SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
____________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Puget Sound Power & Light Company
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(Exact Name of registrant as specified in its charter)
Washington 91-0374630
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(State of incorporation (I.R.S.
Employer
or organization)
Identification No.)
411 - 108th Avenue N.E. Bellevue, Washington 98004-5515
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(Address of principal executive offices)
(zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Adjustable Rate Cumulative Preferred New York Stock Exchange, Inc.
Stock, Series B ($25 Par Value)
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Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of class)
None
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(Title of class)
<PAGE>
Item 1. Description of the Registrant's Securities to be Registered
The matter required by this item is incorporated herein by reference to
the supplemental description of the New Preferred Stock appearing in the
section entitled "CERTAIN TERMS OF THE NEW PREFERRED STOCK" on pages S-4
through S-7 of the Prospectus Supplement dated January 26, 1994 filed with
the Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act of 1933, as amended, and to the section entitled "DESCRIPTION
OF THE COMPANY'S PREFERRED STOCK" appearing on pages 3 and 4 of the
Prospectus dated March 2, 1992 filed by the Registrant on Registration No. 33-
45916.
<PAGE>
Item 2. Exhibits
The securities described herein are to be registered pursuant to Section
12(b) of the Securities Exchange Act of 1934, as amended. The required
exhibits are listed on the exhibit index attached hereto.
<PAGE>
Signature
Pursuant to the requirement of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to
be signed on its behalf by the undersigned, thereto duly authorized.
Dated: January 26, 19
PUGET SOUND POWER & LIGHT COMPANY
By R. E. Olson
-------------------------------
R. E. Olson
Vice President, Finance
and Treasurer
<PAGE>
Exhibit Index
1.1 Statement of Relative Rights and Preferences for the Adjustable
Rate Cumulative Preferred Stock, Series B ($25 Par Value)
1.2 Restated Articles of Incorporation of the Registrant
1.3 Statement of Relative Rights and Preferences for the Series A
Flexible Dutch Auction Rate Transferable Securities $100 Par Value
Preferred Stock
1.4 Statement of Relative Rights and Preferences for the Series B
Flexible Dutch Auction Rate Transferable Securities $100 Par Value
Preferred Stock
1.5 Statement of Relative rights and Preferences for the Preference
Stock, Series R, $50 Par Value
1.6 Statement of Relative Rights and Preferences for the 7 3/4% Series
Preferred Stock Cumulative, $100 Par Value
1.7 Statement of Relative Rights and Preferences for the 7 7/8% Series
Preferred Stock Cumulative, $25 Par Value
2.1 Restated Bylaws of the Registrant (incorporated by reference to
Exhibit 4-b to Registration No. 33-18506)
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES FOR THE
ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES B ($25 PAR VALUE)
---------------------------------
Pursuant to Section 23B.06.020 of the Washington Business Corporation
Act, Puget Sound Power & Light Company (the "Company"), a Washington
corporation, hereby states that at a meeting of the Board of Directors of
the Company duly convened and held on January 11, 1994, the following
resolution was duly adopted:
RESOLVED - That pursuant to the authority expressly vested in it by
the Company's Articles of Incorporation (the "Articles") and subject to the
preferences, limitations, relative rights and other terms and provisions
set forth in the Articles, the Board of Directors of the Company hereby
establishes an additional series of the Company's $25 par value Preferred
Stock, sets forth the designation of the series, and fixes and determines
the relative rights and preferences thereof, including the rate of
dividends, the price, terms and conditions of redemption and the amount
payable upon shares in event of voluntary or involuntary liquidation, as
follows:
1. Designation. The shares of such series shall be designated
"Adjustable Rate Cumulative Preferred Stock, Series B ($25 par value)" (the
"Adjustable Rate Preferred Stock" herein) and the number of shares
constituting such series shall be 2,000,000.
2. Dividends. The holders of the Adjustable Rate Preferred Stock
shall be entitled to annual preferential dividends, in accordance with the
provisions of Article VI, Section 3 of the Articles in an amount determined
in accordance with the formula described in the next succeeding paragraph.
Dividends shall commence to accrue from the date of the original issue of
the shares. The first dividend date shall be February 15, 1994.
The annual dividend per share on the Adjustable Rate The annual
dividend per share on the Adjustable Rate Preferred Stock will be computed
at 83% of the Applicable Rate (as defined below), from time to time in
effect for each dividend period; provided, however, that the dividend rate
for any dividend period shall in no event be less than 4.0% per annum or
greater than 10.0% per annum; provided further, however, that the dividend
rate for the dividend periods ending February 14, 1994 and May 14, 1994
shall be the rate approved by the Chief Financial Officer or Treasurer of
the Company, which rate may be up to .35% above the rate that would be
otherwise determined in accordance with this paragraph.
Except as provided below in this paragraph, the "Applicable Rate" for
any dividend period will be the highest of (i) the Treasury Bill Rate,
(ii) the Ten Year Constant Maturity Rate, and (iii) the Thirty Year
Constant Maturity Rate (each as hereinafter defined) for such dividend
period. In the event that the Company determines in good faith that for
any reason one or more of such rates cannot be determined for any dividend
period, then the Applicable Rate for such dividend period shall be the
higher of whichever of such rates can be so determined. In the event that
the Company determines in good faith that none of such rates can be
determined for any dividend period, then the Applicable Rate in effect for
the preceding dividend period shall be continued for such dividend period.
Except as provided below in this paragraph, the "Treasury Bill Rate"
for each dividend period will be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board during the Calendar
Period immediately prior to the ten calendar days immediately preceding the
February 14, May 14, August 14 or November 14, as the case may be, prior to
the dividend period for which the dividend rate on the Adjustable Rate
Preferred Stock is being determined. In the event that the Federal Reserve
Board does not publish such a weekly per annum market discount rate during
any such Calendar Period, then the Treasury Bill Rate for the related
dividend period shall be the arithmetic average of the two most recent
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the relevant
Calendar Period) for three-month U.S. Treasury bills, as published weekly
during such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Company. In the event that
a per annum market discount rate for three-month U.S. Treasury bills shall
not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar
Period, then the Treasury Bill Rate for such dividend period shall be the
arithmetic average of the two most recent weekly per annum market discount
rates (or the one weekly per annum market discount rate, if only one such
rate shall be published during the relevant Calendar Period) for all of the
U.S. Treasury bills then having maturities of not less than 80 nor more
than 100 days, as published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish such
rates, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Company. In the event that the Company determines
in good faith that for any reason no such U.S. Treasury bill rates are
published as provided above during such Calendar Period, then the Treasury
Bill Rate for such dividend period shall be the arithmetic average of the
per annum market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable non-interest-bearing
U.S. Treasury securities with a maturity of not less than 80 nor more than
100 days from the date of each such quotation, as quoted daily for each
business day in New York City (or less frequently if daily quotations shall
not be generally available) to the Company by at least three recognized
U.S. Government securities dealers selected by the Company. In the event
that the Company determines in good faith that for any reason the Company
cannot determine the Treasury Bill Rate for any dividend period as provided
above in this paragraph, the Treasury Bill Rate for such dividend period
shall be the arithmetic average of the per annum market discount rates
based upon the closing bids during the related Calendar Period for each of
the issues of marketable interest-bearing U.S. Treasury securities with a
maturity of not less than 80 nor more than 100 days from the date of each
such quotation, as quoted daily for each business day in New York City (or
less frequently if daily quotations shall not be generally available) to
the Company by at least three recognized U.S. Government securities dealers
selected by the Company.
Except as provided below in this paragraph, the "Ten Year Constant
Maturity Rate" for each dividend period shall be the arithmetic average of
the two most recent weekly per annum Ten Year Average Yields (or the one
weekly per annum Ten Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below), as
published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the
February 14, May 14, August 14, or November 14, as the case may be, prior
to the dividend period for which the dividend rate on the Adjustable Rate
Preferred Stock is being determined. In the event that the Federal Reserve
Board does not publish such a weekly per annum Ten Year Average Yield
during such Calendar Period, then the Ten Year Constant Maturity Rate for
such dividend period shall be the arithmetic average of the two most recent
weekly per annum Ten Year Average Yields (or the one weekly per annum Ten
Year Average Yield, if only one such Yield shall be published during such
Calendar Period), as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Company. In the event that a per annum Ten Year Average
Yield shall not be published by the Federal Reserve Board or by any Federal
Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such dividend
period shall be the arithmetic average of the two most recent weekly per
annum average yields to maturity (or the one weekly average yield to
maturity, if only one such yield shall be published during such Calendar
Period) for all of the actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities (as defined below))
then having maturities of not less than eight nor more than twelve years,
as published during such Calendar Period by the Federal Reserve Board or,
if the Federal Reserve Board shall not publish such yields, by any Federal
Reserve Bank or by any U.S. Government department or agency selected by the
Company. In the event that the Company determines in good faith that for
any reason the Company cannot determine the Ten Year Constant Maturity Rate
for any dividend period as provided above in this paragraph, then the Ten
Year Constant Maturity Rate for such dividend period shall be the
arithmetic average of the per annum average yields to maturity based upon
the closing bids during such Calendar Period for each of the issues of
actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) with a final maturity date not less than
eight nor more than twelve years from the date of each such quotation, as
quoted daily for each business day in New York City (or less frequently if
daily quotations shall not be generally available) to the Company by at
least three recognized U.S. Government securities dealers selected by the
Company.
Except as provided below in this paragraph, the "Thirty Year Constant
Maturity Rate" for each dividend period shall be the arithmetic average of
the two most recent weekly per annum Thirty Year Average Yields (or the one
weekly per annum Thirty Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period), as published weekly by the
Federal Reserve Board during the Calendar Period immediately prior to the
ten calendar days immediately preceding the February 14, May 14, August 14,
or November 14, as the case may be, prior to the dividend period for which
the dividend rate on the Adjustable Rate Preferred Stock is being
determined. In the event that the Federal Reserve Board does not publish
such a weekly per annum Thirty Year Average Yield during such Calendar
Period, then the Thirty Year Constant Maturity Rate for such dividend
period shall be the arithmetic average of the two most recent weekly per
annum Thirty Year Average Yields (or the one weekly per annum Thirty Year
Average Yield, if only one such Yield shall be published during such
Calendar Period), as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Company. In the event that a per annum Thirty Year Average
Yield shall not be published by the Federal Reserve Board or by any Federal
Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Thirty Year Constant Maturity Rate for such
dividend period shall be the arithmetic average of the two most recent
weekly per annum average yields to maturity (or the one weekly average
yield to maturity, if only one such yield shall be published during such
Calendar Period) for all of the actively traded marketable U.S. Treasury
fixed interest rate securities (other than Special Securities) then having
maturities of not less than twenty-eight nor more than thirty years, as
published during such Calendar Period by the Federal Reserve Board or, if
the Federal Reserve Board shall not publish such yields, by any Federal
Reserve Bank or by any U.S. Government department or agency selected by the
Company. In the event that per annum average yields to maturity for all
the actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) then having maturities of not less than
twenty-eight years nor more than thirty yeas shall not be published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period, then the
Thirty Year Constant Maturity Rate for any dividend period shall be
determined in the manner specified in the preceding sentence based upon all
the actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) then having maturities of not less than
twenty-five years or, in the absence of which, twenty years. In the event
that the Company determines in good faith that for any reason the Company
cannot determine the Thirty Year Constant Maturity Rate for any dividend
period as provided above in this paragraph, then the Thirty Year Constant
Maturity Rate for such dividend period shall be the arithmetic average of
the per annum average yields to maturity based upon the closing bids during
such Calendar Period for each of the issues of actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special
Securities) with a final maturity date not less than twenty-eight nor more
than thirty years (or, in the absence of which, having maturities of not
less than twenty-five years or, in the absence of which, twenty years) from
the date of each such quotation, as quoted daily for each business day in
New York City (or less frequently if daily quotations shall not be
generally available) to the Company by at least three recognized U.S.
Government securities dealers selected by the Company.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate shall each be rounded to the nearest one-
hundredth of a percentage point.
The amount of dividends per share payable for each dividend period
shall be computed by dividing the dividend rate for such dividend period by
four and applying such rate against the par value per share of the
Adjustable Rate Preferred Stock. The amount of dividends payable for the
initial dividend period or any period shorter than a full quarterly
dividend period shall be computed on the basis of 30-day months and a 360-
day year.
The dividend rate with respect to each dividend period will be
calculated as promptly as practicable by the Company according to the
appropriate method described herein. The mathematical accuracy of each
such calculation will be confirmed in writing by independent accountants of
recognized standing. Except for the dividend rate for the initial dividend
period and for the dividend period commencing February 15, 1994, the
Company will cause each dividend rate to be published in a newspaper of
general circulation in New York City prior to the commencement of the new
dividend period to which it applies and will cause notice of such dividend
rate to be enclosed with the dividend payment checks next mailed to the
holders of the Adjustable Rate Preferred Stock.
As used herein, the term "Calendar Period" means a period of fourteen
consecutive calendar days; the term "Special Securities" means securities
which can, at the option of the holder, be surrendered at face value in
payment of any Federal estate tax or which provide tax benefits to the
holder and are priced to reflect such tax benefits or which were originally
issued at a deep or substantial discount; the term "Ten Year Average Yield"
means the average yield to maturity for actively traded marketable U.S.
Treasury fixed interest rate securities (adjusted to constant maturities of
ten years); and the term "Thirty Year Average Yield" means the average
yield to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of thirty years).
3. Redemption. The Company may, at its option expressed by
resolution of the Board of Directors, redeem the Adjustable Rate Preferred
Stock as a whole at any time or in part from time to time in accordance
with the provisions of Article VI, Section 5, of the Articles at the
redemption price of $27.50 per share if redeemed on or prior to February 1,
1999 and at its par value per share if redeemed thereafter, in each case
together with any accrued dividends (sometimes in the Articles called the
"optional redemption price"); provided, however, that the Company will not
prior to February 1, 1999 redeem any shares of the Adjustable Rate
Preferred Stock if such redemption is a part, or in anticipation, of any
refunding operation involving the application, directly or indirectly, of
borrowed funds or the proceeds of an issue of any stock ranking superior to
or on a parity with the Adjustable Rate Preferred Stock, if such borrowed
funds have an interest rate or cost to the Company, or such stock has a
dividend rate or cost to the Company (calculated in each case in accordance
with the generally accepted financial practice) less than 5.37% per annum.
4. Liquidation Preferences. In the event of any liquidation,
dissolution or winding up of the Company, if involuntary, the holders of
the Adjustable Rate Preferred Stock shall be entitled to receive, for each
share thereof, the sum of $25 together with accrued dividends, or, in case
such liquidation, dissolution or winding up shall have been voluntary, an
amount per share equal to $27.50 through February 1, 1999 and $25
thereafter, plus accrued dividends, before any distribution of the assets
shall be made to the holders of the Preference Stock, the Common Stock or
stock of any other class ranking junior as to assets in liquidation to the
Adjustable Rate Preferred Stock; but the holders of the Adjustable Rate
Preferred Stock shall be entitled to no further participation in such
distribution.
5. Sinking Fund. The Adjustable Rate Preferred Stock shall not be
entitled to the benefits of a sinking fund.
6. Conversion. The shares of the Adjustable Rate Preferred Stock
shall not be convertible into shares of stock of the Company of any other
class, into any shares of $25 par value Preferred Stock of the Company of
any other series or into any other type of securities.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in duplicate in its name and on its behalf by its duly authorized
officers and its corporate seal to be affixed hereto, this 31st day of
January, 1994.
PUGET SOUND POWER & LIGHT COMPANY
By R. R. Sonstelie
------------------------------
R. R. Sonstelie, President
By James W. Eldredge
------------------------------
James W. Eldredge, Secretary
RESTATED ARTICLES OF INCORPORATION
OF
PUGET SOUND POWER & LIGHT COMPANY
Pursuant to RCW 23A.16.075 and a resolution duly adopted by the Board of
Directors on October 8, 1987, the following constitutes Restated Articles of
Incorporation of the undersigned, a Washington Corporation. These Restated
Articles of Incorporation correctly set forth without change the
corresponding provisions of the Articles of Incorporation as heretofore
amended and supersede the oriqinal Articles of Incorporation and all
amendments thereto.
ARTICLE I.
The name of this Corporation is PUGET SOUND POWER & LIGHT COMPANY.
ARTICLE II.
The purposes for which this Corporation is formed are as follows:
SECTION 1. To engage in the electric utility business, including, but
not limited to, the generation, purchase, interchange, transmission and sale
of electricity and the furnishing of electric service generally, and to
engage in any business or activity directly or indirectly related to the
electric utility business.
SECTION 2. To engage in the gas utility business, including, but not
limited to, the manufacture, purchase, distribution and sale of gas and the
furnishing of gas service generally, and to engage in any business or
activity directly or indirectly related to the gas utility business.
SECTION 3. To engage in the transportation business and any business or
activity directly or indirectly related to the transportation of persons or
property by any means of conveyance.
SECTION 4. To engage in the real estate business, including, but not
limited to, the purchase or other acquisition of real property and the
subdividing, platting, development, improvement, use, sale or other
disposition of real property or any interest therein and to engage in any
business or activity directly or indirectly related to the real estate
business.
SECTION 5. To engage in any form of public service or utility business
and any business or activity directly or indirectly related thereto.
SECTION 6. To purchase or otherwise acquire, and to own, hold, use,
mortgage, pledge or otherwise encumber, and to assign, sell, or otherwise
dispose of, shares of stock or other securities of any kind whatsoever of any
corporation or entity, and while the holder or owner thereof to exercise all
of the rights of such ho1der or owner.
SECTION 7. To borrow money with or without the giving of security of
any kind or nature, and to execute and deliver notes, debentures, bonds and
other evidences of indebtedness and to act as guarantor or surety, and,
without limiting the generality of the foregoing, to mortgage, pledge,
hypothecate or otherwise encumber the whole or any portion of the property of
this Corporation, real, personal or mixed.
SECTION 8. To carry on any business or activity which may lawfully be
conducted by a corporation organized under the Washington Business
Corporation Act, which may seem to this Corporation capable of being
conveniently carried on in connection with any branch of this Corporation's
business or calculated directly or indirectly to enhance the value of, or
render profitable, any of this Corporation's business, property or rights.
SECTION 9. In general, to do any or all of the things herein-before set
forth, and such other things as are incidental or conducive to the attainment
of the objects and purposes of this Corporation, or any of them, in any place
whatsoever, as principal, agent, or otherwise, either alone or in conjunction
with any person, firm, association or corporation; and to do such acts and
things and to exercise any and all such powers to the full extent authorized
or permitted to be done or exercised by a corporation under any laws that may
be now or hereafter applicable or available to this Corporation.
SECTION 10 . The several clauses contained in this statement of purposes
shall be construed as both purposes and powers and the statements contained
in each clause shall be in no way limited or restricted by reference to or
inference from the terms of any other clause, but shall be regarded as
independent purposes and powers; and nothing contained in these purposes
shall be deemed in any way to limit or exclude any power, right or privilege
given to this Corporation by law.
ARTICLE III.
The duration of this Corporation shall be perpetual.
ARTICLE IV.
The location and post office address of the registered office of this
Corporation shall be Puget Power Building, 10608 N.E. 4th, Bellevue,
Washington 98009.
ARTICLE V.
The total authorized shares of this Corporation shall consist of Eighty
Million (80,000,000) shares of Common Stock without par value, Three Million
(3,000,000) shares of Preferred Stock having a par value of One Hundred
Dollars a share, Thirteen Million (13,000,000) shares of Preferred Stock
having a par value of Twenty-five Dollars a share, and Seven Hundred Thousand
(700,000) shares of Preference Stock having a par value of Fifty Dollars a
share.
ARTICLE VI.
The provisions as to the respective rights, privileges, voting power,
preferences, qualifications and restrictions of the several classes of stock
are as follows:
SECTION 1. Preferred Stock - General.
--------------------------
The authorized Preferred Stock of this Corporation shall consist of two
classes: stock of the par value of $100 per share entitled "$100 par value
Preferred Stock" and stock of the par value of $25 per share entitled "$25
Preferred Stock. The $100 par value Preferred Stock and the $25 Preferred
Stock" are sometimes collectively referred to herein as the "Preferred
Stock," and unless otherwise specified all references herein to Preferred
Stock shall be deemed to include the stock of both classes.
The $100 par value Preferred Stock and the $25 par value Preferred Stock
shall rank equally with respect to dividends and distribution of assets upon
liquidation, dissolution or winding up of this Corporation.
Shares of the Preferred Stock may be divided into and issued in series.
The series of the $100 par value Preferred Stock shall be of the same class
and of equal rank and identical in all respects, and the series of the S25
par value Preferred Stock shall be of the same class and of equal rank and
identical in all respects, except as to the following relative rights and
preferences as to which there may be variations between the different series
of the $100 par value Preferred Stock and between the different series of the
$25 par value Preferred Stock:
(a) The rate of dividends, dividend periods and dividend payment
dates;
(b) Whether shares may be redeemed and, if so, the redemption price
and the terms and conditions of redemption;
(c) The amount payable upon shares in event of voluntary and
involuntary liquidation;
(d) Sinking fund provisions, if any, for the redemption or
purchase of shares;
(e) The terms and conditions, if any, on which the shares may be
converted; and
(f) Any other terms, conditions, or provisions which the Board of
Directors shall have the authority to fix and determine under the Washington
Business Corporation Act, as now in effect or hereafter amended.
The Board of Directors is hereby expressly vested with the authority to
divide any or all of the Preferred Stock into series and fix the designations
of series and, within the limitations set forth herein, fix and determine the
relative rights and preferences of the shares of any series so established.
SECTION 2. Special Provisions of Particular Series of Preferred Stock.
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2.01. The second series* of $100 par value Preferred Stock is
designated 4.84% Preferred Stock and consists of 150,000 shares. The holders
of the 4.84% Preferred Stock shall be entitled to preferential dividends at
the rate of Four and 84/lOO percent (4.84%) per annum as provided in Section
3.
- -----------------------------------
* Note: The provisions relating to the "first series of Preferred Stock"
have been eliminated because the "first series" was redeemed and canceled
pursuant to a Certificate of Redemption, filed with the Secretary of State on
May 19, 1964. Section 2 has been renumbered accordingly.
2.02. This Corporation may, at its option expressed by resolution of
the Board of Directors, redeem the 4.84% Preferred Stock as a whole at any
time or in part from time to time in accordance with the provisions of
Section 5 at:
$105.00 per share if redeemed prior to May 15, 1967,
$104.00 per share if redeemed on May 15, 1967 or
thereafter prior to May 15, 1972,
$103.00 per share if redeemed on May 15, 1972 or
thereafter prior to May 15, 1977,
$102.00 per share if redeemed on or after May 15, 1977,
in each case together with any accrued dividends (herein sometimes called the
"optional redemption Price").
2.03. The 4.84% Preferred Stock shall be entitled to the benefits of a
sinking fund as follows:
(A) On May 15 in each year, commencing with the year l966, this
Corporation shall, upon notice given as provided in Section 5, redeem at
a price per share equal to $100.00, together with accrued dividends
(herein sometimes called the "sinking fund redemption price"), a number
of shares of the 4.84% Preferred Stock equal to two percent (2%) of the
maximum number of shares thereof outstanding at any one time prior to
such May 15. The obligation to redeem shares of the 4.84% Preferred
Stock pursuant to the provisions of this Section is herein sometimes
referred to as the "sinking fund obligations.
(B) The sinking fund obligation shall be cumulative so that if on
any May 15, on or after May 15, 1966, this Corporation shall not have
satisfied to the full extent the sinking fund obligation then due, for
any reason whatsoever, then any such deficiency shall be made good
before (i) any dividend shall be paid upon or set apart for the shares
of Common Stock or of any other class of stock ranking junior as to
dividends or assets in liquidation to the Preferred Stock (other than a
dividend in stock ranking junior as to dividends and assets in
liquidation to the Preferred Stock) or any other distribution shall be
made on any shares of such junior stock, (ii) any shares of stock
ranking junior to the Preferred Stock as to dividends or assets in
liquidation may be redeemed, purchased or otherwise retired for a
consideration by this Corporation (other than in exchange for, or from
the proceeds of any substantially concurrent sale hereafter made of,
other shares of stock of this Corporation ranking junior to the
Preferred Stock as to dividends and assets in liquidation) or (iii) any
shares of Preferred Stock or of any stock ranking on a parity with the
Preferred Stock may be redeemed, purchased or otherwise retired for a
consideration by this Corporation. Nothing herein contained, however,
shall prevent this Corporation from satisfying, in whole or in part, its
obligations in respect of any sinking or purchase fund for shares of any
other series of Preferred Stock, provided that any sinking fund
obligations for the 4.84% Preferred Stock, which shall have theretofore
become due as aforesaid and not have been satisfied, shall be satisfied
by a percentage not less than that by which any obligation of this
Corporation in respect of any such other fund is to be satisfied.
(C) This Corporation shall have the right to satisfy in whole or
in part any sinking fund obligation (including any deficiency in any
past sinking fund obligation) by crediting against such obligation any
shares of the 4.84% Preferred Stock purchased or otherwise acquired by
this Corporation, such credit to be effected by delivering to the
Transfer Agent for the 4.84% Preferred Stock not later than the April 1
next preceding the May 15 on which there is due any sinking fund
obligation in respect of which such credit is to be taken, a certificate
signed by its President or one of its Vice Presidents or its Treasurer
or one of its Assistant Treasurers, specifying the election of this
Corporation to take such credit and stating that no previous sinking
fund credit has been taken in respect of any such shares.
