYSE:SPS), based in Amarillo, Texas, and
Denver-based Public Service Co. of Colorado (NYSE:PSR)
announced Wednesday that they have entered into a definitive
merger agreement to combine two low-cost utilities and form a
new energy services holding company that will cover one of the
largest geographic areas in the country.
This "merger of equals" - which is subject to approval by
shareholders of both companies and various regulatory
authorities - was unanimously approved by both companies'
boards of directors in separate meetings Tuesday.
Bill D. Helton, SPS chairman and chief executive officer,
and Del Hock, PSCo chairman and chief executive officer, said
the new company will build on the strengths of each partner.
"We are extremely pleased with the natural synergies and
resulting savings of combining our two companies, and we will
be very well-positioned to succeed in our changing electric
utility industry," Hock said.
Helton said the two companies are a natural fit and
complement each other in many areas. "As both companies
considered whether a merger was the right move, both wanted to
ensure joining with a company with low rates. We found that
in each other. The combination will result in one of the
premier low-cost energy providers of the future."
Based on fiscal 1994 results, the new holding company
will have combined annual revenues of approximately $3 billion
and total assets of approximately $6 billion. The companies
expect to save approximately $770 million in the first 10
years after the merger is completed.
Upon completion of the merger, holders of PSCo common
stock will receive one share of the new holding company stock
for each share of PSCo stock. Holders of SPS common stock
will receive 0.95 shares of the new holding company's stock
for each share of SPS stock. As of August 4, 1995, PSCo has
63.1 million common shares outstanding, and SPS has 40.9
million common shares outstanding.
Based on the number of common shares outstanding, PSCo
shareholders will own 61.9 percent of the common equity of the
new holding company, while SPS shareholders will own 38.1
percent. The current combined market capitalization of PSCo
and SPS will result in a $3.2 billion market capitalization of
the new holding company.
It is anticipated that the holding company will adopt the
SPS dividend payment level, adjusted for the exchange ratio.
Based on the exchange ratio, the pro forma dividend for the
new company will be $2.32 per share on an annual basis,
following completion of the merger.
Debt holders and preferred stockholders will continue
with their present holdings under existing terms.
<PAGE>
According to Hock and Helton, the anticipated $770
million savings during a 10-year period will allow the
operating companies to provide "very competitive" electricity
rates in both service areas for many years to come. They said
specific rate plans would be filed with appropriate state
public utilities commissions and the Federal Energy Regulatory
Commission in the near future.
According to Helton, PSCo adds a faster-growing service-
area economy, natural gas utility operations, and innovative
approaches to information technology and energy services. SPS
brings strong generation and engineering, diversity of power
plants and fuels, and success with wholesale markets and non-
regulated generation projects.
Hock noted that customers also would benefit from the
adoption of the "best practices" of each company, the sharing
of generating capacity and increased leverage in purchasing.
"We will have lower fuel costs for generation; we can defer
additional generating capacity; and we can reduce total
inventories," Hock said.
The new company will be a registered public utility
holding company, which will be the parent company for both
Public Service Co. of Colorado and Southwestern Public Service
Company. The corporate offices of the holding company will be
in Denver, with significant operating functions based in
Amarillo. SPS and PSCo will maintain their company
headquarters in Amarillo and Denver, respectively. The board
of the new holding company will consist of eight current
directors from PSCo and six current directors from SPS.
Upon the expected completion of the merger in early 1997,
PSCo Chairman and Chief Executive Officer Del Hock, who
currently is 60 years old, will retire. SPS Chairman and
Chief Executive Officer Bill D. Helton, 56, will become the
company's chairman and chief executive officer. PSCo
President and Chief Operating Officer Wayne H. Brunetti, 52,
will become vice chairman, president and chief operating
officer of the new company.
On June 30, 1999 (or two-and-a-half years after the
merger is completed, whichever comes later), Brunetti will
assume the responsibilities of CEO, and Helton will remain
chairman. On May 31, 2001, Helton will retire, and Brunetti
will add the responsibilities of chairman of the board.
The merger is subject to approval by the shareholders of
both companies. The merger is also subject to approval or
regulatory review by the Federal Energy Regulatory Commission,
the Securities and Exchange Commission, the Federal Trade
Commission, the Department of Justice, the Nuclear Regulatory
Commission and state regulators in Texas, Colorado, New
Mexico, Wyoming, Oklahoma and Kansas. The companies have
received fairness opinions from Barr Devlin Associates for
PSCo and Dillon, Read & Co. for SPS.
Brunetti said the merger agreement has the key element to
succeed. "I have long believed that if you can satisfy
customers, you will be successful. This merger is
unquestionably a step that enhances our ability to give our
customers what they want and what they want most of all - low
price," Brunetti said. "Price is the entry point into today's
energy market."