(D) At least one day prior to the May 15 on which any sinking fund
obligation is due, this Corporation shall deliver to the Transfer Agent
for the 4.84% Preferred Stock, in trust for such redemption, an amount
of money sufficient to redeem all shares of such stock called for
redemption to satisfy such obligation, to be held and applied as
provided in Section 5, and certificates properly endorsed in blank for
transfer or accompanied by proper instruments of assignment or transfer
in blank and bearing all necessary stock transfer tax stamps thereto
affixed and canceled, for any shares of such stock purchased or
otherwise acquired by this Corporation which are to be used as a credit
against the sinking fund obligation due on such date, for cancellation
as provided in Section 5 with respect to shares redeemed for sinking
fund purposes.
2.04. The third series of $100 par value Preferred Stock is designated
4.70% Preferred Stock and consists of 150,000 shares. The holders of the
4.70% Preferred Stock shall be entitled to preferential dividends at the rate
of Four and 70/100 percent (4.70%) Per annum as provided in Section 3.
2.05. This Corporation may, at its option expressed by resolution of the
Board of Directors, redeem the 4.70% Preferred Stock as a whole at any time
or in part from time to time in accordance with the provisions of Section 5
at:
$107.00 per share if redeemed prior to May 15, 1969,
$104.00 per share if redeemed on May 15, 1969 or
thereafter prior to May 15, 1974,
$102.00 per share if redeemed on May 15, 1974 or
thereafter prior to May 15, 1979,
$101.00 per share if redeemed on or after May 15, 1979,
in each case together with any accrued dividends (herein sometimes called the
"optional redemption price").
2.06. The 4.70% Preferred Stock shall be entitled to the benefits of a
sinking fund as follows:
(A) On May 15 in each year, commencing with the year 1968, this
Corporation shall, upon notice given as provided in Section 5, redeem at
a price per share equal to $100.00, together with accrued dividends
(herein sometimes called the "sinking fund redemption price"), a number
of shares of the 4.70% Preferred Stock equal to two percent (2%) of the
maximum number of shares thereof outstanding at any one time prior to
such May 15. The obligation to redeem shares of the 4.70% Preferred
Stock pursuant to the provisions of this Section is herein sometimes
referred to as the "sinking fund obligation".
(B) The sinking fund obligation shall be cumulative so that if on
any May 15, on or after May 15, 1968, this Corporation shall not have
satisfied to the full extent the sinking fund obligation then due, for
any reason whatsoever, then any such deficiency shall be made good
before (i) any dividend shall be paid upon or set apart for the shares
of Common Stock or of any other class of stock ranking junior as to
dividends or assets in liquidation to the Preferred Stock (other than a
dividend in stock ranking junior as to dividends and assets in
liquidation to the Preferred Stock) or any other distribution shall be
made on any shares of such junior stock, (ii) any shares of stock
ranking junior to the Preferred Stock as to dividends or assets in
liquidation may be redeemed, purchased or otherwise retired for a
consideration by this Corporation (other than in exchange for, or from
the proceeds of any substantially concurrent sale hereafter made of,
other shares of stock of this Corporation ranking junior to the
Preferred Stock as to dividends and assets in liquidation) or (iii) any
shares of Preferred Stock or of any stock ranking on a parity with the
Preferred Stock may be redeemed, purchased or otherwise retired for a
consideration by this Corporation. Nothing herein contained, however,
shall prevent this Corporation from satisfying, in whole or in part, its
obligations in respect of any sinking or purchase fund for shares of any
other series of Preferred Stock, provided that any sinking fund
obligations for the 4.70% Preferred Stock, which shall have theretofore
become due as aforesaid and not have been satisfied, shall be satisfied
by a percentage not less than that by which any obligation of this
Corporation in respect of any such other fund is to be satisfied.
(C) This Corporation shall have the right to satisfy in whole or
in part any sinking fund obligation (including any deficiency in any
past sinking fund obligation) by crediting against such obligation any
shares of the 4.70% Preferred Stock purchased or otherwise acquired by
this Corporation, such credit to be effected by delivering to the
Transfer Agent for the 4.70% Preferred Stock not later than the April 1
next preceding the May 15 on which there is due any sinking fund
obligation in respect of which such credit is to be taken, a certificate
signed by its President or one of its Vice Presidents or its Treasurer
or one of its Assistant Treasurers, specifying the election of this
Corporation to take such credit and stating that no previous sinking
fund credit has been taken in respect of any such shares.
(D) At least one day prior to the May 15 on which any sinking fund
obligation is due, this Corporation shall deliver to the Transfer Agent
for the 4.70% Preferred Stock, in trust for such redemption, an amount
of money sufficient to redeem all shares of such stock called for
redemption to satisfy such obligation, to be held and applied as
provided in Section 5, and certificates properly endorsed in blank for
transfer or accompanied by proper instruments of assignment or transfer
in blank and bearing all necessary stock transfer tax stamps thereto
affixed and canceled, for any shares of such stock purchased or
otherwise acquired by this Corporation which are to be used as a credit
against the sinking fund obligation due on such date, for cancellation
as provided in Section 5 with respect to shares redeemed for sinking
fund purposes.
SECTION 3. Dividend Provisions Relating to All Series of Preferred Stock.
-------------------------------------------------------------
Out of the assets of this Corporation available for dividends the
holders of the Preferred Stock at the time outstanding shall be entitled to
receive, but only when and as declared by the Board of Directors, dividends
at the rate per annum fixed for each series, and no more, payable quarterly
on February 15, May 15, August 15 and November 15 in each year, provided,
however, that as to any series of Preferred Stock issued after May 15, 1987,
the Board of Directors may declare dividends at the rate or rates, or in
accordance with methods or procedures established from time to time by the
Board of Directors as to any such series, which may be subject to adjustment
in accordance with a method or procedure adopted by resolution of the Board
of Directors at the time of creation of such series, payable from time to
time when and as declared by the Board of Directors or a committee or
designee thereof. Dividends on the shares of Preferred Stock of each series
shall be cumulative, and, at the option of the Board of Directors, shall,
with respect to particular shares of each series, commence to accrue from the
date of the original issue of such particular shares or from the dividend
date next preceding such original issue.
No dividend shall be paid upon or set apart for the shares of Common
Stock or of any other class of stock ranking junior as to dividends to the
Preferred Stock (other than a dividend in stock ranking junior as to
dividends and assets in liquidation to the Preferred Stock), no other
distribution shall be made on any shares of such junior stock and no
expenditure shall be made for the purchase, redemption or other retirement
for a consideration of shares of this Corporation's stock of any class
ranking junior as to assets in liquidation to the Preferred Stock (other than
in exchange for, or from the proceeds of any substantially concurrent sale
hereafter made of, other shares of stock of this Corporation ranking junior
to the Preferred Stock as to dividends and assets in liquidation), unless
full dividends on all shares of the Preferred Stock for all past dividend
periods shall have been paid or declared and a sum sufficient for the payment
thereof set apart and the full dividend for the then current dividend period
shall have been or concurrently shall be paid or declared and a sum
sufficient for the payment thereof set apart. The amount of any deficiency
for past dividend periods may be paid or declared and set apart at any time
without reference to any dividend payment date. No accumulation of unpaid
dividends on the Preferred Stock shall bear interest. Dividends remaining
unclaimed by the holders of such Preferred Stock for six years after having
been declared and made available for payment to such holders of Preferred
Stock shall revert to this Corporation for its general corporate purposes and
the obligations of this Corporation to pay such dividends shall at that time
cease and determine. Any dividends declared or paid on the Preferred Stock
in an amount less than full cumulative dividends accrued or in arrears upon
all Preferred Stock outstanding shall, if more than one series be
outstanding, be divided between the different series in proportion to the
aggregate amounts which would be distributable to the Preferred Stock of each
series if full cumulative dividends to the next preceding dividend date were
declared and paid thereon.
So long as any shares of the Preferred Stock shall be outstanding, this
Corporation shall not declare or pay any dividends on any shares of its stock
of any class ranking junior as to dividends to the Preferred Stock (other
than dividends payable in shares of any such junior stock) or make any other
distribution on any shares of such junior stock, or make any expenditures for
the purchase, redemption or other retirement for a consideration of shares of
its stock of any class ranking junior as to assets in liquidation to the
Preferred Stock (other than in exchange for, or from the proceeds of any
substantially concurrent sale hereafter made of, other shares of stock of
this Corporation ranking junior to the Preferred Stock as to dividends and
assets in liquidation), if the aggregate amount of all such dividends,
distributions and expenditures paid or made by this Corporation and its
predecessor, Puget Sound Power & Light Company, a Massachusetts corporation,
after December 31, 1957, would exceed the aggregate amount of this
Corporation's net income available for dividends on junior stock accumulated
after December 31, 1957, by this Corporation and its predecessor, Puget Sound
Power & Light Company, a Massachusetts corporation, plus the sum of
$7,500,000.
SECTION 4. Liquidation Provisions Relating to All Series of Preferred Stock.
----------------------------------------------------------------
In the event of any involuntary liquidation, dissolution or winding up
of this Corporation, the holders of the $100 par value Preferred Stock shall
be entitled to receive for each share thereof the sum of $100 together with
accrued dividends and the holders of the $25 par value Preferred Stock shall
be entitled to receive the amount per share determined by the Board of
Directors for each series at the time of its issuance (which amount shall not
be less than the par value or greater than the issue price thereof) together
with accrued dividends, before any distribution of the assets shall be made
to the holders of Common Stock, Preference Stock or stock of any other class
ranking junior to the Preferred Stock as to assets in liquidation. In the
event of any voluntary liquidation, dissolution or winding up of this
Corporation, the holders of the Preferred Stock shall be entitled to receive
an amount per share equal to the then applicable optional redemption price,
before any distribution of the assets shall be made to the holders of Common
Stock, Preference Stock or stock of any other class ranking junior to the
Preferred Stock as to assets in liquidation. In either such event the holders
of the Preferred Stock shall be entitled to no further participation in such
distribution. If, upon any such liquidation, dissolution or winding up, the
assets distributable among the holders of the Preferred Stock shall be
insufficient to permit the payment of the full preferential amounts
aforesaid, then the entire assets of this Corporation to be distributed shall
be distributed among the holders of all series of the Preferred Stock then
outstanding, ratably per share in proportion to the full preferential amounts
per share to which they are respectively entitled as hereinabove provided. A
consolidation or merger of this Corporation or sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of this Corporation shall
not constitute a dissolution, liquidation or winding up of this Corporation
within the meaning of this Section 4.
SECTION 5. Redemption Provisions Relating to All Series of Preferred Stock.
----------------------------------------------------------------
This Corporation (a) at its option, expressed by resolution of its Board
of Directors, may at any time or from time to time redeem the whole or any
part of the Preferred Stock or of any series thereof at the optional
redemption price for each such series; (b) at its option, expressed by
resolution of its Board of Directors, or upon the happening of a specified
event or events, may redeem the whole or any part of any series of the
Preferred Stock created after May 15, 1987, at such time or times, price or
prices, or rate or rates, as shall be fixed by resolution of the Board of
Directors or from time to time in accordance with a method or procedure
adopted by resolution of the Board of Directors at the time of the issuance
of such series; and (c) may redeem the whole or any part of the Preferred
Stock or of any series thereof at the sinking fund redemption price for each
such series at such time or times and to the extent necessary to satisfy the
obligations of this Corporation in respect of any sinking fund for any series
of the Preferred Stock. Notice of any proposed redemption of Preferred Stock
shall be given by this Corporation by mailing a copy of such notice at least
thirty days but not more than ninety days prior to the date fixed for such
redemption to the holders of the Preferred Stock to be redeemed of record on
such date as shall be fixed by resolution of the Board of Directors at their
respective addresses then appearing on the books of this Corporation. Any
such redemption of any shares of Preferred Stock shall be in such amount, at
such place and by such method, whether by lot or pro rata, as shall from time
to time be determined by vote of the Board of Directors, subject, in any
case, to the provisions established for any series of Preferred Stock. On or
after the date specified in such notice, each holder of shares of Preferred
Stock called for redemption as aforesaid, upon presentation and surrender at
the place designated in such notice of the certificates for such shares of
Preferred Stock held by him, properly endorsed in blank for transfer or
accompanied by proper instruments of assignment or transfer in blank (if
required by this Corporation) and bearing all necessary stock transfer tax
stamps thereto affixed and canceled, shall be entitled to receive therefor
the redemption funds to which he is entitled. On and after the date fixed for
redemption, if notice is given as aforesaid, and unless default is made by
this Corporation in providing money for payment of the redemption price, all
dividends on the shares called for redemption shall cease to accrue; and on
and after such redemption date, unless default be made as aforesaid, or on
and after the date of earlier deposit by this Corporation with a bank or
trust company doing business in the City of New York, New York, or in the
City of Boston, Massachusetts, or in the City of Seattle, Washington, and
having a capital and surplus of at least $1,000,000, in trust for the benefit
of the holders of the shares of the Preferred Stock so called for redemption,
of all funds necessary for such redemption as aforesaid (provided in the
latter case that there shall have been mailed as aforesaid to holders of
record of shares to be redeemed a notice of the redemption thereof or that
this Corporation shall have executed and delivered to the Transfer Agent for
the Preferred Stock or to the bank or trust company with which such deposit
is made an instrument irrevocably authorizing it to mail such notice at this
Corporation's expense) all rights of the holders of the shares called for
redemption as shareholders of this Corporation, except only the right to
receive the redemption price without interest, shall cease and determine. Any
interest which shall have been allowed by such bank or trust company shall
belong to this Corporation and shall be paid to it from time to time. Any
funds so deposited which shall remain unclaimed by the holders of such
Preferred Stock at the end of six years after the redemption date shall be
paid over by such bank or trust company to this Corporation and thereby
revert to the general funds of this Corporation, to be used by it for its
general corporate purposes, and thereafter such holders shall have no claim
against such bank or trust company or this Corporation therefor. Any shares
of Preferred Stock redeemed as aforesaid shall be canceled and shall not be
reissued. This Corporation may also from time to time purchase shares of its
Preferred Stock at not exceeding the optional redemption price applicable to
the particular shares at the time in effect plus customary brokerage
commissions. Subject to the provisions of Section 6(A)(iv), shares of
Preferred Stock so purchased may in the discretion of the Board of Directors
be canceled, reissued or otherwise disposed of from time to time to the
extent permitted by law, provided, however, shares of any series of the
Preferred Stock having the benefit of a sinking fund may not be reissued or
otherwise disposed of as shares of the same series. If and so long as there
are dividends in arrears on any shares of Preferred Stock, this Corporation
shall not redeem or purchase any shares of the Preferred Stock unless in
connection therewith all of the outstanding Preferred Stock is redeemed or a
bona fide offer to purchase all of the outstanding Preferred Stock is made to
all of the holders thereof at the same percentage of the then applicable
optional redemption prices. This Corporation may, from time to time and
without the consent or vote of the holders of Preferred Stock, take such
appropriate corporate action as may be necessary to reduce the authorized
Preferred Stock with respect to any shares of any series of Preferred Stock
redeemed or purchased and canceled.
SECTION 6. Restrictions on Corporate Action for Benefit of All Series of
-------------------------------------------------------------
Preferred Stock.
---------------
(A) So long as any of the Preferred Stock is outstanding this
Corporation shall not, without the consent (given in writing or by a vote in
person or by proxy at a meeting called for the purpose of the holders of
shares of the $100 par value Preferred Stock of all series then outstanding)
of the holders of at least two-thirds of the aggregate number of shares of
the $100 par value Preferred Stock then outstanding, or of each series of the
then outstanding $100 par value Preferred Stock if then so required by the
laws of the State of Washington, and the consent (given in writing or by a
vote in person or by proxy at a meeting called for the purpose of the holders
of shares of the $25 par value Preferred Stock of all series then
outstanding) of the holders of at least two-thirds of the aggregate number of
shares of $25 par value Preferred Stock then outstanding, or of each series
of the then outstanding S25 par value Preferred Stock if then so required by
the laws of the State of Washington,
(i) create or authorize any shares of stock, or increase the
authorized amount of any class of stock ranking as to dividends or assets in
liquidation prior to the Preferred Stock, or of any obligation or security
convertible into stock ranking as to dividends or assets in liquidation prior
to the Preferred Stock, or
(ii) amend, change or repeal any of the express terms of the
Preferred Stock outstanding in any manner prejudicial to the holders thereof,
except that, if such amendment, change or repeal is prejudicial to the
holders of less than all the series of the Preferred Stock, the consent of
the holders of two-thirds of the total number of shares of the series so
affected shall alone be required, or
(iii) sell, lease or otherwise dispose of all or substantially all
of its property (but no consent of the holders of the Preferred Stock shall
be required by the foregoing in connection with the creation or amendment of
any mortgage or other encumbrance securing indebtedness upon any or all of
the assets of this Corporation), or
(iv) issue any shares of the Preferred Stock or issue any stock of
any class ranking as to dividends or as to assets in liquidation on a parity
with the Preferred Stock or dispose of any shares of Preferred Stock or of
such parity stock previously reacquired, unless
(a) the net income available for dividends on Preferred
Stock, as defined herein, for a period of twelve consecutive calendar months
within the fifteen calendar months immediately preceding the calendar month
within which such additional shares of stock are to be issued or disposed of,
shall have seen at least two and one-half (2 1/2) times the aggregate annual
dividend requirements upon the entire amount of Preferred Stock and any
stocks of this Corporation of any class ranking as to dividends or assets in
liquidation prior to or on a parity with the Preferred Stock to be
outstanding after giving effect to the issuance or disposition of such
additional shares,
(b) the gross income available for payment of interest
charges, as defined herein, for a period of twelve consecutive calendar
months within the fifteen calendar months immediately preceding the calendar
month within which such additional shares of stock are to be issued or
disposed of, shall have been at least one and one-half (1 1/2) times the sum
of (1) the aggregate annual interest charges on all indebtedness of this
Corporation to be outstanding after giving effect to the issuance or
disposition of such additional shares, and (2) the aggregate annual dividend
requirements upon the entire amount of Preferred Stock and any stocks of this
Corporation of any class ranking as to dividends or assets in liquidation
prior to or on a parity with the Preferred Stock to be outstanding after
giving effect to the issuance or disposition of such additional shares, and
(c) the aggregate of the capital of this Corporation
applicable to all stock ranking as to dividends and assets in liquidation
junior to the Preferred Stock, plus capital surplus and earned surplus of
this Corporation, including premiums on stock of this Corporation of any
class, shall be not less than the aggregate amount payable upon involuntary
liquidation, dissolution or winding up of this Corporation to the holders of
shares of Preferred Stock and of stock ranking as to assets in liquidation
prior to or on a parity with the Preferred Stock to be outstanding after
giving effect to the issuance or disposition of such additional shares but
excluding all such shares to be retired in connection with such proposed
issuance or disposition.
The foregoing computations shall be made as if this Corporation and its
predecessor, Puget Sound Power & Light Company, a Massachusetts corporation,
were the same corporation. There shall be excluded from the foregoing
computations interest charges on all indebtedness and dividend requirements
on all shares of stock which are to be retired in connection with the
issuance or disposition of such additional shares. The gross income of any
property acquired by this Corporation during or after the period for which
income is computed, or of any property which is to be acquired in connection
with the issuance or disposition of any such additional shares, if capable of
being separately determined or estimated, may be included on a pro forma
basis in the foregoing computations; and the gross income of any property
disposed of by this Corporation during or after the period for which income
is computed, if capable of being separately determined or estimated, shall be
excluded on a pro forma basis in the foregoing computations.
(B) So long as any of the $100 par value Preferred Stock is outstanding
or any of the $25 par value Preferred Stock is outstanding, this Corporation
shall not, without the consent (given in writing or by vote in person or by
proxy at a meeting called for the purpose of the holders of shares of the
$100 par value Preferred Stock of all series then outstanding) of the holders
of a majority of the aggregate number of shares of the $100 par value
Preferred Stock then outstanding, or of each series of the then outstanding
$100 par value Preferred Stock if then so required by the laws of the State
of Washington, or such greater proportion of such aggregate number of shares
or of each series as shall then be required by such laws, and the consent
(given in writing or by a vote in person or by proxy at a meeting ca1led for
the purpose of the holders of shares of the $25 par value Preferred Stock of
all series then outstanding), of the holders of a majority of the aggregate
number of shares of the $25 par value Preferred Stock then outstanding, or of
each series of the then outstanding $25 par value Preferred Stock if then so
required by the laws of the State of Washington, or such greater proportion
of such aggregate number of shares or of each series as shall then be
required by such laws,
(i) merge or consolidate with or into any other corporation or
corporations, unless such merger or consolidation, or the issuance and
assumption of all securities to be issued or assumed in connection with any
such merger or consolidation, shall have been ordered, approved, authorized
or permitted by a regulatory authority of the United States of America or of
the State of Washington having jurisdiction in the premises; provided that
the provisions of this paragraph (i) shall not apply
(a) to a purchase or other acquisition by this corporation
of franchises or assets of another corporation, in any manner which does not
involve a merger or consolidation, or
(b) to the merger into this Corporation of another
corporation all the stock and other securities of which are at the time owned
by this Corporation, or
(ii) issue, assume or create unsecured securities (notes
debentures or other securities representing unsecured indebtedness other than
unsecured indebtedness maturing by its terms in one year or less from the
date of its issue) for any purpose except to refund outstanding unsecured
securities theretofore issued or assumed, if thereby the aggregate principal
amount of such unsecured securities would exceed fifteen percent (15%) of the
sum of (1) the total principal amount of all bonds or other securities
representing secured indebtedness of this Corporation then to be outstanding,
and (2) the capital represented by stock (including premiums on stock) of
this Corporation and the capital and earned surplus of this corporation;
provided, however, that any unsecured securities theretofore issued under any
authorization of holders of Preferred Stock given pursuant hereto and the
$15,000,000 principal amount of 5 1/4% Debentures due November 1, 1983, of
Puget Sound Power & Light Company, a Massachusetts corporation, predecessor
to this corporation (and any securities to refund the same), shall not be
considered in determining the amount of other unsecured securities which may
be issued, assumed or created within the aforesaid fifteen percent (15%)
limitation.
(C) The voting rights of the $100 par value Preferred Stock hereinabove
set forth shall not be effective if, in connection with any of the matters
specified in paragraphs (A) or (B), provision is made for the redemption or
other retirement of all of the $100 par value Preferred Stock at the time
outstanding, or provision is made that the proposed action shall not be
effective unless provision is made for the redemption or other retirement of
all shares of the $100 par value Preferred Stock at the time outstanding.
(D) The voting rights of the $25 par value Preferred Stock hereinabove
set forth shall not be effective if, in connection with any of the matters
specified in paragraphs (A) or (B), provision is made for the redemption or
other retirement of all of the $25 par value Preferred Stock at the time
outstanding, or provision is made that the proposed action shall not be
effective unless provision is made for the redemption or other retirement of
all shares of the $25 par value Preferred Stock at the time outstanding.
SECTION 7. Voting Rights of All Classes of Stock.
-------------------------------------
The holders of the $100 par value Preferred Stock and the holders of the
$25 par value Preferred Stock shall not be entitled to vote except
(a) as provided above in Section 6;
(b) as may from time to time be mandatorily required by the laws
of the State of Washington; and
(c) if and whenever dividends payable on any of the Preferred
Stock shall be in arrears in an amount equivalent to or exceeding four full
quarterly dividends, the holders of the shares of the $100 par value
Preferred Stock voting separately as a class shall be entitled to elect the
smallest number of directors necessary to constitute a majority of the full
Board of Directors, the holders of the $25 par value Preferred Stock voting
separately as a class shall be entitled to elect two directors (provided,
that if no shares of $100 par value Preferred Stock are outstanding, the
holders of the $25 par value Preferred Stock voting separately as a class
shall be entitled to elect the smallest number of directors necessary to
constitute a majority of the full Board of Directors), and the holders of
the Common Stock voting separately as a class shall be entitled, subject to
the right of the holders of the Preference Stock voting separately as a
class to elect two directors under certain circumstances, to elect the
remaining directors; but when all arrears in dividends on the Preferred
Stock and the current dividend thereon shall have been declared and set
apart for payment, all voting rights given by this clause (c) shall be
divested from the Preferred Stock (subject, however, to being at any time or
from time to time similarly revived and divested).
So long as the holders of Preferred Stock shall have the right to elect
directors under the terms of the foregoing clause (c), the number of
directors constituting a full Board shall be an odd number fixed by the
Board of Directors and stated in the notice of each meeting at which a full
Board of Directors is to be elected.
Whenever, under the provisions of the foregoing clause (c), the rights
of holders of the Preferred Stock to elect directors shall accrue or shall
terminate, the Board of Directors may, and within ten days after delivery to
this Corporation at its registered office in the State of Washington of a
request or requests to such effect signed by the holders of at least ten
percent (10%) of the outstanding shares of any class of stock entitled to
vote shall, call a special meeting in accordance with the Bylaws of this
Corporation of the holders of the class or classes of stock of this
Corporation entitled to vote, to be held within forty days from the delivery
of such request, for the purpose of electing a full Board of Directors to
serve until the next annual meeting and until their respective successors
shall be elected and shall qualify; provided, however, that if the annual
meeting of shareholders for the election of directors is to be held within
sixty days after the delivery of such request, the Board of Directors need
not act thereon. If, at any meeting called as aforesaid or at any annual
meeting of shareholders after accrual or termination of the rights of
holders of the Preferred Stock to elect directors as in the foregoing clause
(c) provided, any director shall not be reelected, his term of office shall
end upon the election and qualification of his successor, notwithstanding
that the term for which such director was originally elected shall not at
the time have expired.
If, during any interval between annual meetings of shareholders for the
election of directors while holders of the Preferred Stock shall be entitled
to elect any director pursuant to the foregoing clause (c), the number of
directors in office who have been elected by the holders of the $100 par
value Preferred Stock or by the holders of the $25 par value Preferred
Stock, or by the holders of the Common Stock, as the case may be, shall
become less than the total number of directors subject to election by
holders of shares of such class, whether by reason of the resignation,
death, or removal of any director or directors, or an increase in the total
number of directors, the vacancy or vacancies shall be filled (1) by the
remaining directors or director, if any, then in office who either were or
was elected by the votes of shares of such class or succeeded to a vacancy
originally filled by the votes of shares of such class or, (2) if there is
no such director remaining in office, at a special meeting of holders of
shares of such class which shall be called by the President of this
Corporation to be held within forty days after there shall have been
delivered to this Corporation at its registered office in the State of
Washington a request or requests signed by the holders of at least ten
percent (10%) of the outstanding shares of such class.
Any director may be removed from office for cause by vote of the
holders of a majority of the shares of the class of stock which voted for
his election (or for his predecessor in case such director was elected by
directors). A special meeting of the holders of shares of any class may be
called by a majority vote of the Board of Directors or by the President for
the purpose of removing a director in accordance with the provisions of the
preceding sentence, and shall be called within forty days after there shall
have been delivered to this Corporation at its registered office in the
State of Washington a request or requests to such effect signed by the
holders of at least ten percent (10%) of the outstanding shares of the class
entitled to vote with respect to the removal of any such director.
Whenever, under the provisions of the Articles of Incorporation, the
rights of the holders of Preferred Stock to elect directors shall accrue and
be exercised, the amount of all dividends on the Preferred Stock which shall
be in arrears shall as soon as practicable be paid out of any assets of this
Corporation available therefor.
Holders of Preferred Stock of any series and holders of stock of any
other class shall not be entitled to receive notice of any Meeting of
holders of any class of stock at which they are not entitled to vote.
Each holder of $100 par value Preferred Stock, as to all matters in
respect of which such stock has voting power, is entitled to one vote for
each share of stock standing in his name.
Each holder of $25 par value Preferred Stock, as to all matters in
respect of which such stock has voting power, is entitled to one vote for
each share of stock standing in his name.
Subject to the voting rights expressly conferred upon the Preferred
Stock or upon other classes of stock by the Articles of Incorporation, the
holders of the Common Stock shall exclusively possess the full voting power
for the election of directors, and for all other purposes.
The holders of the Preference Stock shall not be entitled to vote
except
(a) as may from time to time be mandatorily required by the
laws of the State of Washington;
(b) if and whenever dividends payable on any of the Preference
Stock shall be in arrears in an amount equivalent to or exceeding four full
quarterly dividends, the holders of the shares of the Preference Stock
voting separately as a class shall be entitled to elect the smallest number
of directors necessary to constitute a majority of the full Board of
Directors and the holders of the Common Stock voting separately as a class
shall be entitled to elect the remaining directors, provided, such right of
the holders of Preference Stock shall not be exercisable during periods when
holders of the Preferred Stock are exercising their rights to elect
directors under Section 7 of this Article VI, and when all arrears in
dividends on the Preference Stock and the current dividend thereon shall
have been declared and set apart for payment, all voting rights given by
this clause (b) shall be divested from the Preference Stock (subject,
however, to being at any time or from time to time similarly revived and
divested);
(c) during periods when holders of the Preferred Stock are
exercising their rights to elect directors, as provided above, the holders
of the shares of the Preference Stock voting separately as a class shall be
entitled to elect two directors in addition to those elected by the holders
of the $100 par value Preferred Stock and the holders of the $25 par value
Preferred Stock and in place of two of the directors who would otherwise be
elected by the holders of the Common Stock, which right of election by the
holders of the Preference Stock shall continue until the rights of the
Preferred Stock to elect directors terminate, at which time subject to (b)
above of this paragraph it is likewise to terminate;
(d) any amendment to the Articles of Incorporation or Bylaws
altering materially any existing provisions of the Preference Stock, or
creating or enlarging any class of stock having rights and preferences
senior to those of the Preference Stock must be approved by a two-thirds
vote of the shares of the Preference Stock voting separately as a class; and
(e) any amendment to the Articles of Incorporation increasing
the authorized shares of Preference Stock or creating or enlarging any class
of stock ranking on a parity with the Preference Stock must be approved by a
vote of a majority of the holders of the shares of the Preference Stock
voting separately as a class.
Each holder of Preference Stock, as to all matters in respect to which
such stock has voting power, is entitled to one vote for each share of stock
standing in his name.
Whenever, under the provisions of the foregoing clauses (b)and (c), the
rights of holders of the Preference Stock to elect directors shall accrue or
shall terminate, the Board of Directors may, and within ten days after
delivery to this Corporation at its registered office in the State of
Washington of a request or requests to such effect signed by the holders of
at least ten percent (10%) of the outstanding shares of any class of stock
entitled to vote shall, call a special meeting in accordance with the Bylaws
of this Corporation of the holders of the class or classes of stock of this
Corporation entitled to vote, to be held within forty days from the delivery
of such request, for the purpose of electing Directors pursuant to clause
(b) or (c), as the case may be, to serve until the next annual meeting and
until their respective successors shall be elected and shall qualify;
provided, however, that if the annual meeting of shareholders for the
election of directors is to be held within sixty days after the delivery of
such request, the Board of Directors need not act thereon. If, at any
meeting called as aforesaid or at any annual meeting of shareholders after
accrual or termination of the right of holders of the Preference Stock to
elect directors as in the foregoing clauses (b) and (c) provided, any
director shall not be reelected, his term of office shall end upon the
election and qualification of his successor, not withstanding that the term
for which such director was originally elected shall not at the time have
expired.
If, during any interval between annual meetings of share-holders for
the election of directors while holders of the Preference Stock shall be
entitled to elect any director pursuant to the foregoing clauses (b) and
(c), the number of directors in office who have been elected by the holders
of the Preference Stock, or by the holders of the Common Stock, as the case
may be, shall become less than the total number of directors subject to
election by holders of shares of such class, whether by reason of the
resignation, death or removal of any director or directors, or an increase
in the total number of directors, the vacancy or vacancies shall be filled
(1) by the remaining directors or director, if any, then in office who
either were or was elected by the votes of shares of such class or succeeded
to a vacancy originally filled by the votes of shares of such class or (2),
if there is no such director remaining in office, at a special meeting of
holders of shares of such class which shall be called by the President of
this Corporation to be held within forty days after there shall have been
delivered to this Corporation at its registered office in the State of
Washington a request or requests signed by the holders of at least ten
percent (10%) of the outstanding shares of such class.
SECTION 8. Common Stock.
------------
Dividends. Subject to compliance with the requirements of Section 3
and of any sinking or purchase fund for any series of Preferred Stock,
dividends may be declared by the Board of Directors and paid upon the Common
Stock, to the exclusion of the Preferred Stock, out of any assets of this
Corporation available for dividends.
Liquidation Provisions. Subject to compliance with the requirements of
election, in the event of any liquidation, dissolution or winding up of this
Corporation, the holders of the Common Stock shall be entitled to receive,
pro rata, all of the remaining assets of this Corporation available for
distribution to its shareholders.
SECTION 9. Definitions.
-----------
(A) The term "gross income available for payment of interest charges"
shall mean the total operating revenues of this Corporation, less the total
operating expenses, taxes (including income, excess profits and other taxes
based on or measured by income or undistributed earnings or undistributed
income), and other appropriate items, including provision for maintenance,
and provision for retirements, depreciation or obsolescence, plus or minus,
as the case may be, any net non-operating income or deductions, but
excluding any charges on account of interest on debt or on account of debt
discount and expense, all to be determined in accordance with sound
accounting practice. In determining such "gross income available for
payment of interest charges", no deduction or adjustment shall be made for
or in respect of (1) profits or losses from the sale, abandonment or other
disposition of property properly carried in the plant or investment accounts
of this Corporation, or taxes paid on or in respect of any such profits, or
(2) charges for the elimination or amortization of utility plant adjustment
accounts or other intangibles.
(B) The term "net income available for dividends on Preferred Stock"
shall mean the total operating revenues of this Corporation, less the total
operating expenses, taxes (including income, excess profits and other taxes
based on or measured by income of undistributed earnings or undistributed
income), interest charges, dividend requirements on any stock ranking prior
as to dividends or assets in liquidation to the Preferred Stock and other
appropriate items, including provision for maintenance, and provision for
retirements, depreciation or obsolescence, and including charges for
amortization of debt discount and expense, plus or minus, as the case may
be, any net non-operating income or deductions, all to be determined in
accordance with sound accounting practice. In determining such "net income
available for dividends on Preferred Stock", no deduction or adjustment
shall be made for or in respect of (1) expenses in connection with the
issuance, redemption or retirement of any securities of this Corporation,
including any amount paid in excess of the principal amount or par or stated
value of securities redeemed or retired and, in the event that such
redemption or retirement is effected with the proceeds of sale of other
securities of this Corporation, interest or dividends on the securities
redeemed or retired from the date on which the funds required for retirement
are deposited in trust for such purpose to the date of redemption or
retirement, (2) profits or losses from the sale, abandonment or other
disposition of property properly carried in the plant or investment accounts
of this Corporation, or taxes paid on or in respect of any such profits, (3)
charges for the elimination or amortization of utility plant adjustment
accounts or other intangibles, or (4) any earned surplus adjustment
(including tax adjustments) applicable to any period prior to January 1,
1959.
(C) The term "net income available for dividends on junior stock" shall
mean "net income available for dividends on Preferred Stock," as defined and
determined above, less the sum of all dividends paid and all dividends
accrued and unpaid on any outstanding Preferred Stock and any other class of
stock ranking on a parity with the Preferred Stock as to dividends.
(D) The term "sound accounting practice" shall mean recognized
principles of accounting practice followed by companies engaged in a
business similar to that of this Corporation, provided that any applicable
rules, regulations or orders of any public regulatory authority having
jurisdiction over the accounts of this Corporation shall be controlling,
except to the extent that this Corporation, at that time, shall be
contesting in good faith the validity or applicability to this Corporation
of any such rule, regulation or order.
(E) The term "accrued dividends" means, in respect of each share of
the Preferred Stock, that amount which shall be equal to simple interest
upon the par value thereof at the annual rate thereon and no more from the
date upon which cumulative dividends on such share commence to accrue to the
date fixed for payment of any amount to be distributed in liquidation or
upon redemption less the aggregate amount of all dividends theretofore paid
or declared and set apart for payment thereon.
(F) The term "this Corporation" includes, to the extent applicable,
its predecessor, Puget Sound Power & Light Company, a Massachusetts
corporation, in addition to this Corporation.
SECTION 10. Preemptive Rights.
-----------------
No preemptive right shall exist with respect to shares of stock or
securities convertible into shares of stock. Any and all shares of stock
and securities convertible into shares of stock that may be issued at any
time may, in whole or in part, be disposed of without having been offered to
shareholders.
SECTION 11. Preference Stock.
----------------
11.01. General. Stock of the par value of $50 per share entitled "Pre
ference Stock" may be issued by the Board of Directors in series which shall
be of the same class and of equal rank and identical in all respects except
that to the extent not established herein the Board of Directors shall have
the authority to fix the designation of the series and to fix and determine
the following relative rights and preferences of the shares of any series so
established:
(a) The rate of dividends;
(b) Whether shares may be redeemed and, if so, the redemption
price and the terms and conditions of redemption;
(c) The amount payable upon shares in event of voluntary and
involuntary liquidation;
(d) Sinking fund provisions, if any, for the redemption or
purchase of shares;
(e) The terms and conditions, if any, on which the shares may
be converted; and
(f) Any other terms, conditions, or provisions which the Board
of Directors shall have the authority to fix and determine under the
Washington Business Corporation Act, as now in effect or hereafter amended.
11.02. Dividend Rights. Out of the assets of this Corporation
available or dividends, the holders of the Preference Stock at the time
outstanding shall be entitled to receive, but only when and as declared by
the Board of Directors, dividends at the rate per annum fixed for each series
by the Board of Directors at the time of issuance of each series, and no
more, payable quarterly on the dates fixed by the Board of Directors at the
time of issuance of each series. Dividends on the shares of Preference Stock
of each series shall be cumulative, and, at the option of the Board of
Directors, shall, with respect to particular shares of each series, commence
to accrue from the date of the original issue of such particular shares or
from the quarterly dividend date next preceding such original issue. The
Preference Stock shall be considered junior stock for purposes of Section 3
of this Article VI.
No dividend shall be paid upon or set apart for the shares of Common
Stock or of any other class of stock ranking junior as to dividends to the
Preference Stock (other than a dividend in stock ranking junior as to
dividends and assets in liquidation to the Preference Stock), no other
distribution shall be made on any shares of such junior stock and no
expenditure shall be made for the purchase, redemption or other retirement
for a consideration of shares of this Corporation's stock of any class
ranking junior as to assets in liquidation to the Preference Stock (other
than in exchange for, or from the proceeds of any substantially concurrent
sale hereafter made of, other shares of stock of this Corporation ranking
junior to the Preference Stock as to dividends and assets in liquidation),
unless full dividends on all shares of the Preference Stock for all past
quarterly dividend periods shall have been paid or declared and a sum
sufficient for the payment thereof set apart and the full dividend for the
then current quarterly dividend period shall have been or concurrently shall
be paid or declared and a sum sufficient for the payment thereof set apart.
The amount of any deficiency for past dividend periods may be paid or
declared and set apart at any time without reference to any quarterly
dividend payment date. No accumulation of unpaid dividends on the Preference
Stock shall bear interest. Dividends remaining unclaimed by the holders of
such Preference Stock for six years after having been declared and made
available for payment to such holders of Preference Stock shall revert to
this Corporation for its general corporate purposes and the obligation of
this Corporation to pay such dividends shall at that time cease and
determine. Any dividends declared or paid on the Preference Stock in an
amount less than full cumulative dividends accrued or in arrears upon all
Preference Stock outstanding shall, if more than one series be outstanding,
be divided between the different series in proportion to the aggregate
amounts which would be distributable to the Preference Stock of each series
if full cumulative dividends to the next preceding quarterly dividend date
were declared and paid thereon.
11.03. Liquidation Provisions. In the event of any liquidation,
dissolution or winding up of this Corporation, if involuntary, the holders of
the Preference Stock shall be entitled to receive, for each share thereof,
the sum of $50 together with accrued dividends, or, in case such liquidation,
dissolution or winding up shall have been voluntary, an amount per share
equal to the then applicable optional redemption price, before any distri-
bution of the assets shall be made to the holders of the Common Stock or
stock of any other class ranking junior as to assets in liquidation to the
Preference Stock, but after payment of the liquidation rights of the
Preferred Stock, provided for in Section 4 of this Article VI. The holders
of the Preference Stock shall be entitled to no further participation in such
distribution. If upon any such liquidation, dissolution or winding up, the
assets distributable among the holders of the Preference Stock shall be
insufficient to permit the payment of the full preferential amount aforesaid,
then after payment of such liquidation rights of the Preferred Stock the
entire assets of this Corporation to be distributed shall be distributed
among the holders of all series of the Preference Stock then outstanding,
ratably per share in proportion to the full preferential amounts per share to
which they are respectively entitled as hereinabove provided. A consoli-
dation or merger of this Corporation or sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of this Corporation shall
not constitute a dissolution, liquidation or winding up of this Corporation
within the meaning of this Section 11.03.
11.04. Conversion Rights. The Board of Directors may fix and
determine, prior to the issuance of each series of the Preference Stock, to
the extent then permitted by the Washington Business Corporation Act, the
terms and conditions, if any, on which shares may be converted into, or
exchanged for, shares of any other class or classes or of any other series of
the same or any other class or classes of stock of the Company, and the price
or prices or the rates of exchange and the adjustment at which such shares
shall be convertible or exchangeable. The Board of Directors may also
establish antidilution provisions for each convertible series.
ARTICLE VII.
The amount of paid-in capital with which this Corporation will begin
business is the sum of SIX HUNDRED DOLLARS ($600.00).
ARTICLE VIII.
SECTION 1. The Board of Directors of this Corporation shall be, and
hereby is, expressly vested with full power and authority to issue and sell,
from time to time, the authorized but unissued shares of stock and securities
convertible into shares of stock, upon such terms and conditions and for such
lawful consideration as the Board of Directors shall determine, all in
accordance with the laws of the State of Washington.
SECTION 2. The authority to make, alter, amend or repeal bylaws not
inconsistent with law or these Articles of Incorporation shall be, and is
hereby, expressly vested in the Board of Directors of this Corporation,
subject to the power of the shareholders to change or repeal such bylaws;
provided, however, that the Board of Directors shall not make or alter any
bylaws fixing their qualifications, classifications, term of office, or
compensation.
SECTION 3. The number of Directors of this Corporation shall be fixed
in the manner provided in the Bylaws, provided that the number of Directors
shall not be less than nine. The Directors shall be divided into three
classes, each class to be as nearly equal in number as possible, any Director
or Directors in excess of a number divisible by three being assigned to the
first class or to the first and second classes, as the case may be. At the
Annual Meeting of Shareholders in 1982, the Directors of the first class
shall be elected to serve until the next ensuing Annual Meeting, the
Directors of the second class to serve until the second ensuing Annual
Meeting, and the Directors of the third class to serve until the third
ensuing Annual Meeting, and in each case until their respective successors
shall have been elected and qualified or until their prior death, resignation
or removal. Beginning at the Annual Meeting of Shareholders in the year
1983, and thereafter at each Annual Meeting, successors to the Directors of
the class whose term of office shall then expire shall be elected to serve
until the third ensuing Annual Meeting, and until their respective successors
shall have been elected and qualified or until their prior death, resignation
or removal. In case of any change in the number of Directors, the respective
classes shall be adjusted so that thereafter each of the three classes shall
be as nearly equal in number as possible, any Director or Directors in excess
of the number divisible by three being assigned to the class or classes
having the shortest unexpired terms.
ARTICLE IX.
The following Statements of Relative Rights and Preferences annexed
hereto are hereby incorporated by reference in these Restated Articles of
Incorporation as though fully set forth herein:
Annex A Statement of Relative Rights and Preferences for the 8%
Preferred Stock, $100 par value.
Annex B Statement of Relative Rights and Preferences for the 9.36%
Preferred Stock, $25 par value.
Annex C Statement of Relative Rights and Preferences for the
Adjustable Rate Cumulative Preferred Stock Series A ($100
par value).
ARTICLE X
LIMITATION OF DIRECTOR LIABILITY
To the full extent that the Washington Business Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation
or elimination of the liability of Directors, a Director of the Corporation
shall not be liable to the Corporation or its Shareholders for monetary
damages for conduct as a Director. Any amendment to or repeal of this
Article X shall not adversely affect any right or protection of a Director of
the Corporation for or with respect to any acts or omissions of such Director
occurring prior to such amendment or repeal.
IN WITNESS WHEREOF, We have hereunto set our hands this 4th day of
January, 1988.
John W. Ellis
------------------------
John W. Ellis
Wilbur E. Watson
------------------------
Wilbur E. Watson
AFFIDAVIT
STATE OF WASHINGTON )
) SS
COUNTY OF KING )
John W. Ellis and W. E. Watson, being first duly sworn on oath, depose and
say:
(1) That we have been authorized to execute the foregoing Restated
Articles of Incorporation by resolution of the Board of Directors adopted at
the duly constituted meeting held October 8, 1987;
(2) That the Restated Articles of Incorporation correctly set forth
the text of the Articles of Incorporation as amended and supplemented to the
date hereof; and
(3) That the Restated Articles supersede and take the place of
heretofore existing Articles of Incorporation and amendments thereto.
John W. Ellis
-----------------------
John W. Ellis
Wilbur E. Watson
-----------------------
Wilbur E. Watson
SUBSCRIBED AND SWORN to me this 4th day of January, 1988
Lucius H. Biglow, Jr.
------------------------
Lucius H. Biglow, Jr.
Notary Public in and for the State of
Washington, residing at Medina. My
appointment expires September 2, 1991
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES
FOR THE 8% PREFERRED STOCK
-----------------------------------
Pursuant to Section 23A.08.130 of the Washington Business Corporation
Act, Puget Sound Power & Light Company (the "Company"), a Washington
corporation, hereby states that at a meeting of the Board of Directors of
the Company duly convened and held on October 3, 1973, the following
resolution was duly adopted:
RESOLVED - That pursuant to the authority expressly vested in it by the
Company's Articles of Incorporation and subject to the preferences,
limitations and relative rights set forth in the Company's Restated Articles
of Incorporation (the "Articles") which are applicable to Preferred Stock of
all series or to all classes of stock of the Company, the Board of Directors
of the Company hereby establishes a series of the Company's Preferred Stock
and fixes and determines the relative rights and preferences of such series,
including the designation of the series, the rate of dividends, the price,
terms and conditions of redemption, and the creation of a sinking fund, as
follows:
ANNEX A TO RESTATED ARTICLES OF INCORPORATION
1. Designation. The shares of such series shall be designated
"8% Preferred Stock" (the "New Preferred Stock" herein)and the number of
shares constituting such series shall be 150,000
2. Dividends. The holders of the New Preferred Stock shall be
entitled to preferential dividends at the rate of eight percent (8%) as
provided in Section 3 of the Articles.
3. Redemption. The Company may, at its option expressed by
resolution of the Board of Directors, redeem the New Preferred Stock as a
whole at any time or in part from time to time in accordance with the
provisions of Section 5 of the Articles at:
$108.00 per share if redeemed on or prior to February 15, 1978,
$105.00 per share if redeemed thereafter and on or prior to
February 15, 1983,
$103.00 per share if redeemed thereafter and on or prior to
February 15, 1988, and
$101.00 per share if redeemed thereafter,
in each case together with any accrued dividends (sometimes in the Articles
called the "optional redemption price"); provided however, that no such
redemption shall be made prior to October 1,1978 if such redemption is a
part of or in anticipation of any refunding operation involving the
application, directly or indirectly, of borrowed funds or the proceeds of an
issue of any stock ranking, as to dividends or assets, prior to or on a
parity with the New Preferred Stock if such borrowed funds have an interest
rate or cost to the Company (calculated in accordance with generally
accepted financial practice), or such stock has a dividend rate or cost to
the Company (so calculated) less than the dividend rate per annum of the New
Preferred Stock.
4. Sinking Fund. The New Preferred Stock shall been entitled to
the benefits of a sinking fund as follows:
(A) On February 15 in each year, commencing with the year
1975, the Company shall, upon notice given as provided in Section 5 of the
Articles, redeem at a price per share equal to $100, together with accrued
dividends (sometimes in the Articles called the "sinking fund redemption
price"), a number of shares of the New Preferred Stock as follows: 4,000
shares per year in the years 1975 through 1984, 5,000 shares per year in the
years 1985 through 1989, 6,000 shares per year in the years 1990 through
2003, and 1,000 shares in the year 2004. The Company may, at its option, by
written notice signed by its President or one of its Vice Presidents and
given to the transfer agent for the New Preferred Stock, increase by not
more than 100% the number of shares provided in the preceding sentence to be
redeemed on any said February 15, which right shall be noncumulative. The
obligation to redeem shares of the New Preferred Stock pursuant to the
provisions of this Section, as such obligation may be increased by the
Company pursuant to the preceding sentence, is herein sometimes referred to
as the "sinking fund obligation."
(B) The sinking fund obligation shall be cumulative so that
if on any February 15, on or after February 15, 1975, the Company shall not
have satisfied to the full extent the sinking fund obligation then due, for
any reason whatsoever, then any such deficiency shall be made good before
(i) any dividend shall be paid upon or set apart for the shares of Common
Stock or of any other class of stock ranking junior as to dividends or
assets in liquidation to the Preferred Stock (other than a dividend in stock
ranking junior as to dividends and assets in liquidation to the Preferred
Stock) or any other distribution shall be made on any shares of such junior
stock, (ii) any shares of stock ranking junior to the Preferred Stock as to
dividends or assets in liquidation may be redeemed, purchased or otherwise
retired for a consideration by the Company (other than in exchange for, or
from the proceeds of any substantially concurrent sale hereafter made of,
other shares of stock of the Company ranking junior to the Preferred Stock
as to dividends and assets in liquidation), or (iii) any shares of Preferred
Stock or of any stock ranking on a parity with the Preferred Stock may be
redeemed, purchased or otherwise retired for a consideration by the Company.
Nothing herein contained, however, shall prevent the Company from
satisfying, in whole or in part, its obligations in respect of any sinking
or purchase fund for shares of any other series of Preferred Stock, provided
that any sinking fund obligations for the New Preferred Stock, which shall
have theretofore become due as aforesaid and not have been satisfied, shall
be satisfied by a percentage not less than that by which any obligation of
the Company in respect of any such other fund is to be satisfied.