Brunetti said a transition team - made up of
representatives of both companies - would be responsible for
making recommendations to cut costs and take advantage of the
natural synergies. He said he expected employee reductions
<PAGE>
would be approximately 8 percent of the consolidated work
force of both companies. That figure equals 550 to 600
positions out of the combined work forces of approximately
7,000 employees.
"We pledge to keep employees, customers and shareholders
informed throughout this transition period," Brunetti said.
After the merger, a new transmission line will be built
that connects SPS with PSCo through a high voltage, direct-
current interconnection.
Helton said the interconnection will enhance competition
in the region's wholesale power markets and will make the
generation and fuel savings possible.
Upon completion of the merger, the new company will serve
approximately 1.5 million electric customers in Colorado,
Texas, New Mexico, Wyoming, Oklahoma and Kansas. The company
also will provide natural gas service to 933,000 customers in
Colorado and Wyoming.
SPS, based in Amarillo, is a regional electric utility
that primarily provides service to a population of about one
million people in a 52,000-square-mile area comprising eastern
and southeastern New Mexico, the South Plains and Panhandle of
Texas, the Oklahoma Panhandle and southwestern Kansas. The
company also made wholesale power sales to other electric
systems in 15 states last year.
SPS's generating capacity is 52 percent coal-fueled and
48 percent from other fuels, primarily natural gas. The
company has 12 power plants throughout its system.
SPS subsidiary Utility Engineering Corporation provides
engineering, design and construction management services to a
variety of industries. Another subsidiary, Quixx Corporation,
is involved in a number of non-utility power generation
projects, both nationally and internationally.
Public Service Co. of Colorado is an electric, natural
gas and thermal energy utility, which serves 32,000-square-
mile area and a population of approximately 2.8 million people
in Colorado and in the Cheyenne, Wyo. area. Headquartered in
Denver, the company operates eight steam-electric plants, nine
hydroelectric facilities, a downtown Denver thermal energy
service and an extensive natural gas system.
PSCo's fuel for generation is approximately 99 percent
coal and 1 percent natural gas. Hydroelectric power plays a
role in this mix during the warmer months of the year.
PSCo's subsidiary, e prime, was started in January 1995
to provide value-added, energy-related products and services
to energy-using customers and to selected segments of the
utility industry in the United States. Another subsidiary,
Natural Fuels Corp., is building an infrastructure for natural
gas vehicles, and it sells compressed natural gas as a
transportation fuel.
<PAGE>
AMENDMENT
AMENDMENT, dated as of August 22, 1995, to the Rights Agreement,
dated as of February 26, 1991 (the "Rights Agreement"), between Public Service
Company of Colorado (the "Company") and Mellon Bank, N.A., as Rights Agent
(the "Rights Agent").
WHEREAS, the parties hereto are parties to the Rights Agreement;
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Board
of Directors deems it necessary and desirable and in the best interests of the
Company and its shareholders to amend the Rights Agreement as set forth below;
and
WHEREAS, the parties hereto desire to amend the Rights Agreement,
as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth herein and in the rights agreement, the parties hereto
agree as follows:
1. The definition of "Acquiring Person" as set forth in Section
1(a) of the Rights Agreement is hereby amended by adding the following
provision at the end of the first sentence thereof:
; provided, however, that M-P New Co. shall not be
deemed an "Acquiring Person" as a result of the
execution, delivery and performance of the Agreement
and Plan of Reorganization (the "Reorganization
Agreement") dated as of August 22, 1995, among Public
Service Company of Colorado, Southwestern Public
Service Company and M-P New Co. or the consummation of
the transactions contemplated in the Reorganization
Agreement.
2. Clause (b) of Section 13 of the Rights Agreement is hereby
amended to read in its entirety as follows:
(b) other than pursuant to the Reorganization
Agreement, any Person shall consolidate with the
Company, or merge with and into the Company and the
Company shall be the continuing or surviving
corporation of such merger and, in connection with
such merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other
securities of any Person (including the Company) or
cash or any other property, or
3. This Amendment shall be governed by and construed in
accordance with the laws of the State of Colorado applicable to contracts to
be made and performed entirely within such State.
4. Except as expressly amended hereby, the Rights Agreement
shall continue in full force and effect in accordance with the provisions
thereof.
5. This Amendment may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, Public Service Company of Colorado and the
Rights Agent have executed this Amendment as of the date first above written.
<PAGE>
PUBLIC SERVICE COMPANY OF COLORADO
/s/ R. C. Kelly
By: ______________________________
ATTEST:
/s/ Teresa S. Madden
_______________________
MELLON BANK, N.A.
/s/ Laura E. Kennedy
By: _____________________
ATTEST:
/s/ Stacy Tenken
_______________________
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