(C) The Company shall have the right to satisfy, in whole or
in part, any sinking fund obligation (including any deficiency in any past
sinking fund obligation) by crediting against such obligation any shares of
the New Preferred Stock purchased or otherwise acquired by the Company, such
credit to be effected by delivering to the transfer agent for the New
Preferred Stock not later than the January 1 next preceding the February 15
on which there is due any sinking fund obligation in respect of which such
credit is to be taken, a certificate signed by its President or one of its
Vice Presidents or its Treasurer or one of its Assistant Treasurers,
specifying the election of the Company to take such credit and stating that
no previous sinking fund credit has been taken in respect of any such
shares.
(D) At least one day prior to the February 15 on which any
sinking fund obligation is due, the Company shall deliver to the transfer
agent for the New Preferred Stock, in trust for such redemption, an amount
of money sufficient to redeem all shares of such stock called for redemption
to satisfy such obligation, to be held and applied as provided in Section 5
of the Articles, and certificates properly endorsed in blank for transfer or
accompanied by proper instruments of assignment or transfer in blank and
bearing all necessary stock transfer tax stamps thereto affixed and
cancelled, for any shares of such stock purchased or otherwise acquired by
the Company which are to be used as a credit against the sinking fund
obligation due on such date, for cancellation as provided in Section 5 of
the Articles with respect to shares redeemed for sinking fund purposes.
5. Conversion. The shares of the New Preferred Stock shall not
be convertible into shares of stock of the Company of any other class, into
any shares of Preferred Stock of the Company of any other series or into any
other type of securities.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in triplicate in its name and on its behalf by its duly authorized
officers and its corporate seal to be affixed hereto, this 3rd day of
October, 1973.
PUGET SOUND POWER & LIGHT COMPANY
By Ralph M Davis
----------------------------
Ralph M Davis, President
By Wilbur E. Watson
---------------------------
Wilbur E. Watson, Secretary
STATE OF WASHINGTON )
) ss
COUNTY OF KING )
WILBUR E. WATSON, being duly sworn, on oath deposes and says that
he is Secretary of Puget Sound Power & Light Company, that he has read the
foregoing document, knows the contents thereof and believes the same to be
true.
Wilbur E. Watson
---------------------------
Wilbur E. Watson, Secretary
SUBSCRIBED AND SWORN to before me this 3rd day of October, 1973.
Russel E. Olson
-------------------------
Notary Public in and for the State
Washington, residing at Bellevue
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES FOR
THE 9.36% PREFERRED STOCK, $25 PAR VALUE
Pursuant to Section 23A.08.130 of the Washington Business
Corporation Act, Puget Sound Power & Light Company (the "Company"), a
Washington Corporation, hereby states that at a meeting of the Board of
Directors of the Company duly convened and held on February 5, 1979, the
following resolution was duly adopted:
RESOLVED - That pursuant to the authority expressly vested in it by
the Company's Articles of Incorporation (the "Articles") and subject to the
preferences, limitations, relative rights and other terms and provisions set
forth in the Articles, the Board of Directors of the Company hereby
establishes an additional series of the Company's $25 par value Preferred
Stock, sets forth the designation of the series, and fixes and determines the
relative rights and preferences thereof, including the rate of dividends, the
price, terms and conditions of redemption, the creation of a sinking fund,
and the amount payable upon shares in the event of voluntary or involuntary
liquidation, as follows:
ANNEX B TO RESTATED ARTICLES OF INCORPORATION
1. Designation. The shares of such series shall be designated
"9.36% Preferred Stock, $25 par value" (the "New Preferred Stock" herein) and
the number of shares constituting such series shall be 2,000,000.
2. Dividends. The holders of the New Preferred Stock shall be
entitled to annual preferential dividends, in accordance with the provisions
of Article VI, Section 3 of the Articles at the rate of nine and 36/100
percent (9.36%) of the par value thereof. Dividends shall commence to accrue
from the date of the original issue of the shares. The first dividend date
shall be May 15, 1979.
3. Redemption. The Company may, at its option expressed by
resolution of the Board of Directors, redeem the New Preferred Stock as a
whole at any time or in part from time to time in accordance with the
provisions of Article VI, Section 5, of the Articles at:
$27.35 per share if redeemed on or prior to March 1, 1984;
$26.55 per share if redeemed thereafter and on or prior to
March 1, 1989;
$25.75 per share if redeemed thereafter and on or prior to
March 1, 1994;
$25.25 per share if redeemed thereafter;
in each case together with any accrued dividends (sometimes in the Articles
called the "optional redemption price"); provided, however, that no such
redemption shall be made prior to March 1, 1984 if such redemption is a part
of or in anticipation of any refunding operation involving the application,
directly or indirectly, of borrowed funds or the proceeds of an issue of any
stock ranking, as to dividends or assets in liquidation, prior to or on a
parity with the New Preferred Stock if such funds or proceeds have an
effective cost to the Company (calculated in accordance with generally
accepted financial practice) below that of the New Preferred Stock.
4. Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Company, if involuntary, the holders of the
New Preferred Stock shall be entitled to receive, for each share thereof, the
sum of $25 together with accrued dividends, or, in case such liquidation,
dissolution or winding up shall have been voluntary, an amount per share
equal to the then applicable optional redemption price, before any
distribution of the assets shall be made to the holders of the Preference
Stock, the Common Stock or stock of any other class ranking junior as to
assets in liquidation to the New Preferred Stock; but the holders of the New
Preferred Stock shall be entitled to no further participation in such
distribution.
5. Sinking Fund. The New Preferred Stock shall be entitled to
the benefits of a sinking fund as follows:
(A) On March 1 in each year, commencing with the year 1987,
the Company shall, upon notice given as provided in Section 5 of the
Articles, redeem 81,000 shares per year at a price per share equal to $25,
together with accrued dividends (sometimes in the Articles called the
"sinking fund redemption price". The Company may, at its option, by written
notice signed by its President or one of its Vice Presidents and given to the
transfer agent for the New Preferred Stock, increase by not more than 100%
the number of shares provided in the preceding sentence to be redeemed on any
said March 1, which right shall be non-cumulative. The obligation to redeem
shares of the New Preferred Stock pursuant to the provisions of this Section,
as such obligation may be increased by the Company pursuant to the preceding
sentence, is herein sometimes referred to as the "sinking fund obligation."
(B) The sinking fund obligation shall be cumulative so that if
on any March 1, on or after March 1, 1987, the Company shall not have
satisfied to the full extent the sinking fund obligation then due, for any
reason whatsoever, then any such deficiency shall be made good before (i) any
dividend shall be paid upon or set apart for the shares of Common Stock or of
any other class of stock ranking junior as to dividends or assets in
liquidation to the New Preferred Stock (other than a dividend in stock
ranking junior as to dividends and assets in liquidation to the New Preferred
Stock) or any other distribution shall be made on any shares of such junior
stock, (ii) any shares of stock ranking junior to the New Preferred Stock as
to dividends or assets in liquidation may be redeemed, purchased or otherwise
retired for a consideration by the Company (other than in exchange for, or
from the proceeds of any substantially concurrent sale hereafter made of,
other shares of stock of the Company ranking junior to the New Preferred
Stock as to dividends and assets in liquidation) or (iii) any shares of New
Preferred Stock or of any stock ranking on a parity with the New Preferred
Stock may be redeemed, purchased or otherwise retired for a consideration by
the Company. Nothing herein contained, however, shall prevent the Company
from satisfying, in whole or in part, its obligations in respect of any
sinking or purchase fund for shares of any other series or class of Preferred
Stock, provided that any sinking fund obligations for the New Preferred
Stock, which shall have theretofore become due as aforesaid and not have been
satisfied, shall be satisfied by a percentage not less than that by which any
obligation of the Company in respect of any such other fund is to be
satisfied.
(C) The Company shall have the right to satisfy, in whole or
in part, any sinking fund obligation (including any deficiency in any past
sinking fund obligation) by crediting against such obligation any shares of
the New Preferred Stock purchased or otherwise acquired by the Company, such
credit to be effected by delivering to the transfer agent for the New
Preferred Stock not later than the January 15 next preceding the March I on
which there is due any sinking fund obligation in respect of which such
credit is to be taken, a certificate signed by its President or one of its
Vice Presidents or its Treasurer, specifying the election of the Company to
take such credit and stating that no previous sinking fund credit has been
taken in respect of any such shares.
(D) At least one day prior to the March 1 on which any
sinking fund obligation is due, the Company shall deliver to the transfer
agent for the New Preferred Stock, in trust for such redemption, an amount of
money sufficient to redeem all shares of such stock called for redemption to
satisfy such obligation, to be held and applied as provided in Section 5 of
the Articles, and certificates properly endorsed in blank for transfer or
accompanied by proper instruments of assignment or transfer in blank and
bearing all necessary stock transfer tax stamps thereto affixed and
cancelled, for any shares of such stock purchased or otherwise acquired by
the Company which are to be used as a credit against the sinking fund
obligation due on such date, for cancellation as provided in Section 5 of the
Articles with respect to shares redeemed for sinking fund purposes.
6. Conversion. The shares of the New Preferred Stock shall not
be convertible into shares of stock of the Company of any other class, into
any shares of $25 par value Preferred Stock of the Company of any other
series or into any other type of securities.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in duplicate in its name and on its behalf by its duly authorized
officers and its corporate seal to be affixed hereto, this 5th day of
February, 1979.
PUGET SOUND POWER & LIGHT COMPANY
By John W. Ellis
------------------------------
John W. Ellis, President
By Wilbur E. Watson
------------------------------
Wilbur E. Watson, Secretary
STATE OF WASHINGTON )
) ss
COUNTY OF KING )
W. E. Watson, being duly sworn, on oath deposes and says that he is
Secretary of Puget Sound Power & Light Company, that he has read the
foregoing document, knows the contents thereof and believes the same to be
true.
Wilbur E. Watson
-----------------------------
W. E. Watson
SUBSCRIBED AND SWORN to before me this 5th day of February, 1979.
/s/ Lucius H. Biglow, Jr.
----------------------------
Notary Public in and for the
State of Washington, residing
in Medina
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES FOR
THE ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES A ($100 PAR VALUE)
--------------------
Pursuant to Section 23A.08-130 of the Washington Business
Corporation Act, Puget Sound Power & Light Company (the "Company"), a
Washington corporation, hereby states that at a meeting of the Board of
Directors of the Company duly convened and held on December 13, 1982, the
following resolution was duly adopted:
RESOLVED - That pursuant to the authority expressly vested in it
by the Company's Articles of Incorporation (the "Articles") and subject to
the preferences, limitations, relative rights and other terms and provisions
set forth in the Articles, the Board of Directors of the Company hereby
establishes an additional series of the Company's $100 par value Preferred
Stock, sets forth the designation of the series, and fixes and determines the
relative rights and preferences thereof, including the rate of dividends, the
price, terms and conditions of redemption, and the amount payable upon shares
in event of voluntary or involuntary liquidation, as follows:
ANNEX C TO RESTATED ARTICLES OF INCORPORATION
1. Designation. The shares of such series shall be designated
"Adjustable Rate Cumulative Preferred Stock, Series A ($100 par value)" (the
"Adjustable Rate Preferred Stock" herein) and the number of shares
constituting such series shall be 400,000.
2. Dividends. The holders of the Adjustable Rate Preferred Stock
shall be entitled to annual preferential dividends, in accordance with the
provisions of Article VI, Section 3 of the Articles in an amount determined
in accordance with the formula described in the next succeeding paragraph.
Dividends shall commence to accrue from the date of the original issue of the
shares. The first dividend date shall be February 15, 1983.
The annual dividend per share on the Adjustable Rate Preferred
Stock will be computed at the rate of 10.8% per annum based on par value for
the initial dividend period ending February 15, 1983 and at 1% below the
Applicable Rate, from time to time in effect for each subsequent dividend
period. However, the dividend rate for any dividend period shall in no event
be less than 7% per annum or greater than 14-1/2% per annum.
Except as provided below in this paragraph, the "Applicable
Rate" for any dividend period will be the highest of (i) the Treasury Bill
Rate, (ii) the Ten Year Constant Maturity Rate, and ( iii) the Twenty Year
Constant Maturity Rate (each as hereinafter defined) for such dividend
period. In the event that the Company determines in good faith that for any
reason one or more of such rates cannot be determined for any dividend
period, then the Applicable Rate for such dividend period shall be the higher
of whichever of such rates can be so determined. In the event that the
Company determines in good faith that none of such rates can be determined
for any dividend period, then the Applicable Rate in effect for the preceding
dividend period shall be continued for such dividend period.
Except as provided below in this paragraph, the "Treasury Bill
Rate" for each dividend period will be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board during the Calendar
Period immediately prior to the ten calendar days immediately preceding the
February 15, May 15, August 15 or November 15, as the case may be, prior to
the dividend period for which the dividend rate on the Adjustable Rate
Preferred Stock is being determined. In the event that the Federal Reserve
Board does not publish such a weekly per annum market discount rate during
any such Calendar Period, then the Treasury Bill Rate for the related
dividend period shall be the arithmetic average of the two most recent weekly
per annum market discount rates (or the one weekly per annum market discount
rate, if only one such rate shall be published during the relevant Calendar
Period) for three-month U.S. Treasury bills, as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Company. In the event that a per annum
market discount rate for three-month U.S. Treasury bills shall not be
published by the Federal Reserve Board or by any Federal Reserve Bank or by
any U.S. Government department or agency during such Calendar Period, then
the Treasury Bill Rate for such dividend period shall be the arithmetic
average of the two most recent weekly per annum market discount rates (or the
one weekly per annum market discount rate, if only one such rate shall be
published during the relevant Calendar Period) for all of the U.S. Treasury
bills then having maturities of not less than 80 nor more than 100 days, as
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such rates, by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the Company.
In the event that the Company determines in good faith that for any reason no
such U.S. Treasury bill rates are published as provided above during such
Calendar Period, then the Treasury Bill Rate for such dividend period shall
be the arithmetic average of the per annum market discount rates based upon
the closing bids during such Calendar Period for each of the issues of
marketable non-interest-bearing U.S. Treasury securities with a maturity of
not less than 80 nor more than 100 days from the date of each such quotation,
as quoted daily for each business day in New York City(or less frequently if
daily quotations shall not be generally available) to the Company by at least
three recognized U.S. Government securities dealers selected by the Company.
In the event that the Company determines in good faith that for any reason
the Company cannot determine the Treasury Bill Rate for any dividend period
as provided above in this paragraph, the Treasury Bill Rate for such dividend
period shall be the arithmetic average of the per annum market discount rates
based upon the closing bids during the related Calendar Period for each of
the issues of marketable interest-bearing U.S. Treasury securities with a
maturity of not less than 80 nor more than 100 days from the date of each
such quotation, as quoted daily for each business day in New York City (or
less frequently if daily quotations shall not be generally available) to the
Company by at least three recognized U.S. Government securities dealers
selected by the Company.
Except as provided below in this paragraph, the "Ten Year
Constant Maturity Rate" for each dividend period shall be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields (or
the one weekly per annum Ten Year Average Yield, if only one such Yield shall
be published during the relevant Calendar Period as provided below), as
published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the February
15, May 15, August 15, or November 15, as the case may be, prior to the
dividend period for which the dividend rate on the Adjustable Rate Preferred
Stock is being determined. In the event that the Federal Reserve Board does
not publish such a weekly per annum Ten Year Average Yield during such
Calendar Period, then the Ten Year Constant Maturity Rate for such dividend
period shall be the arithmetic average of the two most recent weekly per
annum Ten Year Average Yields (or the one weekly per annum Ten Year Average
Yield, if only one such Yield shall be published during such Calendar
Period), as published weekly during such Calendar Period by any Federal
Reserve Bank or by any U.S. Government department or agency selected by the
Company. In the event that a per annum Ten Year Average Yield shall not be
published by the Federal Reserve Board or by any Federal Reserve Bank or by
any U.S. Government department or agency during such Calendar Period, then
the Ten Year Constant Maturity Rate for such dividend period shall be the
arithmetic average of the two most recent weekly per annum average yields to
maturity (or the one weekly average yield to maturity, if only one such yield
shall be published during such Calendar Period) for all of the actively
traded marketable U.S. Treasury fixed interest rate securities(other than
Special Securities (as defined below)) then having maturities of not less
than eight nor more than twelve years, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board shall
not publish such yields, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Company. In the event that
the Company determines in good faith that for any reason the Company cannot
determine the Ten Year Constant Maturity Rate for any dividend period as
provided above in this paragraph, then the Ten Year Constant Maturity Rate
for such dividend period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such Calendar
Period for each of the issues of actively traded marketable U.S. Treasury
fixed interest rate securities (other than Special Securities) with a final
maturity date not less than eight nor more than twelve years from the date of
each such quotation, as quoted daily for each business day in New York City
(or less frequently if daily quotations shall not be generally available) to
the Company by at least three recognized U.S. Government securities dealers
selected by the Company.
Except as provided below in this paragraph, the "Twenty Year
Constant Maturity Rate" for each dividend period shall be the arithmetic
average of the two most recent weekly per annum Twenty Year Average Yields
(or the one weekly per annum Twenty Year Average Yield, if only one such
Yield shall be published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period immediately
prior to the ten calendar days immediately preceding the February 15, May 15,
August 15, or November 15, as the case may be, prior to the dividend period
for which the dividend rate on the Adjustable Rate Preferred Stock is being
determined. In the event that the Federal Reserve Board does not publish
such a weekly per annum Twenty Year Average Yield during such Calendar
Period, then the Twenty Year Constant Maturity Rate for such dividend period
shall be the arithmetic average of the two most recent weekly per annum
Twenty Year Average Yields (or the one weekly per annum Twenty Year Average
Yield, if only one such Yield shall be published during such Calendar
Period), as published weekly during such Calendar Period by any Federal
Reserve Bank or by any U.S. Government department or agency selected by the
Company. In the event that a per annum Twenty Year Average Yield shall not
be published by the Federal Reserve Board or by any Federal Reserve Bank or,
by any U.S. Government department or agency during such Calendar Period, then
the Twenty Year Constant Maturity Rate for such dividend period shall be the
arithmetic average of the two most recent weekly per annum average yields to
maturity (or the one weekly average yield to maturity, if only one such yield
shall be published during such Calendar Period) for all of the actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) then having maturities of not less than eighteen nor more
than twenty-two years, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board shall not publish such
yields, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Company. In the event that the Company determines in
good faith that for any reason the Company cannot determine the Twenty Year
Constant Maturity Rate for any dividend period as provided above in this
paragraph, then the Twenty Year Constant Maturity Rate for such dividend
period shall be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of
the issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not
less than eighteen nor more than twenty-two years from the date of each such
quotation, as quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Company by at least three recognized U.S. Government securities dealers
selected by the Company.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate
and the Twenty Year Constant Maturity Rate shall each be rounded to the
nearest five one-hundredths of a percentage point.
The amount of dividends per share payable for each dividend
period shall be computed by dividing the dividend rate for such dividend
period by four and applying such rate against the par value per share of the
Adjustable Rate Preferred Stock. The amount of dividends payable for the
initial dividend period or any period shorter than a full quarterly dividend
period shall be computed on the basis of 30-day months, a 360-day year and
the actual number of days elapsed in such period.
The dividend rate with respect to each dividend period will be
calculated as promptly as practicable by the Company according to the
appropriate method described herein. The mathematical accuracy of each such
calculation will be confirmed in writing by independent accountants of
recognized standing. The Company will cause each dividend rate to be
published in a newspaper of general circulation in New York City prior to the
commencement of the new dividend period to which it applies and will cause
notice of such dividend rate to be enclosed with the dividend payment checks
next mailed to the holder of the Adjustable Rate Preferred Stock.
As used herein, the term "Calendar Period" means a period of
fourteen calendar days; the term "Special Securities" means securities which
can, at the option of the holder, be surrendered at face value in payment of
any Federal estate tax or which provide tax benefits to the holder and are
priced to reflect such tax benefits or which were originally issued at a deep
or substantial discount; the term "Ten Year Average Yield" means the average
yield to maturity for actively traded marketable U.S. Treasury fixed interest
rate securities (adjusted to constant maturities of ten years); and the yield
to maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of twenty years).
3. Redemption. The Company may not redeem the Adjustable Rate
Preferred Stock prior to November 15, 1987. Thereafter the Company may, at
its option expressed by resolution of the Board of Directors, redeem the
Adjustable Rate Preferred Stock as a whole at any time or in part from time
to time in accordance with the provisions of Article VI, Section 5, of the
Articles at the redemption price of $103 per share if redeemed in the period
from November 15, 1987 through November 14, 1992 and at its par value per
share if redeemed thereafter, in each case together with any accrued
dividends (sometimes in the Articles called the "optional redemption price").
4. Liquidation Preferences. In the event of any liquidation,
dissolution or winding up of the Company, if involuntary, the holders of the
Adjustable Rate Preferred Stock shall be entitled to receive, for each share
thereof, the sum of $100 together with accrued dividends, or, in case such
liquidation, dissolution or winding up shall have been voluntary, an amount
per share equal to $103 through November 14, 1992 and $100 thereafter, plus
accrued dividends, before any distribution of the assets shall be made to the
holders of the Preference Stock, the Common Stock or stock of any other class
ranking junior as to assets in liquidation to the Adjustable Rate Preferred
Stock; but the holders of the Adjustable Rate Preferred Stock shall be
entitled to no further participation in such distribution.
5. Sinking Fund. The Adjustable Rate Preferred Stock shall not
be entitled to the benefits of a sinking fund.
6. Conversion. The shares of the Adjustable Rate Preferred Stock
shall not be convertible into share of stock of the Company of any other
class, into any shares of $100 par value Preferred Stock of the Company of
any other series or into any other type of securities.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in duplicate in its name and on its behalf by its duly authorized
officers and its corporate seal to be affixed hereto, this 13th day of
December, 1982.
PUGET SOUND POWER & LIGHT COMPANY
By John W. Ellis
-------------------------------
John W. Ellis, President
By W. E. Watson
-------------------------------
W. E. Watson, Secretary
STATE OF WASHINGTON )
) ss
COUNTY OF KING )
W. E. Watson, being duly sworn, on oath deposes and says that he is
Secretary of Puget Sound Power & Light Company, that he has read the
foregoing document, knows the contents thereof and believes the same to be
true.
W. E. Watson
----------------------------------
W. E. Watson
SUBSCRIBED AND SWORN to me this 13th day of December, 1982.
Lucius H. Biglow, Jr.
--------------------------------------
NOTARY PUBLIC in and for the State of
Washington, residing at Medina.
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES FOR
THE FLEXIBLE DUTCH AUCTION RATE TRANSFERABLE SECURITIES
$100 PAR VALUE PREFERRED STOCK, SERIES A
____________________________
Pursuant to Section 23A.08.130 of the Washington Business Corporation
Act, Puget Sound Power & Light Company (the "Corporation"), a Washington
corporation, hereby states that at a meeting of the Board of Directors of the
Corporation duly convened and held on January 14, 1988, the following
resolution was duly adopted:
RESOLVED, that pursuant to the authority expressly vested in it by the
Corporation's Restated Articles of Incorporation (the "Articles") and subject
to the preferences, limitations, relative rights and other terms and
provisions set forth in the Articles, the Board of Directors of the
Corporation hereby establishes an additional series of the Corporation's $100
par value Preferred Stock, sets forth the designation of the series, and
fixes and determines the relative rights and determining the rate(s) of
dividends, the price, terms and preferences thereof, including the methods
and procedures for conditions of redemption, and the amount payable upon
shares in the event of voluntary or involuntary liquidation, as follows:
1. Designation. The shares of such series shall be designated
"Flexible Dutch Auction Rate Transferable Securities" $100 Par Value
Preferred Stock, Series A" (the "Series A FLEX DARTS") and the number of
shares constituting such series shall be 500,000. The Series A FLEX DARTS
shall be issued in units (the "Units"), with each Unit consisting of 1,000
shares of Series A FLEX DARTS. The Series A FLEX DARTS may be purchased or
transferred only in whole Units and the Series A FLEX DARTS included in the
Units may not be separately purchased or transferred.
2. Definitions. Unless the context or use indicates another or
different meaning or intent, the following terms shall have the following
meanings, whether used in the singular or plural:
(a) "Additional Dividend Payment Date," during a Designated
Dividend Period of 26 or 52 weeks, means the thirteenth, twenty-sixth and
thirty-ninth Monday (provided that any such Monday is not otherwise a Normal
Dividend Payment Date), as applicable, after the first day of such Designated
Dividend Period; provided, however, that (i) if any such Monday or the
Tuesday following following such Monday is not a Business Day, the
"Additional Dividend Payment Date" that would otherwise be such Monday shall
be the first Business Day after such Monday that is immediately followed by a
Business Day or (ii) if the Securities Depository shall make available to its
participants and members the amounts due as dividends on Units in immediately
available funds in The City of New York on the dates on which such dividends
are payable (and the Securities Depository shall have so advised the Trust
Company) and if any such Monday is not a Business Day, the "Additional
Dividend Payment Date" that would otherwise be such Monday shall be the first
Business Day after such Monday.
(b) "Applicable Rate" means the rate per annum at which dividends
are payable on the shares of the Series A FLEX DARTS for any Dividend Period.
(c) "Auction" means each periodic operation of the Auction
Procedures.
(d) "Auction Date" means the first Business Day preceding the
first day of a Dividend Period.
(e) "Auction Procedures" means the procedures for conducting
reductions set forth in paragraph 6 below.
(f) "Business Day" means a day on which the New York Stock
Exchange is open for trading and which is not a Saturday, Sunday or other day
on which banks in The City of New York are authorized by law to close.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Common Stock" means all shares now or hereafter issued of the
class of common stock, without par value, of the Corporation now or hereafter
authorized and any other shares into which such shares may hereafter be
changed from time to time.
(i) "Corporation" means Puget Sound Power & Light Company, a
Washington Corporation.
(j) "Date of original issue" means the date on which the
Corporation originally issues Series A FLEX DARTS.
(k) "Designated Dividend Period" has the meaning set forth in
paragraph 3(b)(i) below.
(1) "Dividend Payment Date" has the meaning set forth in Paragraph
3(b)(i) below.
(m) "Dividend Period" has the meaning set forth in paragraph
3(c)(i) below.
(n) "Holder" means the holder of Units as its name appears on the
Stock Books of the Corporation.
(o) "Initial Dividend Payment Date" has the meaning set forth in
paragraph 3(b)(i) below.
(p) "Initial Dividend Period" has the meaning set forth in
paragraph 3(c)(i) below.
(q) "Initial Dividend Rate" has the meaning set forth in paragraph
3(c)(i) below.
(r) "Minimum Holding Period" has the meaning set north in
paragraph 3(b)(i) below.
(s) "Normal Designated Dividend Period" has the meaning set forth
in paragraph 3(b)(i) below.
(t) "Normal Dividend Payment Date" has the meaning set forth in
paragraph 3(b)(i) below.
(u) "Notice of Redemption" has the meaning set forth in paragraph
5(a) below.
(v) "Preferred Stock" means the $100 par value preferred stock and
the $25 par value preferred stock of the Corporation, as such preferred stock
may be issued from time to time.
(w) "Securities Depository" means The Depository Trust Company and
its successors and assigns or any other securities depository selected by the
Corporation which agrees to follow the procedures required to be followed by
such securities depository in connection with the Series A FLEX DARTS.
(x) "Series A FLEX DARTS" means the 500,000 shares of Preferred
Stock, $100 par value per share, of the Corporation designated as its
"Flexible Dutch Auction Rate Transferable Securities $100 Par Value Preferred
Stock, Series A."
(y) "Stock Books" means the stock transfer books of the
Corporation maintained by the Trust Company.
(z) "Subsequent Dividend Period" has the meaning specified in
paragraph 3(c)(i) below.
(aa) "Trust Company" means Manufacturers Hanover Trust Company
unless and until another bank, trust company or other entity appointed by a
resolution of the Board of Directors of the Corporation, enters into an
agreement(s) with the Company to follow the Auction Procedures for the
purpose of determining the Applicable Rate for the Series A FLEX DARTS.
(bb) "Units" means units of shares of Series A FLEX DARTS, with
each Unit consisting of 1,000 shares of Series A FLEX DARTS.
3. Dividends.
(a) The Holders shall be entitled to annual preferential
dividends, in accordance with Article VI, Section 3 of the Articles, at the
Applicable Rate per annum, determined as set forth below, and no more,
payable on the respective dates set forth below.
(b) (i) Dividends on Series A FLEX DARTS, at the Applicable
Rate per annum, shall accrue from the Date of Original Issue and shall
be payable commencing on March 14, 1988, on each Monday that is the last
day of each successive Designated Dividend Period thereafter (each such
date on which dividends would be payable but for the following proviso
being herein referred to as a "Normal Dividend Payment Date") and, in
addition, during any Designated Dividend Period of 26 or 52 weeks, on
each Additional Dividend Payment Date; provided, however, that if any
Normal Dividend Payment Date, the Friday preceding such Normal Dividend
Payment Date or the Tuesday following such Normal Dividend Payment Date
is not a Business Day, then (A) dividends on Series A FLEX DARTS that
would otherwise be payable on such Normal Dividend Payment Date shall
be payable on the first Business Day after such Normal Dividend Payment
Date that is immediately followed by a Business Day and is preceded by a
Business Day that is the preceding Friday or a day after such Friday or
(B) if the Securities Depository shall make available to its
participants and members the amounts due as dividends on Series A FLEX
DARTS, in immediately available funds in The City of New York on the
dates on which such dividends are payable (and the Securities Depository
shall have so advised the Trust Company), then dividends on Series A
FLEX DARTS that would otherwise be payable on such Normal Dividend
Payment Date shall be payable on the first Business Day on or after
such Normal Dividend Payment Date that is preceded by a Business Day
that is the preceding Friday or a day after such Friday (each such date
of payment of dividends, other than an Additional Dividend Payment Date,
being herein referred to as a "Dividend Payment Date" and the first
Dividend Payment Date being herein referred to as the "Initial Dividend
Payment Date"). Although any particular Dividend Payment Date may not
occur on the originally scheduled Normal Dividend Payment Date because
of the above mentioned proviso, the next succeeding Dividend Payment
Date shall, subject to such proviso, be the Monday that is the last day
of the next succeeding Designated Dividend Period. "Designated Dividend
Period" shall mean a period of 7, 13, 26 or 52 weeks (or, in the case of
a Designated Dividend Period immediately following a Designated
Dividend Period of 13 weeks or longer, 8, 9, 10, 11 or 12 weeks), as
designated or deemed to be designated by the Corporation as provided in
the following sentence, commencing on the Initial Dividend Payment Date
or a Normal Dividend Payment Date, as the case may be (a Designated
Dividend Period of seven weeks, as may be adjusted pursuant to the third
succeeding sentence, being herein referred to as a "Normal Designated
Dividend Period"). Prior to 12,30 p.m., New York City time, on the
third Business Day prior to the related Auction Date, the Corporation
may, by written notice to the Trust Company and each Holder at such
Holder's address as the same appears on the Stock Books of the
Corporation, designate the length of the next succeeding Designated
Dividend Period; provided, however, that (A) if any such notice shall
not have been received by the Trust Company prior to 12:30 p.m., New
York City time, on the third Business Day prior to the related Auction
Date or (B) in the event that Sufficient Clearing Bids (as defined in
paragraph 6(d)(i) below) do not result from the related Auction, the
Corporation shall be deemed to have designated such next Designated
Dividend Period as a Normal Designated Dividend Period. Any designation
of a Designated Dividend Period by the Corporation pursuant to the
preceding sentence shall be irrevocable. Notwithstanding the foregoing,
(I) in the event of a change in law lengthening the minimum holding
period (currently found in Section 246(c) of the Code) (the "Minimum
Holding Period") required for taxpayers to be entitled to the dividends
received deduction on preferred stock held by nonaffiliated corporations
(currently found in Section 243(a of the Code), the Board of Directors
of the Corporation or a duly designated committee thereof shall adjust
the number of weeks in each Normal Designated Dividend Period commencing
after the date of such change in law to equal or exceed the then current
Minimum Holding Period; provided, that the Normal Designated Dividend
Period, as adjusted, shall (x) consist of a whole number of weeks, (y)
not exceed by more than nine days the length of such then current
Minimum Holding Period, and (z) in no event exceed 14 weeks, and (II)
the Corporation shall not designate any Designated Dividend Period to be
shorter than a Normal Designated Dividend Period. Upon any such change
in the number of weeks in a Normal Designated Dividend Period as a
result of a change in law, the Corporation shall mail notice of such
change by first class mail, postage prepaid, to the Trust Company and to
each Holder at such Holder's address as the same appears on the Stock
Books of the Corporation.
(ii) Each dividend shall be paid to the Holder of Units as
its name appears on the Stock Books of the Corporation at the opening of
business on the Business Day next preceding the Dividend Payment Date or
Additional Dividend Payment Date therefor. Dividends in arrears that
were payable on any past Dividend Payment Date or Additional Dividend
Payment Date may be declared and paid at any time, without reference to
any regular Dividend Payment Date or Additional Dividend Payment Date.
The persons entitled to such dividend payments shall be the Holders
whose names appear on the Stock Books of the Corporation on a date, not
exceeding 15 days preceding the payment date thereof, as may be fixed by
the Board of Directors of the Corporation or a duly designated committee
thereof.
(c) (i) The dividend rate (the "Initial Dividend Rate") on
Series A FLEX DARTS during the period from and after the Date of
Original Issue to the Initial Dividend Payment Date (the "Initial
Dividend Period") shall be 6% per annum. Commencing on the Initial
Dividend Payment Date, the dividend rate on Series A FLEX DARTS for each
subsequent dividend period (hereinafter referred to as a "Subsequent
Dividend Period," and the Initial Dividend Period or any Subsequent
Dividend Period being hereinafter referred to as a "Dividend Period"),
which Subsequent Dividend Period shall commence on the last day of the
preceding Dividend Period and shall end on the next Dividend Payment
Date, shall be equal to the rate per annum that results from
implementation of the Auction Procedures.
(ii) The amount of dividends per share of the Series A
FLEX DARTS payable for any Dividend Period or part thereof (including,
during a Designated Dividend Period of 26 or 52 weeks, each period
commencing on a Dividend Payment Date or Additional Dividend Payment
Date and ending on the immediately succeeding Additional Dividend
Payment Date or Dividend Payment Date, as the case may be) shall be
computed by multiplying the Applicable Rate for such Dividend Period by
a fraction, the numerator of which shall be the number of days in the
period commencing on the immediately preceding Dividend Payment Date or
Additional Dividend Payment Date, as the case may be, and ending on the
applicable Dividend Payment Date or Additional Dividend Payment Date, as
the case may be (calculated by counting the first day thereof but
excluding the last day thereof), and the denominator of which shall be
360 and multiplying the rate so obtained by $100. The amount of
dividends per Unit of Series A FLEX DARTS payable for anv Dividend
Period or part thereof shall be computed by multiplying the amount of
dividends per share of Series A FLEX DARTS determined as aforesaid by
1,000.
(d) Holders of Units shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full cumulative
dividends, as herein provided, on the Units. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend
payment on Units that may be in arrears.
4. Liquidation Preferences. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of the Series A FLEX DARTS shall be entitled to
receive, for each share thereof, the sum of $100, together with accrued
dividends, before any distribution of the assets shall be made to the holders
of the Preference Stock, the Common Stock or stock of any other class
ranking junior as to assets in liquidation to the Series A FLEX DARTS; but
the holders of the Series A FLEX DARTS shall be entitled to no further
participation in such distribution.
5. Redemption. The Series A FLEX DARTS shall be redeemable by the
Corporation only in whole Units as provided below.
(a) At its option, the Corporation, by resolution of its Board of
Directors or a duly designated committee thereof may, out of funds legally
available therefor, redeem the Units as a whole or from time to time in part
(but in whole Units only) on any Dividend Payment Date at $100 per share
($100,000 per Unit), plus an amount equal to accrued and unpaid dividends on
such shares (whether or not earned or declared) to the redemption date. In
addition to the requirements of Article VI, Section 5 of :he Articles,
whenever Units are to be redeemed, at least 30 and not more than 45 days
prior to the date fixed for redemption the Corporation shall mail a notice
("Notice of Redemption") by first-class mail, postage prepaid to each Holder
of record of Units to be redeemed and to the Trust Company. A Notice of
Redemption shall be addressed to the Holder at the address of the Holder
appearing on the Stock Books of the Corporation maintained by the Trust
Company. The Notice of Redemption shall also be published in The Wall Street
Journal at least 15 days and not more than 45 days prior to the date fixed
for redemption. The Notice of Redemption shall include a statement of (i)
the redemption date, (ii) the redemption price, (iii) the number of Series A
FLEX DARTS and number of Units to be redeemed, (iv) the place or places where
Units are to be surrendered for payment of the redemption price, that
dividends on the shares to be redeemed will cease to accrue on such
redemption date, and (vi) the CUSIP number for the Series A FLEX DARTS. No
defect in the Notice of Redemption or in the mailing or publication thereof
shall affect the validity of the redemption proceedings, except as required
by law.
(b) If Notice or Redemption shall have been given as aforesaid and
the Corporation shall have deposited a sum sufficient to redeem the Series A
FLEX DARTS as to which Notice of Redemption has been given with the Trust
Company, with irrevocable instructions and authority to pay the redemption
price to the Holders thereof, or if no such deposit is made, then upon such
date fixed for redemption (unless the Corporation shall default in making
payment of the redemption price), all rights of the Holders thereof as
shareholders of the Corporation by reason of the ownership of such shares
(except their right to receive the redemption price thereof, but without
interest), shall terminate, and such shares shall no longer be deemed
outstanding. The Corporation shall be entitled to receive, from time to
time, from the Trust Company the interest, if any, on such monies deposited
with it and the Holders of any shares so redeemed shall have no claim to any
such interest.
6. Auction Procedures.
------------------
(a) Certain Definitions
-------------------
Capitalized terms not defined in this paragraph 6 shall have the
respective meanings specified in paragraphs 1 through 5 above. As used in
this paragraph 6, the following terms shall have the following meanings,
unless the context otherwise requires:
(i) "Affiliate" shall mean any Person known to the Trust
Company to be controlled by, in control, of, or under common control
with the Corporation.
(ii) "Agent Member" shal1 mean the member of the Securities
Depository that will act on behalf of a Bidder and is identified as such
in such Bidder's Master Purchaser's Letter.
(iii) "Applicable 'AA' Composite Commercial Paper Rate," on any
Auction Date, shall mean (i) if the next succeeding Designated Dividend
Period does not exceed nine weeks, (A) the interest equivalent of the 60-
day rate on commercial paper placed on behalf of issuers whose corporate
bonds are rated "AA" by Standard & Poor's Corporation or its successor
("S&P") or the equivalent of such rating by S&P or another rating
agency, as such 60-day fate is made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the Business Day
immediately preceding such date, or (B) in the event that the Federal
Reserve Bank of New York does not make available such a rate, then the
interest equivalent of the 60-day rate on commercial paper placed on
behalf of such issuers, as quoted on a discount basis or otherwise by
Commercial Paper Dealer to the Trust Company for the close of business
on the Business Day immediately preceding such date, (ii) if the next
succeeding Designated Dividend Period is a period of 10, 11 or 12 weeks,
the arithmetic average of the interest equivalent of the 60-day and 90-
day rates on such commercial paper as so determined, (iii) if the next
succeeding Designated Dividend Period is a period of 13 weeks, or 14
weeks as a result of a change in the Minimum Holding Period, the
interest equivalent of the 90-day rate on such commercial paper as so
determined, or (iv) if the next succeeding Designated Dividend Period is
a period of 26 weeks, the interest equivalent of the 180-day rate on
such commercial paper as s-o determined. For purposes of this
definition, the "interest equivalent" of a rate stated on a discount
basis (a "discount rate") for commercial paper of a given maturity shall
be equal to the quotient of (A) the discount rate divided by (B) the
difference between (x) 1.00 and (y) a fraction, the numerator of which
shall be the product of the discount rate times the number of days in
which such commercial paper matures and the denominator of which shall
be 360. If the rate obtained by the Trust Company is quoted on a basis
other than a discount rate, the Trust Company shall convert the quoted
rate to its interest equivalent after consultation with the Corporation
as to the method of such conversion. If the Commercial Paper Dealer
does not quote a rate required to determine the Applicable "AA"
Composite Commercial Paper Rate, the Applicable "AA" Composite
Commercial Paper Rate shall be determined on the basis of the quotation
furnished by any Substitute Commercial Paper Dealer selected by the
Corporation to provide such rate.
(iv) "Auction" shall mean the periodic operation of the
procedures set forth in this paragraph 6.
(v) "Auction Date" shall mean the Business Day 2xt preceding a
Dividend Payment Date.
(vi) "Available Units" shall have the meaning specified in
paragraph 6(d)(i) below.
(vii) "Bid" shall have the meaning specified in paragraph 6(b)(i)
below.
(viii) "Bidder" shall have the meaning specified in paragraph
6(b)(i) below.
(ix) "Board of Directors" shall mean the Board of Directors of
the Corporation, or any duly authorized committee of the Board of
Directors acting on behalf thereof.
(x) "Broker-Dealer" shall mean any broker-dealer, or other
entity permitted by law to perform the functions required of a Broker-
Dealer in this paragraph 6, that has been selected by the Corporation
and has entered into a Broker-Dealer Agreement with the Trust Company
that remains effective.
(xi) "Broker-Dealer Agreement" shall mean an agreement between
the Trust Company and a Broker-Dealer pursuant to which such Broker-
Dealer agrees to follow the procedures specified in this paragraph 6.
(xii) "Commercial Paper Dealer" shall mean Shearson Lehman
Commercial Paper Incorporated.
(xiii) "Existing Holder," when used with respect to Units, shall
mean a Person who has signed a Master Purchaser's Letter and is listed
as the beneficial owner of such Units in the records of the Trust
Company.
(xiv) "FLEX DARTS" shall mean the 500,000 shares of the
Corporation's $100 par value preferred stock designated "Flexible Dutch
Auction Rate Transferable Securities $100 Par Value Preferred Stock,
Series A."
(xv) "Hold Order" shall have the meaning specified in paragraph
6(b)(i) below.
(xvi) "Master Purchaser's letter" shall mean a Master Purchaser's
Letter in which a Person agrees, among other things, to offer to
purchase, purchase, offer to sell and/or sell Units as set forth in this
paragraph 6.
(xvii) "Maximum Applicable Rate" on any Auction Date shall mean
the percentage of the Reference Rate in effect on such Auction Date,
determined as set forth below, based on the prevailing rating of FLEX
DARTS in effect at the close of business on the Business Day preceding
such Auction Date and the length of the next succeeding Designated
Dividend Period:
Prevailing Rating/Percentage
--------------------------------------------------
Designated AA/aa Below
Dividend Period or Above A/a BBB/baa BB/ba BB/ba
--------------- -------- --- ------- ----- -----
7 to 10 weeks 110% 120% 130% 200% 205%
11 to 13 weeks* 1l5% 125% 140% 200% 215%
26 weeks 120% 130% 150% 215% 225%
52 weeks 130% 150% 175% 225% 260%
For purposes of this definition, (x) the "prevailing rating" of FLEX
DARTS shall be (i) AA/aa or above if FLEX DARTS have ratings of AA- or
better by S&P and aa3 or better by Moody's Investors Service, Inc. or
its successor ("Moody's"), or the equivalent of both such ratings by
such agencies or a substitute rating agency(s) selected as provided
below, (ii) if not AA/aa or above, then A/a if FLEX DARTS have ratings
of A- or better by S&P and a3 or better by Moody's or the equivalent of
both such ratings by such agencies or a substitute rating agency(s)
selected as provided below, (iii) if not AA/aa or above or A/a, then
BBB/baa, if FLEX DARTS have rating's of BBB- or better by S&P and baa3
or better by Moody's or the equivalent of both such ratings by such
agencies or a substitute rating agency(s) selected as provided below,
(iv) if not AA/aa or above, A/a or BBB/baa, --hen BB/ba if FLEX DARTS
have ratings of BB- or better by S&P and ba3 or better by Moody's, or
the equivalent of both such ratings by such agencies or a substitute
rating agency(s) selected as provided below, and (v) if not AA/aa or
above, A/a, BBB/baa or BB/ba, then below BB/ba, and (y) the Designated
Dividend Period shall be determined as provided in paragraph 3(b)(i)
above without giving effect to subclause (B) thereof. The Corporation
shall take all reasonable action necessary to enable S&P and Moody's to
provide ratings for FLEX DARTS. If either S&P or Moody's shall not make
such a rating available, or neither S&P nor Moody's shall make such a
rating available, Salomon Brothers Inc and Shearson Lehman Brothers Inc.
or their successors shall select a nationally recognized securities
rating agency or two nationally recognized securities rating agencies to
act as substitute rating agency(s), as the case may be.
----------------
If the Company adjusts the Normal Designated Dividend Period to 14
weeks as a result of a change in the minimum Holding Period, then the
Maximum Applicable Rate will be determined in the same manner as
determined for a Designated Dividend Period of 13 weeks.
(xviii) "Minimum Applicable Rate," on any Auction Date, shall mean
59% of the Reference Rate in effect on such Auction Date.
(xix) "One-Year Treasury Rate," on any Auction Date, shall mean
the interest equivalent of (i) the rate for the most recent date set
forth in H.15(519) for such Auction Date under the caption "U.S.
Government Securities/Treasury Bills/Secondary Market/1-Year" or (ii) if
by the close of business on the Business Day immediately preceding such
Auction Date such H.15(519) is not yet published or is otherwise not
available to the Trust Company,, the arithmetic mean of the secondary
market bid rates of the reference dealers as of the close of business on
the Business Day immediately preceding such Auction Date quoted by such
reference dealers to the Trust Company for the issue of United States
Treasury bills with a remaining maturity closest to one year. For
purposes of this definition, the "interest equivalent" of a rate stated
on a discount basis (a "discount rate") shall be equal to the quotient
of (A) the discount rate divided by (B) the difference between 1.00 and
the discount rate; "H.15(519)," for any Auction Date, shall mean the
weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve
System on the Monday immediately preceding such Auction Date; and
"reference dealers" shall mean three primary United States Government
securities dealers in The City of New York. If the bid rates obtained
by the Trust Company are quoted on a basis other than a discount rate,
the Trust Company shall convert the quoted rates to their interest
equivalent after consultation with the Corporation as to the method of
such conversion.
(xx) "Order" shall have the meaning specified in paragraph
6(b)(i) below.
(xxi) "Outstanding" shall mean, as of any date, FLEX DARTS
theretofore issued by the Corporation except, without duplication, (A)
any FLEX DARTS theretofore canceled or delivered to the Trust Company
for cancellation, or redeemed by the Corporation or as to which a notice
of redemption shall have been given by the Corporation, (B) any FLEX
DARTS as to which the Corporation or any Affiliate thereof shall be an
Existing Holder and (C) any FLEX DARTS represented by any certificate in
lieu of which a new certificate has been executed and delivered by the
Corporation.
(xxii) "Person" shall mean and include an individual, a
partnership, a corporation, a trust, an unincorporated association, a
joint venture or other entity or a government or any agency or poli-
tical subdivision thereof.
(xxiii) "Potential Holder" shall mean any Person, including any
Existing Holder, (A) who shall have executed a Master Purchaser's Letter
and (B) who may be interested in acquiring Units (or, in the case of an
Existing Holder, additional Units).
(xxiv) "Reference Rate," on any Auction Date, shall mean (A) if
the next succeeding Designated Dividend Period is a period not exceeding
26 weeks, the Applicable "AA" Composite Commercial Paper Rate on such
Auction Date and (B) if such Designated Dividend Period is a period of
52 weeks, the One-Year Treasury Rate on such Auction Date. For purposes
of this definition, the Designated Dividend Period succeeding each
Auction Date shall be determined as provided in paragraph 3(b)(i) but
without giving effect to subclause (B) thereof.
(xxv) "Securities Depository" shall mean The Depository Trust
Company and its successors and assigns or any other securities
depository selected by the Corporation which agrees to follow the
procedures required to be followed by such securities depository in
connection with FLEX DARTS.
(xxvi) "Sell Order" shall have the meaning specified in paragraph
6(b)(i) below.
(xxvii) "Submission Deadline" shall mean 12:30 p.m., New York City
time, on any Auction Date or such other time on any Auction Date by
which Broker-Dealers are required to submit Orders to the Trust Company,
as specified by the Trust Company from time to time.
(xxviii) "Submitted Bid" shall have the meaning specified in
paragraph 6(d)(i) below.
(xxix) "Submitted Hold Order" shall have the meaning specified in
paragraph 6(d)(i) below.
(xxx) "Submitted Order" shall have the meaning specified in
paragraph 6(d)(i) below.
(xxxi) "Submitted Sell Order" shall have the meaning specified in
paragraph 6(d)(i) below.
(xxxii) "Substitute Commercial Paper Dealer" shall mean any
commercial paper dealer that is a leading dealer in the commercial paper
markets, provided that neither such dealer nor any of its affiliates is
a Commercial Paper Dealer.
(xxxiii) "Sufficient Clearing Bids" shall have the meaning specified
in paragraph 6(d)(i) below.
(xxxiv) "Trust Company" shall mean Manufacturers Hanover Trust
Company and its successors and assigns or any other bank, trust company
or other entity selected by the Corporation which agrees to follow the
Auction Procedures for the purposes of determining the Applicable Rate
for FLEX DARTS.
(xxxv) "Units" shall mean units consisting of 1,000 shares of FLEX
DARTS.
(xxxvi) "Winning Bid Rate" shall have the meaning specified in
paragraph 6(d)(i) below.
(b) Orders by Existing Holders and Potential Holders
(i) On or prior to each Auction Date:
(A) each Existing Holder may submit to a Broker-Dealer
information as to:
(1) the number of Outstanding Units, if any,
held by such Existing Holder which such Existing Holder desires to
continue to hold without regard to the Applicable Rate for the next
succeeding Dividend Period;
(2) the number of Outstanding Units, if any,
held by such Existing Holder which such Existing Holder desires to
continue to hold, provided that the Applicable Rate for the next
succeeding Dividend Period shall not be less than the rate :per annum
specified by such Existing Holder; and/or
(3) the number of Outstanding Units, if any,
held by such Existing Holder which such Existing Holder offers to sell
without regard to the Applicable Rate for the next succeeding Dividend
Period; and
(B) each Broker-Dealer, using a list of Potential
Holders that shall be maintained in good faith for the purpose of
conducting a competitive Auction shall contact Potential Holders,
including Persons that are not Existing Holders, on such list to
determine the number of Outstanding Units, if anv, which each such
Potential Holder offers to purchase, provided that the Applicable Rate
for the next succeeding Dividend Period shall not be less than the rate
per annum specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (A) or (B) of this paragraph 6(b)(i)
is hereinafter referred to as an "Order" and each Existing Holder and
each Potential Holder placing an Order is hereinafter referred to as a
"Bidder"; an Order containing the information referred to in clause
(A)(1) of this paragraph 6(b)(i) is hereinafter referred to as a "Hold
Order"; an Order containing the information referred to in clause (A)(2)
or (B) of this paragraph 6(b)(i) .s hereinafter referred to as a "Bid";
and an Order containing the information referred to in clause (A)(3) of
this paragraph 6(b)(i) is hereinafter referred to as a "Sell Order."
(ii) (A) A Bid by an Existing Holder shall constitute an
irrevocable offer to sell:
(1) the number of Outstanding Units specified
in such Bid if the Applicable Rate determined on such Auction Date shall
be less than the rate specified in such Bid; or
(2) such number or a lesser number of
Outstanding FLEX DARTS to be determined as set forth in paragraph
6(e)(i)(D) if the Applicable Rate determined on such Auction Date shall
be equal to the rate specified therein; or
(3) such number or lesser number of Outstanding Units to be
determined as set forth in paragraph 6(e)(ii)(C) if such specified rate
shall be higher than the Maximum Applicable Rate and Sufficient Clearing
Bids do not exist.
(B) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(1) the number of Outstanding Units specified
in such Sell Order; or
(2) such number or a lesser number of
Outstanding Units to be determined as set forth in paragraph 6(e)(ii)(C)
if Sufficient Clearing Bids do not exist.
(C) A Bid by a Potential Holder shall constitute an
irrevocable offer to purchase:
(1) the number of Outstanding Units specified
in such Bid if the Applicable Rate determined on such Auction Date shall
be higher than the rate specified therein; or
(2) such number or a lesser number of
Outstanding Units to be determined as set forth in paragraph 6(e)(i)(E)
if the Applicable Rate determined on such Auction Date shall be equal to
the rate specified therein.
(c) Submission of Orders by Broker-Dealers to Trust Company
-------------------------------------------------------
(i) Each Broker-Dealer shall submit in writing to the Trust
Company prior to the Submission Deadline on each Auction Date all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate number of Outstanding Units that are
the subject of such Order;
(C) to the extent that such Bidder is an Existing
Holder:
(1) the number of Outstanding Units, if any,
subject to any Hold Order placed by such Existing Holder;
(2) the number of Outstanding Units, if any,
subject to any Bid placed by such Existing Holder and the rate specified
in such Bid; and
(3) the number of Outstanding Units, if any,
subject to any Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder,
the rate specified in such Potential Holder's Bid.
(ii) If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Trust Company shall round
such rate up to the next highest one-thousandth (.001) of 1%.
(iii) If an Order or orders covering all of the Outstanding Units
held by an Existing Holder is not submitted to the Trust Company prior
to the Submission Deadline, the Trust Company shall deem a Hold Order to
have been submitted on behalf of such Existing Holder covering the
number of Outstanding Units held by such Existing Holder and not subject
to Orders submitted to the Trust Company.
(iv) If one or more Orders covering in the aggregate more than
the number of Outstanding Units held by an Existing Holder are submitted
to the Trust Company, such Orders shall be considered valid as follows
and in the following order of priority:
(A) any Hold Order submitted on behalf of such Existing
Holder shall be considered valid up to and including the number of
Outstanding Units held by such Existing Holder; provided that if more
than one Hold Order is submitted on behalf of such Existing Holder and
the number of Units subject to such Ho1d Orders exceeds the number of
Outstanding Units held by such Existing Holder, the number of Units
subject to such Hold Orders shall be reduced pro rata so that such Hold
Orders shall cover the number of Outstanding Units held by such Existing
Holder;
(B) (1) any Bid shall be considered valid up to and
including the excess of the number of Outstanding Units held by such
Existing Holder over the number of Units subject to Hold Orders referred
to in clause (A) of this paragraph 6(c)(iv);
(2) subject to clause (1) above, if more than
one Bid with the same rate is submitted on behalf of such Existing
Holder and the number of Outstanding Units subject to such Bids is
greater than such excess, the number of Outstanding Units subject to
such Bids shall be reduced pro rata so that such Bids shall cover the
number of Outstanding Units equal to such excess; and
(3) subject to clause (1) above, if more than
one Bid with different rates is submitted on behalf of such Existing
Holder, such Bids shall be considered valid in the ascending order of
their respective rates and in any such event the number, if any, of such
Outstanding Units subject to Bids not valid under this clause (B) shall
be treated as the subject of a Bid by a Potential Holder; and
(C) any Sell Order shall be considered ,valid up to and
including the excess of the number of Outstanding Units held by such
existing Holder over the number of Outstanding Units subject to Hold
Orders referred to in clause (A) of this paragraph 6(c)(iv) and Bids
referred to in clause (B) of this paragraph 6(c)(iv).
(v) If more than one Bid is submitted on behalf of any
Potential Holder, each Bid submitted shall be a separate Bid with the
rate and Units therein specified.
(vi) If any rate specified in any Bid is lower than the Minimum
Applicable Rate for the Dividend Period to which such Bid relates, such
Bid shall be deemed to be a Bid specifying a rate equal to such Minimum
Applicable Rate.
(vii) Orders by Existing Holders and Potential Holders must
specify the numbers of Units in whole Units. Any Order that specifies a
number of Units other than in whole Units will be invalid and will not
be considered a Submitted Order for purposes of an Auction.
(d) Determination of Sufficient Clearing Bids, Win Bid
--------------------------------------------------
Rate and Applicable Rate
- -------------------------
(i) Not earlier than the Submission Deadline on each Auction
Date, the Trust Company shall assemble all Orders submitted or deemed
submitted to it by the Broker Dealers (each such Order as submitted or
deemed submitted by a Broker Dealer being hereinafter referred to
individually as a "Submitted Hold Order," a "Submitted Bid" or a
"Submitted Sell Order," as the case may be, or as a "Submitted Order")
and shall determine:
(A) the excess of the total number of Outstanding Units
over the number of Outstanding Units that are the subject of Submitted
Hold Orders (such excess being hereinafter referred to as the "Available
Units");
(B) from the Submitted Orders, whether:
(1) the number of Outstanding Units that are
the subject of Submitted Bids by Potential Holders specifying one or
more rates equal to or lower than the Maximum Applicable Rate exceeds or
is equal to the sum of:
(2) [a] the number of Outstanding Units that
are the subject of Submitted Bids by Existing Holders specifying one or
more rates higher than the Maximum Applicable Rate and
[b] the number of Outstanding Units that
are subject to Submitted Sell Orders if such excess or such equality
exists (other than because the number of Outstanding Units in clauses
[a] and [b] above are each zero because all the Outstanding Units are
the subject of Submitted Hold Orders), such Submitted Bids in clause (1)
above being hereinafter referred to collectively as "Sufficient Clearing
Bids" and
(C) if Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid Rate"), which if:
(1) each Submitted Bid from Existing Holders
specifying the Winning Bid Rate and all other Submitted Bids from
Existing Holders specifying lower rates were rejected, thus entitling
such Existing Holders to continue to hold the Units that are the subject
of such Submitted Bids, and
(2) each Submitted Bid from Potential Holders
specifying the Winning Bid Rate and all other Submitted Bids from
Potential Holders specifying lower rates were accepted, thus entitling
the Potential Holders to purchase the Units that are the subject of such
Submitted Bids, would result in the number of shares subject to all
Submitted Bids specifying the Winning Bid Rate or a lower rate being at
least equal to the Available Units.
(ii) Promptly after the Trust Company has made the
determinations pursuant to paragraph 6(d)(i), the Trust Company shall
advise the Corporation of the Maximum Applicable Rate and the Minimum
Applicable Rate and, based on such determinations, the Applicable Rate
for the next succeeding Dividend Period shall be as follows:
(A) if Sufficient Clearing Bids exist, then the
Applicable Rate for the next succeeding Dividend Period shall be equal
to the Winning Bid Rate so determines;
(B) if sufficient Clearing Bids do not exist (other
than because all of the Outstanding Units are the subject of Submitted
Hold Orders), then the Applicable Rate for the next succeeding Dividend
Period shall be equal to (1) the Maximum Applicable Rate, if the next
succeeding Designated Dividend Period is a Normal Designated Dividend
Period, or (2) if the next succeeding Designated Dividend Period as
designated by the Corporation is not a Normal Designated Dividend
Period, the higher of (x) the Maximum Applicable Rate as determined for
such next succeeding Designated Dividend Period and (y) the Maximum
Applicable Rate as determined pursuant to paragraph 6(a)(Xiv) above,
assuming that such next succeeding Designated Dividend Period is a
Normal Designated Dividend Period; or
(C) if all of the Outstanding Units are the subject of
Submitted Hold Orders, then the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Minimum Applicable Rate.
(e) Acceptance and Rejection of Submitted .Bids and Submitted Sell
--------------------------------------------------------------
Orders and Allocation of Units
- ------------------------------
Based on the determinations made pursuant to paragraph 6(d)(i), the
Submitted Bids and Submitted Sell orders shall be accepted or rejected and
the Trust Company shall take such other action as set forth below:
(i) If Sufficient Clearing Bids have been made, subject to the
provisions of paragraphs 6(e)(iii) and 6(e)(iv), Submitted Bids and
Submitted Sell Orders shall be accepted or rejected in the following
order of priority and all other Submitted Bids shall be rejected:
(A) the Submitted Sell Orders of Existing Holders shall
be accepted and the Submitted Bid of each of the Existing Holders
specifying any rate that is higher than the Winning Bid Rate shall be
rejected, thus requiring each such Existing Holder to sell the
Outstanding Units that are the subject of such Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders
specifying any rate that is lower than the Winning Bid Rate shall be
accepted, thus entitling each such Existing Holder to continue to hold
the Outstanding Units that are the subject of such Submitted Bid;
(C) the Submitted Bid of each of the Potential Holders
specifying any rate that is lower than the Winning Bid Rate shall be
accepted, thus requiring the Potential Holder to purchase the Units hat
are the subject of such Submitted Bid;
(D) the Submitted Bid of each of the Existing Holders
specifying a rate that is equal to the Winning Bid Rate shall be
accepted, thus entitling each such Existing Holder to continue to hold
the Outstanding Units that are the subject of such Submitted Bid, unless
the number of Outstanding Units subject to all such Submitted Bids shall
be greater than the number of Outstanding Units ("remaining Units")
equal to the excess of the Available Units over the number of
Outstanding Units subject to Submitted Bids described in clauses (B) and
(C) of this paragraph 6(e)(i), in which event the Submitted Bids of each
such Existing Holder shall be rejected, and each such Existing Holder
shall be required to sell Outstanding Units, but only in an amount equal
to the difference between (1) the number of Outstanding Units then held
by such Existing Holder subject to such Submitted Bid and (2) the number
of Units obtained by multiplying (x) the number of remaining Units by
(y) a fraction, the numerator of which shall be the number of
Outstanding Units held by such Existing Holder subject to such Submitted
Bid and the denominator of which shall be the sum of the number of
Outstanding Units subject to such Submitted Bids made by all such
Existing Holders that specified a rate equal to the Winning Bid Rate;
and
(E) the Submitted Bid of each of the Potential Holders
specifying a rate that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number of Outstanding Units
obtained by multiplying (x) the difference between the Available Units
and the number of Outstanding Units subject to Submitted Bids described
in clauses (B), (C) and (D) of this paragraph 6(e)(i) by (y) a fraction,
the numerator of which shall be the number of Outstanding Units subject
to such Submitted Bid and the denominator of which shall be the sum of
the number of Outstanding Units subject to such Submitted Bids made by
all such Potential Holders that specified rates equal to the Winning Bid
Rate.
(ii) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding Units are subject to Submitted Hold
Orders), subject to the provisions of paragraphs 6(e)(iii) and 6(e)(iv),
Submitted Orders shall be accepted or rejected as follows in the
following order of priority and all other Submitted Bids shall be
rejected:
(A) the Submitted Bid of each Existing Holder
specifying any rate that is equal to or lower than the Maximum
Applicable Rate shall be accepted, thus entitling such Existing Holder
to continue to hold the Outstanding Units that are the object of such
Submitted Bid;
(B) the Submitted Bid of each Potential Holder
specifying any rate that is equal to or lower than the Maximum
Applicable Rate shall be accepted, thus requiring such Potential Holder
to purchase the Outstanding Units that are the subject of such Submitted
Bid; and
(C) the Submitted Bids of each Existing Holder
specifying any rate that is higher than the Maximum Applicable Rate
shall be rejected and the Submitted Sell Orders of each Existing Holder
shall be accepted, in both cases only in an amount equal to the
difference between (1) the number of (outstanding Units then held by
such Existing Holder subject to such Submitted Bid or Submitted Sell
Order and (2) the number of Units obtained by multiplying (x) the
difference between the Available Units and the aggregate number of
Outstanding Units subject to Submitted Bids described in clauses (A) and
(B) of this paragraph 6(e)(ii) by (y) a fraction, the numerator of which
shall be the number of Outstanding Units held by such Existing Holder
subject to such Submitted Bid or Submitted Sell Order and the
denominator of which shall be the number of Outstanding Units subject to
all such Submitted Bids and Submitted Sell Orders.
(iii) If, as a result of the procedures described in paragraph
6(e)(i) or 6(e)(ii), any Existing Holder would be entitled or required
to sell, or any Potential Holder would be entitled or required to
purchase, a fraction of a Unit on any Auction Date, the Trust Company
shall, in such manner as, in its sole discretion, it shall determine,
round up or down the number of Units to be purchased or sold by any
Existing Holder or Potential Holder on such Auction Date so that the
number of Outstanding Units purchased or sold by each Existing Holder or
Potential Holder on such Auction Date shall be whole Units.
(iv) If, as a result of the procedures described in paragraph
6(e)(i), any Potential Holder would be entitled to purchase less than a
whole Unit on any Auction Date, the Trust Company shall, in such manner
as, in its sole discretion, it shall determine, allocate Units for
purchase among Potential Holders so that only whole Units are purchased
on such Auction Date by any Potential Holder, even if such allocation
results in one or more of such Potential Holders not purchasing Units on
such Auction Date.
(v) Based on the results of each Auction, the Trust Company
shall determine the aggregate number of Outstanding Units to be
purchased and the aggregate number of Outstanding Units to be sold by
Potential Holders and. Existing Holders on whose behalf each Broker
Dealer submitted Bids or Sell Orders, and, with respect to each Broker
Dealer, to the extent that such aggregate number of Outstanding Units to
be purchased and such aggregate number of Outstanding Units to be sold
differ, determine to which other Broker Dealer(s) acting for one or more
purchasers such Broker Dealer shall deliver, or from which other Broker
Dealer(s) acting for one or more sellers such Broker Dealer shall
receive, as the case may be, Outstanding Units.
(f) Miscellaneous
-------------
The Board of Directors may interpret the provisions of this paragraph 6 to
resolve anv inconsistency or ambiguity, remedy any formal defect or make any
other change or modification which does not adversely affect the rights of
Existing Holders of Units. An Existing Holder (A) may sell, transfer or
otherwise dispose of Units only pursuant to a Bid or Sell Order in accordance
with the procedures described in this paragraph 6 or to or through a Broker
Dealer or to a Person that has delivered a signed copy of a Master
Purchaser's Letter to the Trust Company, provided that in the case of all
transfers other than pursuant to Auctions such Existing Holder, its Broker
Dealer or its Agent Member advises the Trust Company of such transfer and (B)
shall have the ownership of the Units held by it maintained in book entry
form by the Securities Depository in the account of its Agent Member, which
in turn will maintain records of such Existing Holder's beneficial ownership.
Neither the Corporation nor any Affiliate shall submit an Order, either
directly or indirectly, in any Auction. Except as otherwise provided by law,
all of the Outstanding Units shall be represented by a certificate registered
in the name of the nominee of the Securities Depository and no Person
acquiring Units shall be entitled to receive a certificate representing such
Units. If any entity acting as Trust Company should resign as such at any
time, the Corporation will use its best efforts to enter into an agreement(s)
with a successor Trust Company containing substantially the same terms and
conditions as the agreement with the Trust Company.
(g) Headings of Subdivisions
------------------------
The headings of the various subdivisions of this paragraph 6 are for
convenience of reference only and shall not affect the interpretation of any
of the provisions hereof.
7. Voting Rights. Holders of the Series A FLEX DARTS shall have no
voting rights, either general or special, except as expressly required by
applicable law and the Articles.
8. Sinking Fund. The Series 'FLEX DARTS shall not be entitled to the
benefits of a sinking fund.
9. Conversion. The Units shall not be convertible into shares of
stock of the Corporation of any other class, into any shares of $100 par
value Preferred Stock of the Corporation or any other series, or into any
other type of securities.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
executed in duplicate in its name and on its behalf by its duly authorized
officers and its corporate seal to be affixed hereto, this fourteenth day of
January, 1988.
PUGET SOUND POWER & LIGHT COMPANY
By R. R. Sonstelie
-------------------------------
R. R. Sonstelie
President
By W. E. Watson
--------------------------------
W. E. Watson
Secretary
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES FOR
THE FLEXIBLE DUTCH AUCTION RATE TRANSFERABLE SECURITIESSM
$100 PAR VALUE PREFERRED STOCK, SERIES B
-----------------------------------
Pursuant to Section 23A.08.130 of the Washington Business Corporation
Act, Puget Sound Power & Light Company (the "Corporation"), a Washington
corporation, hereby states that at a meeting of the Board of Directors of the
Corporation duly convened and held on January 14, 1988, the following
resolution was duly adopted:
RESOLVED, that pursuant to the authority expressly vested in it by the
Corporation's Restated Articles of Incorporation (the "Articles") and subject
to the preferences, limitations, relative rights and other terms and
provisions set forth in the Articles, the Board of Directors of the
Corporation hereby establishes an additional series of the Corporation's $100
par value Preferred Stock, sets forth the designation of the series, and
fixes and determines the relative rights and preferences thereof, including
the methods and procedures for determining the rate(s) of dividends, the
price, terms and conditions of redemption, and the amount payable upon shares
in the event of voluntary or involuntary liquidation, as follows:
1. Designation. The shares of such series shall be designated
"Flexible Dutch Auction Rate Transferable Securities $100 Par Value Preferred
Stock, Series B" (the "Series B FLEX DARTS") and the number of shares
constituting such series shall be 500,000. The Series B FLEX DARTS shall be
issued in units (the "Units"), with each Unit consisting of 1,000 shares of
Series B FLEX DARTS. The Series B FLEX DARTS may be purchased or transferred
only in whole Units and the Series 'B FLEX DARTS included in the Units may
not be separately purchased or transferred.
2. Definitions. Unless the context or use indicates another or
different meaning or intent, the following terms shall have the following
meanings, whether used in the singular or plural:
(a) "Additional Dividend Payment Date," during a Designated
Dividend Period of 26 or 52 weeks, means the thirteenth, twenty-sixth and
thirty-ninth Monday (provided that any such Monday is not otherwise a Normal
Dividend Payment Date), as applicable, after the first day of such Designated
Dividend Period; provided, however, that (i) if any such Monday or the
Tuesday following such Monday is not a Business Day, the "Additional Dividend
Payment Date" that would otherwise be such Monday shall be the first Business
Day after such Monday that is immediately followed by a Business Day or (ii)
if the Securities Depository shall make available to its participants and
members the amounts due as dividends on Units in immediately available funds
in The City of New York on the dates on which such dividends are payable (and
the Securities Depository shall have so advised the Trust Company) and if any
such Monday is not a Business Day, the "Additional Dividend Payment Date"
that would otherwise be such Monday shall be the first Business Day after
such Monday.
(b) "Applicable Rate" means the rate @)per annum at which
dividends are payable on the shares of the Series B FLEX DARTS for any
Dividend Period.
(c) "Auction" means each periodic operation of the Auction
Procedures.
(d) "Auction Date" means the first Business Day preceding the
first day of a Dividend Period.
(e) "Auction Procedures" means the procedures for conducting
Auctions set forth in paragraph 6 below.
(f) "Business Day" means a day on which the New York Stock
Exchange is open for trading and which is not a Saturday, Sunday or other day
on which banks in The City of New York are authorized by law to close.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Common Stock" means all shares now or hereafter issued of the
class of common stock, without par value, of the Corporation now or hereafter
authorized and any other shares into which such shares may hereafter be
changed from time to time.
(i) "Corporation" means Puget Sound Power & Light Company, a
Washington corporation.
(j) "Date of Original Issue" means the date on which the
Corporation originally issues Series B FLEX DARTS.
(k) "Designated Dividend Period" has the meaning set forth in
paragraph 3(b)(i) below.
(1) "Dividend Payment Date" has the meaning set forth in paragraph
3(b)(i) below.
(m) "Dividend Period" has the meaning set forth in paragraph
3(c)(i) below.
(n) "Holder" means the holder of Units as its name appears on the
Stock Books of the Corporation.
(o) "Initial Dividend Payment Date" has the meaning set forth in
paragraph 3(b)(i) below.
(p) "Initial Dividend Period" has the meaning set forth in
paragraph 3(c)(i) below.
(q) "Initial Dividend Rate" has the meaning set forth in paragraph
3(c)(i) below.
(r) "Minimum Holding Period" has the meaning set forth in
paragraph 3(b)(i) below.
(s) "Normal Designated Dividend Period" has the meaning set forth
in paragraph 3(b)(i) below.
(t) "Normal Dividend Payment Date" has the meaning set forth in
paragraph 3(b)(i) below.
(u) "Notice of Redemption" has the meaning set forth in paragraph
5(a) below.
(v) "Preferred Stock" means the $100 par value preferred stock and
the $25 par value preferred stock of the Corporation, as such preferred stock
may be issued from time to time.
(w) "Securities Depository" means The Depository Trust Company and
its successors and assigns or any other securities depository selected by the
Corporation which agrees to follow the procedures required to be followed
by such securities depository in connection with the Series B FLEX DARTS.
(x) "Series B FLEX DARTS" means the 500,000 shares Of Preferred
Stock, $100 par value per share, of the Corporation designated as its
"Flexible Dutch Auction Rate Transferable Securities $100 Par Value Preferred
Stock, Series B.
(y) "Stock Books" means the stock transfer books of the
Corporation maintained by the Trust Company.
(z) "Subsequent Dividend Period" has the meaning specified in
paragraph 3(c)(i) below.
(aa) "Trust Company" means Manufacturers Hanover Trust Company
unless and until another bank, trust company or other entity appointed by a
resolution of the Board of Directors of the Corporation, enters into an
agreement(s) with the Company to follow the Auction Procedures for the
purpose of determining the Applicable Rate )for the Series B FLEX DARTS.
(bb) "Units" means units of shares of Series B FLEX DARTS, with
each Unit consisting of 1,000 shares of Series B FLEX DARTS.
3. Dividends.
(a) The Holders shall be entitled to annual Preferential
dividends, in accordance with Article VI, Section 3 of the Articles, at the
Applicable Rate per annum, determined as set forth below, and no more,
payable on the respective dates set forth below.
(b) (i) Dividends on Series B FLEX DARTS, at the Applicable
Rate per annum, shall accrue from the Date of Original Issue and shall
be payable commencing on April 11, 1988, on each Monday that is the last
day of each successive Designated Dividend Period '@-hereafter (each
such date on which dividends could be payable but for the following
proviso being herein referred to as a "Normal Dividend Payment Date")
and, in addition, during any Designated Dividend Period of 26 or 52
weeks, on each Additional Dividend Payment Date; provided, however, that
if any Normal Dividend Payment Date, the Friday preceding such Normal
Dividend Payment Date or the Tuesday following such Normal Dividend
Payment Date is not a Business Day, then (A) dividends on Series B FLEX
DARTS that would - otherwise be payable on such Normal Dividend Payment
Date shall be payable on the first Business Day after such Normal
Dividend Payment Date that is immediately followed by a Business Day and
is preceded by a Business Day that is the preceding Friday or a day
after such Friday or (B) if the Securities Depository shall make
available to its participants and members the amounts due as dividends
on Series B FLEX DARTS, in immediately available funds in The City of
New York on the dates on which such dividends are payable (and the
Securities Depository shall have so advised the Trust Company), then
dividends on Series a FLEX DARTS that would otherwise be payable on such
Normal Dividend Payment Date shall be payable on the first Business Day
on or after such Normal Dividend Payment Date that is preceded by a
Business Day that is the preceding Friday or a day after such Friday
(each such date of payment of dividends, other than an additional
Dividend Payment Date, being herein referred to as a "Dividend Payment
Date" and the first Dividend Payment Date being herein referred to as
the "Initial Dividend Payment Date"). Although any particular Dividend
Payment Date may not occur on the originally scheduled Normal Dividend
Payment Date because of the above-mentioned proviso, the next succeeding
Dividend Payment Date shall, subject to such proviso, be the Monday that
is the last day of the next succeeding Designated Dividend Period.
"Designated Dividend Period" shall mean a period of 7, 13, 26 or 52
weeks (or, in the case of a Designated Dividend Period immediately
following a Designated Dividend Period of 13 weeks or longer, 8, 9, 10,
11 or 12 weeks), as designated or deemed to be designated by the
Corporation as provided in the following sentence, commencing on the
Initial Dividend Payment Date or a Normal Dividend Payment Date, as the
case may be (a Designated Dividend Period of seven weeks, as may be
adjusted pursuant to the third succeeding sentence, being herein
referred to as a "Normal Designated Dividend Period"). Prior to 12:30
p.m., New York City time, on the third Business Day prior to the related
Auction Date, the Corporation may, by written notice to the Trust
Company and each Holder at such Holder's address as the same appears on
the Stock Books of the Corporation, designate the length of the next
succeeding Designated Dividend Period; provided, however, that (A) if
any such notice shall not have been received by the Trust Company prior
to 12:30 -p.m., New York City time, on the third Business Day prior to
the related Auction Date or (B) in the event that Sufficient Clearing
Bids (as defined in paragraph 6(d)(i) below) do not result from the
related Auction, the Corporation shall be deemed to have designated such
next Designated Dividend Period as a Normal Designated Dividend Period.
Any designation of a Designated Dividend Period by the Corporation
pursuant to the preceding sentence shall be irrevocable.
Notwithstanding the foregoing, (I) in the event of a change in law
lengthening the minimum holding period (currently found in Section
246(c) of the Code) (the "Minimum Holding Period") required for
taxpayers to be entitled to the dividends received deduction on
preferred stock held by nonaffiliated corporations (currently found in
Section 243(a) of the Code), the Board of Directors of the Corporation
or a duly designated committee thereof shall adjust the number of weeks
in each Normal Designated Dividend Period commencing after the date of
such change in law to equal or exceed the then-current Minimum Holding
Period; provided, that the Normal Designated Dividend Period, as
adjusted, shall (x) consist of a whole number of weeks, (y) not exceed
by more than nine days the length of such then-current Minimum Holding
Period, and (z) in no event exceed 14 weeks, and (II) the Corporation
shall not designate any Designated Dividend Period to be shorter than a
Normal Designated Dividend Period. Upon any such change in the number
of weeks in a Normal Designated Dividend Period as a result of a change
in law, the Corporation shall mail notice of such change by first-class
mail, postage prepaid, to the Trust Company and to each Holder at such
Holder's address as the same appears on the Stock Books of the
Corporation.
(ii) Each dividend shall be paid to the Holder of Units as
its name appears on the Stock Books of the Corporation at the opening of
business on the Business Day next preceding the Dividend Payment Date or
Additional Dividend Payment Date therefor. Dividends in arrears that
were payable on any past Dividend Payment Date or Additional Dividend
Payment Date may be declared and paid at any time, without reference to
any regular Dividend Payment Date or Additional Dividend Payment Date.
The persons entitled to such dividend payments shall be the Holders
whose names appear on the Stock Books of the Corporation on a date, not
exceeding 15 days preceding the payment date thereof, as may be fixed by
the Board of Directors of the Corporation or a duly designated committee
thereof.
(c) (i) The dividend rate (the "Initial Dividend Rate") on
Series B FLEX DARTS during the period from and after the Date of
Original Issue to the Initial Dividend Payment Date (the "Initial
Dividend Period") shall be 6.10% per annum. Commencing on the Initial
Dividend Payment Date, the dividend rate on Series B FLEX DARTS for each
subsequent dividend period (hereinafter referred to as a "Subsequent
Dividend Period," and the Initial Dividend Period or any Subsequent
Dividend Period being hereinafter referred to as a "Dividend Period"),
which Subsequent Dividend Period shall commence on the last day of the
preceding Dividend Period and shall end on the next Dividend Payment
Date, shall be equal to the rate per annum that results from
implementation of the Auction Procedures.
(ii) The amount of dividends per share of the Series B FLEX
DARTS payable for any Dividend Period or part of thereof (including,
during a Designated Dividend Period of 6 or 52 weeks, each period
commencing an a Dividend Payment Date or Additional Dividend Payment
Date and ending on the immediately succeeding Additional Dividend
Payment Date or Dividend Payment Date, as the case may be) shall be
computed by multiplying the Applicable Rate for such Dividend Period by
a fraction, the numerator of which shall be the number of days in the
period commencing on the immediately preceding Dividend Payment Date or
Additional Dividend Payment Date, as the case may be, and ending on the
applicable dividend Payment Date or Additional Dividend Payment, as the
case may be (calculated by counting the first day thereof but excluding
the last day thereof), and the denominator of which shall be 360 and
multiplying the rate so obtained by $100. The amount of dividends per
Unit of Series B FLEX DARTS payable for any Dividend Period or part
thereof shall be computed by multiplying the amount of dividends per
share of Series B FLEX DARTS determined as aforesaid by 1,000.
(d) Holders of Units shall not be entitled to any dividends,
whether payable in cash, property or stock, in \ excess of full
cumulative dividends, as herein provided, on the Units. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
dividend payment on Units that may be in arrears.
4. Liquidation Preferences. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of the Series B FLEX DARTS shall be entitled to
receive, for each share thereof, the sum of $100, together with accrued
dividends, before any distribution of the assets shall be made to the holders
of the Preference Stock, the Common Stock or stock of any other class ranking
junior as to assets in liquidation to the Series B FLEX DARTS but the holders
of the Series B FLEX DARTS shall be entitled to no further participation in
such distribution.
5. Redemption. The Series B FLEX DARTS shall be redeemable by the
Corporation only in whole Units as provided below:
(a) At its option, the Corporation, by resolution of its Board of
Directors or a duly designated committee thereof may, out of funds legally
available therefor, redeem the Units as a whole or from time to time in part
(but in whole Units only) on any Dividend Payment Date at $100 per share
($100,000 per Unit), plus an amount equal to accrued and unpaid dividends on
such shares (whether or not earned or declared) to the redemption date. In
addition to the requirements of Article VI, Section 5 of the Articles,
whenever Units are to be redeemed, at least 30 and not more than 45 days
prior to the date fixed for redemption the Corporation shall mail a notice
("Notice of Redemption") by first class mail, postage prepaid, to each Holder
of record of Units to be redeemed and to the Trust Company. A Notice of
Redemption shall be addressed to the Holder at the address of the Holder
appearing on the Stock Books of the Corporation maintained by the Trust
Company. The Notice of Redemption shall also be published in The Wall Street
Journal at least 15 days and not more than 45 days prior to the date fixed
for redemption. The Notice of Redemption shall include a statement of (i)
the redemption date, (ii) the redemption price, (iii) the number of Series B
FLEX DARTS and number of Units to be redeemed, (iv) the place or places where
Units are to be surrendered for payment of the redemption price, (v) that
dividends on the shares to be redeemed will cease on such redemption date,
and (vi) the CUSIP number for the Series B .FLEX DARTS. No defect in the
Notice of Redemption or in the mailing or publication thereof shall affect
the validity of the redemption proceedings, except as required by law.
(b) If Notice of Redemption shall have been given as aforesaid and
the Corporation shall have deposited a sum sufficient to redeem the Series B
FLEX DARTS as to which Notice of Redemption has been given with the Trust
Company, with irrevocable instructions and authority to pay the redemption
price to the Holders thereof, or if no such deposit is made, then upon such
date fixed for redemption (unless the Corporation shall default in making
payment of the redemption price), all rights of the Holders thereof as
shareholders of the Corporation by reason of the ownership of such shares
(except their right to receive the redemption price thereof, but without
interest), shall terminate, and such shares shall no longer be deemed
outstanding. The Corporation shall be entitled to receive, from time to
time, from the Trust Company the interest, if any, on such monies deposited
with it and the Holders of any shares so redeemed shall have no claim to any
such interest.
6. Auction Procedures.
------------------
(a) Certain Definitions
-------------------
Capitalized terms not defined in this paragraph 6 shall have the
respective meanings specified in paragraphs I through 5 above. As used in
this paragraph 6, the following terms shall have the following meanings,
unless the context otherwise requires:
(i) "Affiliate" shall mean any person known to The Trust
Company to be controlled by, in control of, or under common control with
the Corporation.
(ii) "Agent Member" shall mean the member of the Securities
Depository that will act on behalf of a Bidder and is identified as such
in such Bidder's Master Purchaser's Letter.
(iii) "Applicable 'AA' Composite Commercial Paper Rate," on any
Auction Date, shall mean (i) if the next succeeding Designated Dividend
Period does not exceed nine weeks, (A) the interest equivalent of the 60-
day rate on commercial paper placed on behalf of issuers whose corporate
bonds are rated "AA" by Standard & Poor's Corporation or its successor
("S&P") or the equivalent of such rating by S&P or another rating
agency, as such 60-day rate is made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the Business Day
immediately preceding such date, or (B) in the event that the Federal
Reserve Bank of New York does not make available such a rate, then the
interest equivalent of the 60-day rate on commercial paper placed on
behalf of such issuers, as quoted on a discount basis or otherwise by
Commercial Paper Dealer to the Trust Company for the close of business
on the Business Day immediately preceding such date, (ii) if the next
succeeding Designated Dividend Period is a period of 10, 11 or 12 weeks,
the arithmetic average of the interest equivalent of the 60-day and 90-
day rates on such commercial paper as so determined, (iii) if the next
succeeding Designated Dividend Period is a period of 13 weeks, or 14
weeks as a result of a change in the Minimum Holding Period, the
interest equivalent of the 90-day rate on such commercial paper as so
determined, or (iv) if the next succeeding Designated Dividend Period is
a period of 26 weeks, the interest equivalent of the 180-day rate on
such commercial paper as so determined. For purposes of this
definition, the "interest equivalent" of a rate stated on a discount
basis (a "discount rate") for commercial paper of a given maturity shall
be equal to the quotient of (A) the discount rate divided by (B) the
difference between (x) 1.00 and (y) a fraction, the numerator of which
shall be the product of the discount rate times the number of days in
which such commercial paper matures and the denominator of which shall
be 360. If the rate obtained by the Trust Company is quoted on a basis
other than a discount rate, the Trust Company shall convert the quoted
rate to its interest equivalent after consultation with the Corporation
as to the method of such conversion. If the Commercial Paper Dealer
does not quote a rate required to determine the Applicable "AA"
Composite Commercial Paper Rate, the Applicable "AA" Composite
Commercial Paper Rate shall be determined on the basis of the quotation
furnished by any Substitute Commercial Paper Dealer selected by the
Corporation to provide such rate
(iv) "Auction" shall mean the periodic operation of the
procedures set forth in this paragraph 6.
(v) "Auction Date" shall mean the Business Day next preceding a
Dividend Payment Date.
(vi) "Available Units" shall have the meaning specified in
paragraph 6(d)(i) below.
(vii) "Bid" shall have the meaning specified in paragraph 6(b)(i)
below.
(viii) "Bidder" shall have the meaning specified in paragraph
6(b)(i) below.
(ix) "Board of Directors" shall mean the Board of Directors of
the Corporation, or any duly authorized committee of the Board of
Directors acting on behalf thereof.
(x) "Broker-Dealer" shall mean any broker-dealer, or Other
entity permitted by law to perform the functions required of a Broker-
Dealer in this paragraph 6, that has been selected by the Corporation
and has entered into a Broker-Dealer Agreement with the Trust Company
that remains effective.
(xi) "Broker-Dealer Agreement" shall. mean an agreement between
the Trust Company and a Broker-Dealer pursuant to which such Broker-
Dealer agrees to follow the procedures specified in this paragraph 6.
(xii) "Commercial Paper Dealer" shall mean Shearson Lehman
Commercial Paper Incorporated.
(xiii) "Existing Holder," when used with respect to Units, shall
mean a Person who has signed a Master Purchaser's Letter and is listed
as the beneficial owner of such Units in the records of the Trust
Company.
(xiv) "FLEX DARTS" shall mean the 500,000 shares of the
Corporation's $100 par value preferred stock designated "Flexible Dutch
Auction Rate Transferable Securities $100 Par Value Preferred Stock,
Series B."
(xv) "Hold Order" shall have the meaning specified in paragraph
6(b)(i) below.
(xvi) "Master Purchaser's Letter" shall mean a Master Purchaser's
Letter in which a Person agrees, among other things, to offer to
purchase, purchase, offer to sell and/or sell Units as set forth in this
paragraph 6.
(xvii) "Maximum Applicable Rate" on any Auction Date shall mean
the percentage of the Reference Rate in effect on such Auction Date,
determined as set forth below, based on the prevailing rating of FLEX
DARTS in effect at the close of business on the Business Day preceding
such Auction Date and the length of the next succeeding Designated
Dividend Period:
Prevailing Rating/Percentage
------------------------------------------
Designated AA/aa Below
Dividend Period or Above A/a BBB/baa BB/ba BB/ba
7 to 10 weeks 110% 120% 130% 200% 205%
11- to 13 weeks* 115% 125% 140% 200% 215%
26 weeks 120% 130% 150% 215% 225%
52 weeks 130% 150% 175% 225% 260%
For purposes of this definition, (x) the "prevailing rating" of
FLEX DARTS shall be (i) AA/aa or above if FLEX DARTS have ratings of A.A-
or better by S&P and aa3 or better by Moody's Investors Service, Inc. or
its successor ("Moody's"), or the equivalent of both such ratings by
such agencies or a substitute rating agency(s) selected as provided
below, (ii) if not AA/aa or above, then A/a if FLEX DARTS have ratings
of A- or better by S&P and a3 or better by Moody's or the equivalent of
both such ratings by such agencies or a substitute rating agency(s)
selected as provided below, (iii) if not AA/aa or above or A/a, then
BBB/baa, if FLEX DARTS have ratings of BBB- or better by S&P and baa3 or
better by Moody's or the equivalent of both such ratings by such
agencies or a substitute rating agency(s) selected as provided below,
(iv) if not AA/aa or above, A/a or BBB/baa, then BB/ba FLEX DARTS have
ratings of BB- or better by S&P and ba3 or better Moody's, or the
equivalent of both such ratings by such agencies or a substitute rating
agency(s) selected as provided below, and (v) if not AA/aa or above,
A/a, BBB/baa or BB/ba, then below BB/ba, and (y) the Designated Dividend
Period shall be determined as provided in paragraph 3(b)(i) above
without giving effect to subclause (B) thereof. The Corporation shall
take all reasonable action necessary to enable S&P and Moody's to
provide ratings for FLEX DARTS. If either S&P or Moody's shall not make
such a rating available, or neither S&P nor Moody's shall make such a
rating available, Salomon Brothers Inc and Shearson Lehman Brothers Inc.
or their successors shall select a nationally recognized securities
rating agency or two nationally recognized securities rating agencies to
act as substitute rating agency(s), as the case may be.
(xviii) "Minimum Applicable Rate," on any Auction Date, shall mean
59% of the Reference Rate in effect on such Auction Date.
(xix) "One-Year Treasury Rate," on any Auction Date, the interest
equivalent of (i) the rate for the most recent date set forth in
H.15(519) for such Auction Date under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market/1-Year" or (ii) if by the
close of business on the Business Day immediately preceding such
Auction Date such H.15(519) is not yet published or is otherwise not
---------------
* If the Company adjusts the Normal Designated Dividend Period to 14
weeks as a result of a change in the Minimum Holding Period, then the
Maximum Applicable Rate will be determined in the same manner as
determined for a Designated Dividend Period of 13 weeks.
available to the Trust Company, the arithmetic mean of the secondary
market bid rates of the reference dealers as of the close of business on
the Business Day immediately preceding such Auction Date quoted by such
reference dealers to the Trust Company for the issue of United States
Treasury bills with a remaining maturity closest to one year. For
purposes of this definition, the "interest equivalent" of a rate stated
on a discount basis (a "discount rate") shall be equal to the quotient
of (A) the discount rate divided by (B) the difference between 1.00 and
the discount rate; "H.15(5l9), for any Auction Date, shall mean the
weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve
System on the Monday immediately preceding such Auction Date; and
"reference dealers" shall mean three primary United States Government
securities dealers in The City of New York. If the bid rates obtained
by the Trust Company are quoted on a basis other than a discount rate,
the Trust Company shall convert the quoted rates to their interest
equivalent after consultation with the Corporation as to the method of
such conversion.
(x) "order" shall have the meaning specified in paragraph
6(b)(i) below.
(xxi) "Outstanding" shall mean, as of any date, FLEX DARTS
theretofore issued by the Corporation except, without duplication, (A)
any FLEX DARTS theretofore cancelled or delivered to the Trust Company -
for cancellation, or redeemed by the Corporation or as to which a notice
of redemption shall have been given by the Corporation, (B) any FLEX
DARTS as to which the Corporation or any Affiliate thereof shall be an
Existing Holder and (C) any FLEX DARTS represented by any certificate in
lieu of which a new certificate has been executed and delivered by the
Corporation.
(xxii) "Person" shall mean and include an individual, a
partnership, a corporation, a trust, an unincorporated association, a
joint venture or other entity or a government or any agency or political
subdivision thereof.
(xxiii) "Potential Holder" shall mean any Person, including any
Existing Holder, (A) who shall have executed a Master Purchaser's Letter
and (B) who may be interested in acquiring Units (or, in the case of an
Existing Holder, additional Units).
(xxiv) "Reference Rate," on any Auction Date, shall mean (A) if
the next succeeding Designated Dividend Period is a period not exceeding
26 weeks, the Applicable "AA" Composite Commercial Paper Rate on such
Auction Date and (B) if such Designated Dividend Period is a period of
52 weeks, the One-Year Treasury Rate on such Auction Date. For purposes
of this definition, the Designated Dividend Period succeeding each
Auction Date shall be determined as provided in paragraph 3(b)(i) but
without giving effect to subclause (B) thereof.
(xxv) "Securities Depository" shall mean The Depository Trust
Company and its successors and assigns or any other securities
depository selected by the Corporation which agrees to follow the
procedures required to be followed by such securities depository in
connection with FLEX DARTS.
(xxvi) "Sell Order" shall have the meaning specified in paragraph
6(b)(i) below.
(xxvii) "Submission Deadline" shall mean 12:30 p.m., New York City
time, on any auction Date or such other time on any Auction Date by
which Broker-Dealers are required to submit Orders to the Trust Company,
as specified by the Trust Company from time to time.
(xxviii) "Submitted Bid" shall have the meaning specified in
paragraph 6(d)(i) below.
(xxix) "Submitted Hold Order" shall have the meaning specified in
paragraph 6(d)(i) below.
(xxx) "Submitted Order" shall have the meaning specified in
paragraph 6(d)(i) below.
(xxxi) "Submitted Sell Order" shall have the meaning specified in
paragraph 6(d)(i) below.
(xxxii) "Substitute Commercial Paper Dealer" shall mean any
commercial paper dealer that is a leading dealer in the commercial paper
markets, provided that neither such dealer nor any of its affiliates is
a Commercial Paper Dealer.
(xxxiii) "Sufficient Clearing Bids" shall have the meaning specified
in paragraph 6(d)(i) below.
(xxxiv) "Trust Company" shall mean Manufacturers Hanover Trust
Company and its successors and assigns or any other bank, trust company
or other entity selected by the Corporation which agrees to follow the
Auction Procedures for the purposes of determining the Applicable Rate
for FLEX DARTS.
(xxxv) "Units" shall mean units consisting of 1,000 shares of FLEX
DARTS.
(xxxvi) "Winning Bid Rate" shall have the meaning specified in
paragraph 6(d)(i) below.
(b) Orders by Existing Holders and Potential Holders
(i) On or prior to each Auction Date:
(A) each Existing Holder may submit to a Broker-Dealer
information as to:
(1) the number of Outstanding Units, if any,
held by such Existing Holder which such Existing Holder desires to
continue to hold without regard to the Applicable Rate for the next
succeeding Dividend Period;
(2) the number of (outstanding Units if any, held
by such Existing Holder which such existing Holder desires to continue
to hold, provided that such Applicable Rate for the next succeeding
Dividend Period shall not be less than the rate per annum specified by
such Existing Holder; and/or
(3) the number of Outstanding Units, if any, held
by such Existing Holder which such Existing Holder offers to sell
without regard to the Applicable Rate for the next succeeding Dividend
Period; and
(B) each Broker-Dealer, using a list of Potential Holders
that shall be maintained in good faith for the purpose of conducting a
competitive Auction shall contact Potential Holders, including Persons
that are not Existing Holders, on such list to determine the number of
Outstanding Units, if any which each such Potential Holder offers to
purchase, provided that the Applicable Rate for the next succeeding
Dividend Period shall not be less than the rate per annum specified by
such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (A) or (B) of this paragraph 6(b)(i)
is hereinafter referred to as an "Order" and each Existing Holder and
each Potential Holder placing an Order is hereinafter referred to as a
"Bidder"; an Order containing the information referred to in clause
(A)(1) of this paragraph 6(b)(i) is hereinafter referred to as a "Hold
Order"; an Order containing the information referred to in clause (A)(2)
or (B) of this paragraph 6(b)(i) is hereinafter referred to as a "Bid";
and an Order containing the information referred to in clause (A)(3) of
this paragraph 6(b)(i) is hereinafter referred to as a "Sell Order."
(ii) (A) A Bid by an Existing Holder shall constitute an
irrevocable offer to sell:
(1) the number of Outstanding Units specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
less than the rate specified in such Bid; or
(2) such number or a lesser number of Outstanding
FLEX DARTS to be determined as set forth in paragraph 6(e)(i)(D) if the
Applicable Rate determined on such Auction Date shall be equal to the
rate specified therein; or
(3) such number or a lesser number of Outstanding
Units to be determined as set forth in paragraph 6(e)(ii)(C) if such
specified rate shall be higher than the Maximum Applicable Rate and
Sufficient Clearing Bids do not exist.
(B) A Sell Order by an Existing Holder shall constitute
an irrevocable offer to sell:
(1) the number of Outstanding Units specified in
such Sell Order; or
(2) such number or a lesser number of Outstanding
Units to be determined as set forth in paragraph 6(e)(ii)(C) if
Sufficient Clearing Bids do not exist.
(C) A Bid by a Potential Holder shall constitute an
irrevocable offer to purchase:
(1) the number of Outstanding Units specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
higher than the rate specified therein; or
(2) such number or a lesser number of Outstanding
Units to be determined as set forth in paragraph 6(e)(i)(E) if the
Applicable Rate determined on such Auction Date shall be equal to the
rate specified therein.
(c) Submission of Orders by Broker-Dealers to Trust Company
-------------------------------------------------------
(i) Each Broker-Dealer shall submit in writing to the Trust
Company prior to the Submission Deadline on each Auction Date all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(A) the name of the Bidder placing such order
(B) the aggregate number of Outstanding Units that are
the subject of such Order;
(C) "to the extent that such Bidder is an Existing
Holder:
(1) the number of Outstanding Units, if any,
subject to any Hold Order placed by such Existing Holder;
(2 ) the number of Outstanding Units, if any,
subject to any Bid placed by such Existing Holder and the rate specified
in such Bid; and
(3) the number of Outstanding Units, if any,
subject to any Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder, the
rate specified in such Potential Holder's Bid.
(ii) If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Trust Company shall round
such rate up to the next highest one-thousandth (.001) of 1%.
(iii) If an order or Orders covering all of the Outstanding Units
held by an Existing Holder is not submitted to the Trust Company prior
to the Submission Deadline, the Trust Company shall deem a Hold Order to
have been submitted on behalf of such Existing Holder covering the
number of Outstanding Units held by such Existing Holder and not subject
to Orders submitted to the Trust Company
(iv) If one or more Orders covering in the aggregate more than
the number of Outstanding Units held by an Existing Holder are submitted
to the Trust Company, such Orders shall be considered valid as follows
and in the following order of priority:
(A) any Hold Order submitted on behalf of such Existing
Holder shall be considered valid up to and including the number of
Outstanding Units held by such Existing Holder; provided that if more
than one Hold Order is submitted on behalf of such Existing Holder and
the number of Units subject to such Hold Orders exceeds the number of
Outstanding Units held by such Existing Holder, the number of Units
subject to such Hold Orders shall be reduced pro rata so that such Hold
Orders shall cover the number of Outstanding Units held by such Existing
Holder;
(B) (1) any Bid shall be considered valid up to and
including the excess of the number of Outstanding Units held by such
Existing Holder over the number of Units subject to Hold Orders referred
to in clause (A) of this paragraph 6(c)(iv)
(2) subject to clause (1) above, if more than one
Bid with the same rate is submitted on behalf of such existing Holder
and the number of Outstanding Units subject to such Bids is greater than
such excess, the number of Outstanding Unit subject to such Bids shall
be reduced pro rata so that such Bids shall cover the number of
Outstanding Units equal to such excess; and
(3) subject to clause (1) above, if more than one
Bid with different rates is submitted on behalf of such Existing Holder,
such Bids shall be considered valid in the ascending order of their
respective rates and in any such event the number, if any, of such
Outstanding Units subject to Bids not valid under this clause (B) shall
be treated as the subject of a Bid by a Potential Holder; and
(C) any Sell Order shall be considered valid up to and
including the excess of the number of Outstanding Units held by such
Existing Holder over the number of Outstanding Units subject to Hold
Orders referred to in clause (A) of this paragraph 6(c)(iv) and Bids
referred to in clause (B) of this paragraph 6(c)(iv).
(v) If more than one Bid is submitted on behalf of any
Potential Holder, each Bid submitted shall be a separate Bid with the
rate and Units therein specified.
(vi) If any rate specified in any Bid is lower than the Minimum
Applicable Rate for the Dividend Period to which such Bid relates, such
Bid shall be determined to be a Bid specifying a rate equal to such
Minimum Applicable Rate.
(vii) Orders by Existing Holders and Potential Holders must
specify the numbers of Units in whole Units. Any Order that specifies a
number of Units other than in whole Units will be invalid and will not
be considered a Submitted Order for purposes of an Auction.
(d) Determination of Sufficient Clearing Bids, Winning Bid Rate and
---------------------------------------------------------------
Applicable Rate
- ---------------
(i) Not earlier than the Submission Deadline on each Auction
Date, the Trust Company shall assemble all Orders submitted or deemed
submitted to it by the Broker-Dealers (each such Order as submitted or
deemed submitted by a Broker-Dealer being hereinafter referred to
individually as a "Submitted Hold Order," a "Submitted Bid" or a
"Submitted Sell Order," as the case may be, or as a "Submitted Order")
and shall determine:
(A) The excess of the total number of Outstanding Units
over the number of Outstanding Units that are the subject of Submitted
Hold Orders (such excess being hereinafter referred to as the "Available
Units");
(B) from the Submitted Orders, whether:
(1) the number of Outstanding Units that are the
subject of Submitted Bids by Potential Holders specifying one or more
rates equal to or lower than the Maximum Applicable Rate exceeds or is
equal to the sum of:
(2) [a] the number of Outstanding Units that are
the subject of Submitted Bids by Existing Holders specifying one or more
rates higher than the Maximum Applicable Rate and
[b] the number of Outstanding Units that are
subject -to Submitted Sell Orders if such excess or such equality exists
(other than because the number of Outstanding Units in clauses [a] and
[b] above are each zero because all the Outstanding Units are the
subject of Submitted Hold Orders), such Submitted Bids in clause (1)
above being hereinafter referred to collectively as "Sufficient Clearing
Bids" and
(C) Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid Rate"), which if:
(1) each Submitted Bid from Existing Holders
specifying the Winning Bid Rate and all other Submitted Bids from
Existing Holders specifying lower rates were rejected, thus entitling
such Existing Holders to continue to hold the Units that are the
subject of such Submitted Bids, and
(2) each Submitted Bid from Potential Holders
specifying the Winning Bid Rate and all other Submitted Bids from
Potential Holders specifying lower rates were accepted, thus entitling
the Potential Holders to purchase the Units that are the subject of such
Submitted Bids, would result in the number of shares subject to all
Submitted Bids specifying the Winning Bid Rate or a lower rate being at
least equal to the Available Units.
(ii) Promptly after the Trust Company has made the
determinations pursuant to paragraph 6(d)(i), the Trust Company shall
advise the Corporation of the Maximum Applicable Rate and the Minimum
Applicable Rate and, based on such determinations, the Applicable Rate
for the next succeeding Dividend Period shall be as follows:
(A) if Sufficient Clearing Bids exist, then the
Applicable Rate for the next succeeding Dividend Period shall be equal
to the Winning Bid Rate so determined:
(B) if Sufficient clearing Bids do not exist (other than
because all of the Outstanding Units are the subject of Submitted Hold
Orders), then the Applicable Rate for the next succeeding Dividend
Period shall be equal to (1) the Maximum Applicable Rate, if the next
succeeding Designated Dividend Period is a Normal Designated Dividend
Period, or (2) if the next succeeding Designated Dividend Period as
designated by the Corporation is not a Normal Designated Dividend
Period, the higher of (x) the Maximum Applicable Rate as determined for
such next succeeding Designated Dividend Period and (y) the Maximum
Applicable Rate as determined pursuant to paragraph 6(a)(xiv) above,
assuming that such next succeeding Designated Dividend Period is a
Normal Designated Dividend Period; or
(C) if all of the Outstanding Units are the subject of
Submitted Hold Orders, then the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Minimum Applicable Rate.
(e) Acceptance and Rejection of Submitted Bids and Submitted Sell
--------------------------------------------------------------
Orders and Allocation of Units
- ------------------------------
Based on the determinations made pursuant to paragraph 6(d)(i), the
Submitted Bids and Submitted Sell Orders shall be accepted or rejected and
the Trust Company shall take such other action as set forth below;
(i) If Sufficient Clearing Bids have been made, subject to the
provisions of paragraphs 6(e)(iii) and 6(e)(iv), Submitted Bids and
Submitted Sell Orders shall be accepted or rejected in the following
order of priority and all other Submitted Bids shall be rejected:
(A) the Submitted Sell Orders of Existing Holders shall
be accepted and the Submitted Bid of each of the Existing Holders
specifying any rate that is higher than the Winning Bid Rate shall be
rejected, thus requiring each such Existing Holder to sell the
Outstanding Units that are the subject of such Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders
specifying any rate that is lower than the Winning Bid Rate shall be
accepted, thus entitling each such Existing Holder to continue to hold
the Outstanding Units that are the subject of such Submitted Bid;
(C) the Submitted Bid of each of the Potential Holders
specifying any rate that is lower than the Winning Bid Rate shall be
accepted, thus requiring the Potential Holder to purchase the Units that
are the subject of such Submitted Bid;
(D) the Submitted Bid of each of the Existing Holders
specifying a rate that is equal to the Winning Bid Rate shall be
accepted, thus entitling each such Existing Holder to continue to hold
the Outstanding Units that are the subject of such Submitted Bid, unless
the number of Outstanding Units subject to all such Submitted Bids shall
be greater than the number of Outstanding Units ("remaining Units")
equal to the excess of the Available Units over the number of
Outstanding Units subject to Submitted Bids described in clauses (B) and
(C) of this paragraph 6(e)(i), in which event the Submitted Bids of each
such Existing Holder shall be rejected, and each such Existing Holder
shall be required to sell Outstanding Units, but only in an amount equal
to the difference between (1) the number of Outstanding Units then held
by such Existing Holder subject to such Submitted Bid and (2) the number
of Units obtained by multiplying (x) the number of remaining Units by
(y) a fraction, the numerator of which shall be the number of
Outstanding Units held by such Existing Holder subject to such Submitted
Bid and the denominator of which shall be the sum of the number of
Outstanding Units subject to such Submitted Bids made by all such
Existing Holders that specified a rate equal to the Winning Bid Rate;
and
(E) the Submitted Bid of each of the Potential Holders
specifying a rate that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number of Outstanding Units
obtained by multiplying (x) the difference between the Available Units
and the number of Outstanding Units subject to Submitted Bids described
in clauses (B), (C) and (D) of this paragraph 6(e)(i) by (y) a fraction,
the numerator of which shall be the number of Outstanding Units subject
to such Submitted Bid and the denominator of which shall be the sum of
the number of Outstanding Units subject to such Submitted Bids made by
all such Potential Holders that specified rates equal to the Winning Bid
Rate.
(ii) If Sufficient Clearing Bids have not been made (other than
because all of the outstanding Units are subject to Submitted Hold
Orders), subject to the provisions of paragraphs 6(e)(iii) and 6(e)(iv),
Submitted orders shall be accepted or rejected as follows in the
following order of priority and all other Submitted Bids shall be
rejected:
(A) the Submitted Bid of each Existing Holder specifying
any rate that is equal to or lower than the Maximum Applicable Rate
shall be accepted, thus entitling such Existing Holder to continue to
hold the Outstanding Units that are the subject of such Submitted Bid;
(B) the Submitted Bid of each Potential Holder
specifying any rate that is equal to or lower than the Maximum
Applicable Rate shall be accepted, thus requiring such Potential Holder
to purchase the Outstanding Units that are the subject of such Submitted
Bid; and
(C) the Submitted Bids of each Existing Holder
specifying any rate that is higher than the Maximum Applicable Rate
shall be rejected and the Submitted Sell Orders of each Existing Holder
shall be accepted, in both cases only in an amount equal to the
difference between (1) the number of Outstanding Units then held by such
Existing Holder subject to such Submitted Bid or Submitted Sell Order
and (2) the number of Units obtained by multiplying (x) the difference
between the Available Units and the aggregate number of Outstanding
Units subject to Submitted Bids described in clauses (A) and (B) of this
paragraph 6(e)(ii) by (y) a fraction, the numerator of which shall be
the number of Outstanding Units held by such Existing Holder subject to
such Submitted Bid or Submitted Sell Order and the denominator of which
shall be the number of Outstanding Units subject to all such Submitted
Bids and Submitted Sell Orders.
(iii) If, as a result of the procedures described in paragraph
6(e)(i) or 6(e)(ii), any Existing Holder would be entitled or required
to sell, or any Potential Holder would be entitled or required to
purchase, a fraction of a Unit on any Auction Date, the Trust Company
shall, in such manner as, in its sole discretion, it shall determine,
round up or down the number of Units to be purchased or sold by any
Existing Holder or Potential Holder on such Auction Date so that the
number of Outstanding Units purchased or sold by each Existing Holder or
Potential Holder on such Auction Date shall be whole Units.
(iv) If, as a result of the procedures described in paragraph
6(e)(i), any Potential Holder would be entitled to purchase less than a
whole Unit on any Auction Date, the Trust Company shall, in such manner
as, in its sole discretion, it shall determine, allocate Units for
purchase among Potential Holders so that only whole Units are purchased
on such Auction Date by any Potential Holder, even if such allocation
results in one or more of such Potential Holders not purchasing Units on
such Auction Date.
(v) Based on the results of each Auction, the Trust Company
shall determine the aggregate number of Outstanding Units to be
purchased and the aggregate number of Outstanding Units to be sold by
Potential Holders and Existing Holders on whose behalf each Broker-
Dealer submitted Bids or Sell Orders, and, with respect to each Broker-
Dealer, to the extent that such aggregate number of Outstanding Units to
be purchased and such aggregate number of Outstanding Units to be sold
differ, determine to which other Broker-Dealer(s) acting for one or more
purchasers such Broker-Dealer shall deliver, or from which other Broker-
Dealer(s) acting for one or more sellers such Broker-Dealer shall
receive, as the case may be, Outstanding Units.
(f) Miscellaneous
-------------
The Board of Directors may interpret the provisions of this paragraph 6
to resolve any inconsistency or ambiguity, remedy any formal defect or make
any other change or modification which does not adversely affect the rights
of Existing Holders of Units. An Existing Holder (A) may sell, transfer or
otherwise dispose of Units only pursuant to a Bid or Sell Order in accordance
with the procedures described in this paragraph 6 or to or through a Broker-
Dealer or to a Person that has delivered a signed copy of a Master
Purchaser's Letter to the Trust Company, provided that in the case of all
transfers other than pursuant to Auctions such Existing Holder, its Broker-
Dealer or its Agent Member advises the Trust Company of such transfer and (B)
shall have the ownership of the Units held by it maintained in book entry
form by the Securities Depository in the account of its Agent Member, which
in turn will maintain records of such Existing Holder's beneficial ownership.
Neither the Corporation nor any Affiliate shall submit an Order, either
directly or indirectly, in any Auction. Except as otherwise provided by law,
all of the Outstanding Units shall be represented by a certificate registered
in the name of the nominee of the Securities Depository and no Person
acquiring Units shall be entitled to receive a certificate representing such
Units. If any entity acting as Trust Company should resign as such at any
time, the Corporation will use its best efforts to enter into an agreement(s)
with a successor Trust Company containing substantially the same terms and
conditions as the agreement with the Trust Company.
(g) Headings of Subdivisions
------------------------
The headings of the various subdivisions of this paragraph 6 are for
convenience of reference only and shall not affect the interpretation of any
of the provisions hereof.
7. Voting Rights. Holders of the Series B FLEX DARTS shall have no
voting rights, either general or special, except as expressly required by
applicable law and the Articles.
8. Sinking Fund. The Series B., FLEX DARTS shall not be entitled to
the benefits of a sinking fund.
9. Conversion. The Units shall not be convertible into shares of stock
of the Corporation of any other class, into any shares of $100 par value
Preferred Stock of the Corporation or any other series, or into any other
type of securities.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
executed in duplicate in its name and on its behalf by its duly authorized
officers and its corporate seal to be affixed hereto, this fourteenth day of
January, 1988.
PUGET SOUND POWER & LIGHT COMPANY
By R. R. Sonstelie
-------------------------------
R. R. Sonstelie
President
By W. E. Watson
-------------------------------
W. E. Watson
Secretary
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES FOR
THE PREFERENCE STOCK, SERIES R ($50 PAR VALUE)
_______________________
Pursuant to Section 23B.06.020 of the Washington Business Corporation
Act, Puget Sound Power & Light Company (the "Company"), a Washington
corporation, hereby states that at a meeting of the Board of Directors of the
Company duly convened and held on January 15, 1991, the following resolution
was duly adopted:
RESOLVED - That pursuant to the authority expressly vested in it by the
Company's Restated Articles of Incorporation (the "Articles") and subject to
the preferences, limitations and relative rights set forth in the Articles,
the Board of Directors of the Company hereby establishes a series of the
Company's Preference Stock and fixes and determines the relative rights and
preferences of such series, including the designation of the series, the rate
of dividends, terms and conditions of redemption, and the amount payable in
the event of a voluntary liquidation, as follows:
Series R Preference Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series R Preference Stock" (the "Series R Preference Stock")
and the number of shares constituting the Series R Preference Stock shall be
80,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided that no decrease shall reduce the number of
shares of Series R Preference Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the Company convertible
into Series R Preference Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series R Preference Stock with respect to dividends, the holders of shares of
Series R Preference Stock, in preference to the holders of Common Stock
without par value (the "Common Stock"), of the Company and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series R Preference Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) or (II) subject to the provision
for adjustment hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends and 1,000 times the aggregate per share amount
(payable in kind) of all noncash dividends or other distributions, other than
a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series R Preference Stock. In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series R Preference Stock were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Series
R Preference Stock as provided in paragraph (A) of this Section 2 immediately
after it declares a dividend or distribution on the Common Stock (other than
a dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the
Series R Preference Stock shall nevertheless be payable on such subsequent]
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series R Preference Stock from the Quarterly Dividend Payment date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series R Preference Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series R
Preference Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
shares of Series R Preference Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
Section 3. Reacquired Shares. Any share of Series R Preference Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preference Stock and may be reissued as part of a new series of Preference
Stock subject to the conditions and restrictions on issuance set forth
herein, in the Articles, or in any other Statement of Relative Rights and
Preferences creating a series of Preference Stock or any similar stock or as
otherwise required by law.
Section 4. Liquidation, Dissolution or Winding Up. Upon any voluntary
liquidation, dissolution or winding up of the Company, no distribution shall
be made (i) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series R
Preference Stock unless, prior thereto, the holders of shares of Series R
Preference Stock shall have received an amount per share equal to the
optional redemption price per share set forth in Section 6 below; or (ii) to
the holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series R Preference
Stock, except distributions made ratably on the Series R Preference Stock and
all such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up. In the event the Company shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series R Preference Stock were entitled immediately prior to such
event under the proviso in clause (i) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 5. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Series R Preference Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series R
Preference Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 6. Redemption. The shares of Series R Preference Stock shall
be subject to redemption at the option of the Company on the fifth day prior
to the effective date of a voluntary liquidation, dissolution or winding up
of the Company at price per share of Series R Preference Stock equal to the
greater of 9a) $10 per share plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, and (b) an aggregate amount per share, subject to the provision
for adjustment set forth in the second sentence of Section 4 above, equal to
1,000 times the aggregate amount proposed to be distributed per share to
holders of share of Common Stock in the related voluntary liquidation,
dissolution or winding up (the "optional redemption price").
IN WITNESS WHEREOF, the Company has caused this instrument to be execute
triplicate in its name and on its behalf by its duly authorized officers its
corporate seal to be affixed hereto, this 23rd day of January, 1991.
PUGET SOUND POWER & LIGHT COMPANY
By R. R. Sonstelie
-------------------------------
R. R. Sonstelie, President
By W. E. Watson
------------------------------
W. E. Watson, Secretary
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES FOR THE
7-3/4% SERIES PREFERRED STOCK
(CUMULATIVE, $100 PAR VALUE)
--------------------------
Pursuant to Section 23B.06.020 of the Washington Business Corporation
Act, Puget Sound Power & Light Company (the "Company"), a Washington
corporation, hereby states that at a meeting of the Board of Directors of the
Company duly convened and held on March 18, 1992, the following resolution
was duly adopted:
RESOLVED - That pursuant to the authority expressly vested in it by
theCompany's Articles of Incorporation (the "Articles") and subject to the
preferences, limitations, relative rights and other terms and provisions set
forth in the Articles, the Board of Directors of the Company hereby
establishes an additional series of the Company's $100 par value Preferred
Stock, sets forth the designation of the series, and fixes and determines the
relative rights and preferences thereof, including the rate of dividends, the
price, terms and conditions of redemption, and the creation of a sinking
fund, as follows:
1. Designation. The shares of such series shall be designated "7-3/4%
Series Preferred Stock (Cumulative, $100 par value)" (the "New Preferred
Stock" herein) and the number of shares constituting such series shall be
750,000.
2. Dividends. The holders of the New Preferred Stock shall be entitled
to annual preferential dividends at the rate of 7-3/4%, in accordance with
the provisions of Article VI, Section 3 of the Articles. Dividends shall
commence to accrue from the date of the original issue of the shares. T]
first dividend date shall be May 15, 1992.
3. Redemption. The Company may, at its option expressed by resolution
of the Board of Directors, redeem the New Preferred Stock as a whole at any
time or in part from time to time in accordance with the provisions of
Section 5 of the Articles at the following prices per share, applicable to
the redemption periods during which such redemptions occur:
12 Month Redemption 12 Month Redemption
Period Ended Price Period Ended Price
February 15, Per Share February 15, Per Share
1993 $107.75 2001 $103.62
1994 107.23 2002 103.10
1995 106.72 2003 102.58
1996 106.20 2004 102.07
1997 105.68 2005 101.55
1998 105.17 2006 101.03
1999 104.65 2007 101.52
2000 104.13
and at $100.00 per share if redeemed thereafter, plus an amount in each case
equal to accrued and unpaid dividends (sometimes in the Articles called the
"optional redemption price"); provided however, that no such redemption shall
be made prior to February 15, 1997 if such redemption is a part of or in
anticipation of any refunding operation involving the application, directly
or indirectly, of borrowed funds or the proceeds of an issue of any stock
ranking superior to or on a parity with the New Preferred Stock if such
borrowed funds have an interest rate or cost to the Company or such stock has
a dividend rate or cost to the Company (calculated in accordance with
generally accepted financial practice) of less than the dividend rate per
~nnllm ~f the New Preferred Stock.
4. Sinking Fund. The New Preferred Stock shall be entitled to the
benefits of a sinking fund as follows:
(A) On February 15 in each year, commencing with the year 1998, the
Company shall, upon notice given as provided in Section 5 of the Articles
redeem 37,500 shares of New Preferred Stock at a price per share equal to
$100, together with accrued and unpaid dividends (sometimes in the Articles
called the "sinking fund redemption price"). The Company may, at its option,
by written notice signed by its President or one of its Vice-Presidents and
given to the transfer agent for the New Preferred Stock, redeem an additional
37,500 shares of New Preferred Stock on any said February 15, which right
shall be noncumulative. The obligation to redeem shares of the New Preferred
Stock pursuant to the provisions of this Section, as such obligation may be
increased by the Company pursuant to the preceding sentence, is herein
sometimes referred to as the "sinking fund obligation."
(B) The sinking fund obligation shall be cumulative so that if on any
February 15, on or after February 15, 1998, the Company shall not have
satisfied to the full extent the sinking fund obligation then due, for any
reason whatsoever, then any such deficiency shall be made good before (i) any
dividend shall be paid upon or set apart for the shares of Common Stock or of
any other class of stock ranking junior as to dividends or assets in
liquidation to the New Preferred Stock (other than a dividend in stock
ranking junior as to dividends and assets in liquidation to the New Preferred
Stock) or any other distribution shall be made on any shares of such junior
stock, (ii) any shares of stock ranking junior to the New Preferred Stock as
to dividends or assets in liquidation may be redeemed, purchased or otherwise
retired for a consideration by the Company (other than in exchange for, or
from the proceeds of any substantially concurrent sale hereafter made of,
other shares of stock of the Company ranking junior to the New Preferred
Stock as to dividends and assets in liquidation), or (iii) any shares of New
Preferred Stock or of any sotck ranking on a parity with the New Preferred
Stock may be redeemed, purchased or otherwise retired for consideration by
the Company. Nothing herein contained, however, shall prevent the Company
from satisfying, in whole or in part, its obligations in respect of any
sinking or purchase fund for shares of any other series of Preferred Stock,
provided that any sinking fund obligations for the New Preferred Stock, which
shall have theretofore become due as aforesaid and not have been satisfied,
shall be satisfied buy a percentage not less than that by which any
obligation of the Company in respect of any such other fund is to be
satisfied.
(C) The Company shall have the right to satisfy, in whole or in part,
any sinking fund obligation (including any deficiency in any past sinking
fund obligation) by crediting against such obligation any shares of the New
Preferred Stock purchased or otherwise acquired by the Company, such credit
to be effected by delivering to the transfer agent for the New Preferred
Stock not later than the January 1 next preceding the February 15 on which
there is due any sinking fund obligation in respect of which such credit is
to be taken, a certificate signed by its President or one of its Vice
Presidents or its Treasurer, or one of its Assistant Treasurers, specifying
the election of the Company to take such credit and stating that no previous
sinking fund credit has been taken in respect of any such shares.
(D) At least one day prior to the February 15 on which any sinking
obligation is due, the Company shall deliver to the transfer agent for the
New Preferred Stock, in trust for such redemption, an amount of money
sufficient to redeem all shares of such stock called for redemption to
satisfy such obligation, to be held and applied as provided in Section 5 of
the Articles, and certificates properly endorsed in blank for transfer or
accompanied by proper instruments of assignment or transfer in blank and
bearing all necessary stock transfer tax stamps thereto affixed and
cancelled, for any shares of such stock purchased or otherwise acquired by
the Company which are to be used as a credit against the sinking fund
obligation due on such date, for cancellation as provided in Section 5 of the
Articles with respect to shares redeemed for sinking fund purposes.
5. Conversion. The shares of the New Preferred Stock shall not be
convertible into shares of stock of the Company of any other class, into any
shares of Preferred Stock of the Company of any other series or into any
other type of securities.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in triplicate in its name and on its behalf by its duly authori~
officers and its corporate seal to be affixed hereto, this 23rd day of March,
1992.
PUGET SOUND POWER & LIGHT COMPANY
By R. R. Sonstelie
-------------------------------
R. R. Sonstelie, President
By Wilbur E. Watson
------------------------------
Wilbur E. Watson, Secretary
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT OF RELATIVE RIGHTS AND PREFERENCES FOR THE
7-7/8% SERIES PREFERRED STOCK
(Cumulative, $25 Par Value)
-------------------------
Pursuant to Section 23B.06.020 of the Washington Business Corporation Act
Puget Sound Power & Light Company (the "Company"), a Washington corporation
hereby states that at a meeting of the Board of Directors of the Company duly
convened and held on July 14, 1992, the following resolution was duly
adopted:
RESOLVED - That pursuant to the authority expressly vested in it by the
Company's Articles of Incorporation (the "Articles") and subject to the
preferences, limitations, relative rights and other terms and provisions set
forth in the Articles, the Board of Directors of the Company hereby
establishes an additional series of the Company's $25 par value Preferred
Stock, sets forth the designation of the series, and fixes and determine the
relative rights and preferences thereof, including the rate of dividends, the
price and the terms and conditions of redemption:
1. Designation. The shares of such series shall be designated "77/8%
Series Preferred Stock (Cumulative, $25 par value)" (the "New Preferred
Stock" herein) and the number of shares constituting such series shall be
3,000,000.
2. Dividends. The holders of the New Preferred Stock shall be entitled
to annual preferential dividends at the rate of 7-7/8%, in accordance with
the provisions of Article VI, Section 3 of the Articles. Dividends shall
commence to accrue from the date of the original issue of the shares. The
first dividend date shall be August 15, 1992.
3. Redemption. The New Preferred Stock will not be redeemable prior to
July 15, 1997. On and after such date, the Company may, at its option
expressed by resolution of the Board of Directors, redeem the New Preferred
Stock as a whole at any time or in part from time to time in accordance with
the provisions of Section 5 of the Articles at $25.00 per share, plus an
amount in each case equal to accrued and unpaid dividends (sometimes in the
Articles called the "optional redemption price").
4. Sinking Fund. The New Preferred Stock shall not be entitled to the
benefit of any sinking fund.
5. Conversion. The shares of the New Preferred Stock shall not be
convertible into shares of stock of the Company of any other class, into any
shares of Preferred Stock of the Company of any other series or into any
other type of securities.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed in
triplicate in its name and on its behalf by its duly authorized officers and
its corporate seal to be affixed hereto, this 15th day of August, 1992.
PUGET SOUND POWER & LIGHT COMPANY
By R. R. Sonstelie
-------------------------------
R. R. Sonstelie, President
By Wilbur E. Watson
-------------------------------
Wilbur E. Watson, Secretary
